Community health owes attorney fees in $98 million fraud case

A group of 7 whistleblowers may receive attorney fees for helping federal prosecutors reach a ‘worldwide’ $98 million settlement under the False Claims Act in 2014 with Community Health Systems Inc. for allegedly improper hospital admissions, the United States Court of Appeals for the Sixth Circuit ruled.

Community Health’s reliance on the FCA’s public disclosure ban and first-to-file rule was an improper ‘last-ditch’ effort to deny whistleblower costs, Judge Karen Nelson Moore said in a Tuesday ruling. to void and return to a Tennessee district court. .

The ban on public disclosure excludes lawsuits based on information already disclosed, and the first-to-file rule bars “parasitic” lawsuits that are tied to the prosecution of a first whistleblower.

It would be unfair to only allow the first whistleblower to recover all attorneys’ fees if multiple whistleblowers discovered multiple independent parts of the same complex scheme and the government used their collective resources to investigate the fraud, the court said.

The whistleblowers here differ from the opportunistic whistleblowers that the courts are concerned about, the court said. Here, whistleblowers spent significant time and resources helping the government develop claims against Community Health, the court said.

The government intervened in all of the whistleblowers’ cases, cooperated with each of them and encouraged them to share the proceeds of the settlement, the court said.

Allowing whistleblowers to recover costs in a high-profile fraud case like this would encourage other whistleblowers to help the government, the court said.

The whistleblowers filed their lawsuits between 2009 and 2011, alleging Community Health knowingly billed government health care programs for hospital services that should have been billed as outpatient or observation services.

The Ministry of Justice announcement the settlement in August 2014. But the settlement reserved the question of the allocation of attorneys’ fees.

The whistleblowers’ lawsuits were transferred to the U.S. District Court for the Intermediate District of Tennessee, which ruled in April 2020 that the charges were barred.

Judges Eric L. Clay and Julia Smith Gibbons joined in the decision.

Barrett Johnson Martin & Garrison LLC, law firms of Patrick J. O’Connell PLLC, Grant & Eisenhofer PA and Kreindler & Assocs. represented whistleblowers. Robbins Russell Englert Orseck Untereiner & Sauber LLP and Riley Warnock & Jacobson PLC represented Community Health.

The case is United States ex rel. Bryant v. cmty. Health System Inc.6th Cir., no. 20-5460, 01/25/22.