Judge Joseph R. Goodwin, United States District Judge in the Southern District of West Virginia, recently dismissed a False Claims Act (FCA) lawsuit brought by a whistleblower against Charleston Hospital, Inc., Herbert J. Thomas Memorial Hospital Association, THS Physician Partners, Inc., Thomas Health System, Inc., and Bryan Ulery.
The Relator who brought the case – L.K. – worked as a nurse at Thomas Memorial Hospital, alleging that in 2013 onward, Thomas Health System, Inc (“Thomas Health”), by its subsidiaries Thomas Memorial Hospital and St. Francis Hospital (“Thomas Health Hospitals”) and THS Physician Partners, Inc. (“THSPP”), and at the direction of defendant Bryan Ulery, violated the Stark Law and the Anti-Kickback Statute. The Relator specifically alleged that compensation arrangements at Thomas Health improperly accounted for physician referrals for surgeries and procedures under the Stark Law regulations.
Defendants most recently filed a motion to dismiss the action on April 16, 2024, arguing that the Relator did not file her amended complaint under seal pursuant to 31 U.S.C. § 3730(b)(2), and that the Complaint failed to state a claim upon which relief may be granted under Rule 12(b)(6), in part because the FCA allegations were not pleaded with the level of particularity required by Federal Rule of Civil Procedure 9(b). Relator responded in opposition to the Motion to Dismiss, Defendants replied to that opposition, and on September 12, 2024, Judge Goodwin requested the parties file briefs on the impact of Loper Bright Enterprises v. Raimondo to the case.
Goodwin requested additional briefing on the topic as Loper Bright made clear that courts are responsible for independently determining whether regulations at issue in the case aligned with the statute as enacted by Congress, without deferring to interpretations by the Centers for Medicare and Medicaid Services (CMS). He noted that particularly Stark Law regulations are “complex, nuanced, and potentially beyond Congress’s intent.” Goodwin further wrote, “Inevitably, Loper Bright will begin to ripple through the Stark regulations. The only question for courts is when and how.”
Ultimately, after receiving the briefing from the parties, he did grant the Defendants’ Motion to Dismiss for Counts 1 – 4 alleged in the amended complaint, as he found the Relator did not plead any of the Counts with sufficient particularity as required.
While the Motion to Dismiss is important, the importance of this particular case perhaps comes more in Judge Goodwin’s request of additional briefing on a relatively novel legal issue, the impact of Loper Bright on open – and future – lawsuits. By requesting the briefings, Goodwin highlighted the evolving legal landscape – where deference to governmental agencies is no longer the norm, but statutory interpretation becomes of greater importance.