North Carolina hospitals defeat billing fraud lawsuit

The Fourth Circuit Court of Appeals affirmed a lower court's decision June 15, rejecting a False Claims Act lawsuit filed against two North Carolina hospitals, according to Bloomberg Law

The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act by a former employee of North Carolina Baptist Hospital in Winston-Salem. The whistleblower alleged North Carolina Baptist and Charlotte, N.C.-based Carolinas Healthcare System improperly billed Medicare for employees' health costs. 

In upholding the lower court's decision June 15, the appellate court held that the whistleblower failed to demonstrate that the hospitals knowingly submitted false claims to Medicare by failing to comply with the "Related-Party Rule." The rule requires hospitals to report their costs for providing care to their own employees as "related-party transactions," and to submit for Medicare reimbursement only their out-of-pocket costs rather than the amount charged. 

The whistleblower "does not allege any facts from which one could infer knowledge of a false claim: that the hospitals' employees had conversations about regulatory violations, for instance, or that the hospitals instructed their employees to ignore concerns about potential violations, or anything else to indicate that the Hospitals were aware even of the potential for a violation of the Related-Party Rule," reads the non-precedential opinion from the appellate court. 

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