Hospital groups urge Supreme Court to reverse 'dangerous' false claims ruling

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Six hospital groups, including the American Hospital Association and Federation of American Hospitals, urged the U.S. Supreme Court to review and rectify a Sixth Circuit Court of Appeals decision they say will increase hospitals' exposure to False Claims Act lawsuits.

The groups filed an amicus brief to support the case William Beaumont Hospital v. United States of America. William Beaumont Hospital in Royal Oak, Mich., is currently petitioning the U.S. Supreme Court to review the Sixth Circuit's March 2021 decision that broadens protections for whistleblowers under the False Claims Act.

The False Claims Act lawsuit against William Beaumont was brought by a whistleblower, former employee David Felten, MD, PhD. Dr. Felten first brought the lawsuit against William Beaumont in 2010, alleging a large-scale kickback scheme that the hospital settled in 2018 for $84.5 million. However, Dr. Felten later amended his lawsuit to claim the hospital retaliated against him by blacklisting him, preventing him from getting another job after he was fired. This claim was contentious because it involved actions William Beaumont allegedly took after Dr. Felten was terminated and did not deal with retaliation at the time of employment. 

The Sixth Circuit decision granted protections to Dr. Felten, which expanded the definition of the word "employee" to include previously employed individuals under the law's anti-retaliation provisions.

In the amicus brief, the hospital groups argue that the expanded FCA-retaliation liability is "particularly dangerous" for hospitals because they often operate on thin margins already, and the anti-retaliation provision often requires excessive and expensive litigation.

Additionally, the groups argue that hospitals face a disproportionate amount of FCA litigation. A recent Department of Justice report found hospitals are already defendants in about two-thirds of all FCA cases, according to the hospital groups.

"By distorting the FCA's text to permit retaliation claims by former employees, for conduct years after their employment ceased, the Sixth Circuit erroneously exposes employers to virtually-unbounded retaliation liability," the groups wrote in the brief in support of William Beaumont.

The Michigan Health & Hospital Association, Kentucky Hospital Association, Ohio Hospital Association and Tennessee Hospital Association also wrote the brief. 

Read the full amicus brief here

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