In June 2020, the United States Court of Appeals for the Eighth Circuit affirmed the dismissal with prejudice of a qui tam suit against Trinity Health in North Dakota. The suit, brought by Rafik Benaissa, MD, a former surgeon with Trinity Health, alleged that certain physician compensation arrangements at the hospital violated the Anti-Kickback Statute (AKS) and Stark Law and that Trinity Health violated the False Claims Act (FCA) by submitting false and/or fraudulent claims to the United States.
Benaissa alleged that Trinity paid five of its highest-earning physicians above fair market value by compensating them at levels that were not justified by their personal productivity; the high compensation generated practice losses for Trinity, absent taking into account the physicians’ downstream referrals to the health system; and as a result of the physicians’ compensation methodology, they performed unnecessary surgeries to inflate their compensation. Benaissa also alleged that Trinity did not renew his contract because he complained about the allegedly unnecessary surgeries.
According to Benaissa, the compensation arrangements violated the AKS and Stark Law, and further, that any claims submitted by Trinity to federal health care programs for the procedures performed by the physician violated the FCA. He also alleged that Trinity’s refusal to renew his contract violated the anti-retaliation provisisions found in the FCA.
After the United States declined to get involved in the qui tam suit, Trinity filed a Motion to Dismiss, which was granted in the United States District Court for the District of North Dakota. The District Court found that because Benaissa did not identify representative examples of false claims submitted by Trinity, nor did he exhibit any direct connection to or personal knowledge of Trinity’s billing practice, he did not satisfy Rule 9(b), which requires that false claims must be presented to the government. The District Court also found that Benaissa’s complaints about clinical decisions made by other surgeons (including whether the procedures were necessary) did not amount to “protected activity” under the FCA because his complaints did not make reference to fraud or improper billing by Trinity.
Benaissa appealed the dismissal, conceding that while he did not allege representative examples of false claims submitted for payment or approval, such an inference can be made because roughly 29% of Trinity’s annual revenue came from Medicare reimbursements and that any claims submitted for services performed by the five physicians identified in the complaint would be tainted by the alleged AKS and Stark violations, it was “more likely” than not that Trinity “submitted at least some” such claims to the government.
The Eighth Circuit, though, disagreed with that argument and upheld the dismissal, finding that such a “general inference” theory does not satisfy the Rule 9(b) particularity requirement for an FCA violation. The Eighth Circuit also found that as a trauma surgeon, Benaissa did not “have firsthand knowledge of Trinity’s billing practices” and that he did not plead details about Trinity’s billing practices which would indicate a reliable “basis for knowledge” regarding the submission of fraudulent claims.