Finally, Some Good News for Halifax–And All Other–Hospitals

It’s been a long time since Orlando’s Halifax Hospital got any good news from the federal court hearing the whistleblower case brought by employee Elin Baklid-Kunz. Earlier this year the hospital had to agree to an $85 million settlement for alleged Stark Law violations.

Only a few weeks later the judge hit the hospital with a heavy penalty—likely six figures—for “reprehensible” behavior in destroying file documents relevant to the case. And earlier this month the judge rejected the hospital’s statute-of-limitations defense because the hospital waited too long to assert it.

But that same decision included some very good news on the False Claims Act (FCA) front—good news for Halifax and perhaps for all Medicare-certified hospitals.

The whistleblower alleged that as far back as 2002 the hospital admitted patients who didn’t qualify as inpatients and billed Medicare for the inpatient amount rather than the lower outpatient amount. The FCA calls for triple damages, plus a $5,500 fine for every false claim. Under the whistleblower’s theory, every Medicare bill was a false claim and the “damage” was the entire amount of the bill. Under that theory Halifax could have owed as much as $300 million.

But the judge agreed with Halifax that the “damage” wasn’t the entire Medicare bill but rather the difference between an inpatient bill and an outpatient bill. What’s more, the judge agreed with Halifax that merely violating a Medicare regulation—even a condition of participation—doesn’t necessarily constitute an FCA violation. So the whistleblower couldn’t argue that the lack of the Medicare-required physician’s order for an admission was an FCA violation.

How good was the news for Halifax? Good enough that the whistleblower has signed an agreement to settle all her claims for $1 million.