Two Relators Terminated for Reporting Significant Violations of the False Claims Act

Two former employees of Dallas-based South Hampton Community Hospital were allegedly terminated for reporting violations of the False Claims Act to the U.S. Department of Health and Human Services’ Office of the Inspector General. The two were allegedly threatened, harassed, discharged, and otherwise discriminated against for reporting that the hospital changed diagnoses to bill government health care programs at improperly inflated rates and texted patients’ private medical information so that doctors could bill for visits that didn’t actually occur. In 2012, the hospital received an “F” for safety from the Leapfrog Group, a Washington-based nonprofit ratings service set up by major employers across the country to improve patient safety and value. The 111-bed acute care hospital was subsequently acquired by University General Health System and in early 2013 was re-branded as University General Hospital-Dallas.

In March 2012 relator Dawn Moss began her employment as a quality manager at the hospital. Her primary responsibility was to ensure compliance with all state and federal health laws and regulations in day-to-day activities of the hospital. In August 2012 relator Kelley Powell began working at the hospital as the director of the hospital’s intensive care unit, wound care, and emergency room. After beginning their employment at the hospital both relators allegedly observed a number of categories of illegal conduct. For example, Powell encountered individuals that were providing medicine and other treatment in connection with wound care without a license or certification. One of these individuals had allegedly improperly obtained access to the Pyxis MedStation system for automated mediation disbursement. Additionally, she found an unlocked medication cart and medical records being kept in an unlocked cabinet. As a result, medication and records were improperly accessible to third parties. In 2012 an estimated $1 million worth of drugs were unaccounted for.

Within the first month of her employment, Moss performed a hospital-wide compliance, regulatory and billing audit and presented certain concerns to management related to upcoding and compliance and other regulatory infractions. Upcoding involves the changing of the diagnosis code for a patient, extending a patient’s hospital stay, or carrying out more medical procedures than are warranted, in order to charge the patient and their insurance carrier or other payer (including Medicare or Medicaid), an inflated amount, thereby generating income to a hospital and treating physician not properly due. Both Moss and Powell allegedly observed this practice frequently at the hospital, including both before and after a patient had been discharged and on days when such patient was not even in the hospital. Based on patient charts that Moss reviewed she determined that approximately 402 patients were improperly upcoded between March 29, 2012 and June 18, 2012. Based on a preliminary audit, the amount of charges generated from the upcoding for certain of patients was $391,500 for this period alone. The primary payer affected by upcoding was Medicare, which was charged approximately $8 million by the Hospital in 2012. Moss also allegedly discovered that a trailer provided to the hospital by the Federal Emergency Management Administration had not been used for its intended purpose. Supplies intended to be stored in the trailer were removed to the hospital without compensation, and emergency drills necessary to maintain the trailer never performed.

Moss and Powell allegedly both observed that nurses and doctors were texting regarding admitted patients and taking photographs of such patients on their private phones so that they could fill out information on the patient’s chart remotely and without actually seeing the patient. Because the phones through which the texts and photographs were sent were not encrypted, the information was accessible by unauthorized third parties such as telephone companies and family members. This represents an unauthorized disclosure of confidential patient information to third parties in violation of the Health Insurance Portability and Accountability Act (“HIPAA”). Pursuant to Medicare regulations, doctors are required to visit admitted patients of the hospital at least once every 24 hours during that patient’s hospital stay.

The anti-retaliation provision of the False Claims Act protects employees from being discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by their employer because the employee investigated, reported or sought to stop fraudulent conduct. Relief from such retaliation includes reinstatement with the same seniority status, two times back pay plus interest and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.