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United States Staley v. Columbia/HCA Healthcare Corp.

November 23, 2008


The opinion of the court was delivered by: James P. Jones Chief United States District Judge


In this qui tam action remanded to this court for trial from a multidistrict litigation court, the relator seeks reconsideration of a decision of the transferee court that dismissed a portion of the qui tam claim. Because reconsideration would be contrary to the principles of the multidistrict litigation system and to the doctrine of the law of the case, I will deny the motion for reconsideration.


Relator Chyrissa Staley alleges that the defendants Columbia/HCA Healthcare Corporation, now known as HCA, Inc., Indian Path Hospital, Inc., and Superior Home Health of East Tennessee, Inc. (collectively, "Columbia") violated the False Claims Act ("FCA"), 31 U.S.C.A. §§ 3729-3733 (West 2003 & Supp. 2008) by defrauding Medicare at the geriatric/psychiatric unit of Indian Path Hospital in Kingsport, Tennessee.*fn1 Although originally filed in this court in 1997, the Judicial Panel on Multidistrict Litigation ("JPML") consolidated the action with similar cases from other districts in the United States District Court for the District of Columbia ("D.C. District Court"), where pretrial proceedings lasted for almost ten years. There, the defendants successfully moved to dismiss two claims in the First Amended Complaint for lack of subject matter jurisdiction. See United States ex rel. Hockett v. Columbia/HCA Healthcare Corp., 498 F. Supp. 2d 25, 54 (D.D.C. 2007). The dismissed claims had alleged that:

36. Upon information, defendant Columbia conducted one or more meetings of chief financial officers (CFOs) and certain other officials of the hospitals it owned and/or operated which had Geropsych units.

Jim Matney, CFO of Indian Path, attended on behalf of his hospital. There, Matney and his counterparts were instructed in the use of, and told to use techniques that would inflate the TEFRA charges in their respective Geropscyh units.

37. Still upon information, these Geropsych units, acting in accordance with Columbia's instructions, employed their techniques and perhaps others for inflating TEFRA charges and as a result overcharged Medicare at the subject hospitals. The overcharging techniques included those which are described in paragraphs 15 through 35 of this Complaint.

(Relator's First Am. Compl. ¶¶ 36-37.) The original Complaint alleged that fraud had occurred only at Indian Path Hospital. Paragraphs thirty-six and thirty-seven of the First Amended Complaint added allegations that other Columbia locations also engaged in similar fraud.

The D.C. District Court held that these claims were barred by the public disclosure provision of the FCA. See Hockett, 498 F. Supp. 2d at 54. That provision states:

(A) No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations . . . in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.

(B) . . . '[O]riginal source' means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section. . . .

31 U.S.C.A. § 3730(e)(4) (West 2003). In the D.C. Circuit, this provision "is triggered whenever the relator files a complaint describing allegations or transactions substantially similarto those in the public domain, regardless of the actual source for the information in the particular complaint." United States ex rel. Findley v. FPC-Boron Employees' Club, 105 F.3d 675, 682 (D.C. Cir. 1997).

The D.C. District Court found that paragraphs thirty-six and thirty-seven "merely add[ed] slight details and variations" to a fraud explained in a December, 1997, New York Times article.*fn2 Hockett, 498 F. Supp. 2d at 50. The relator could not qualify as an original source of the claims because her "only purported knowledge bottom[ed] on hearsay statements which require inference after inference to support a claim of fraud," and was not "direct and independent" as required by the statute. Id. at 54. Moreover, the relator neglected to "voluntarily disclose[] to the government [any information she did have] prior to her filing of the amended complaint." Id. For these reasons, the court held that public disclosure bar applied, and therefore dismissed the claims in paragraphs thirty-six and thirty-seven for lack of subject matter jurisdiction. Id. at 54-55.

The relator has now asked this court to reconsider that dismissal. The issues have been briefed and argued and the Motion to ...

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