United States ex rel. Goldberg v. Rush Univ. Med. Ctr.

• Decision Date: 21 May 2012
• Docket Number: No. 10–3785.,10–3785.
• Citation: 680 F.3d 933
• Parties: UNITED STATES of America, on the relation of Robert S. GOLDBERG and June Beecham, Plaintiff–Appellant, v. RUSH UNIVERSITY MEDICAL CENTER, et al., Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

680 F.3d 933

UNITED STATES of America, on the relation of Robert S. GOLDBERG and June Beecham, Plaintiff–Appellant,

v.RUSH UNIVERSITY MEDICAL CENTER, et al., Defendants–Appellees.

No. 10–3785.

United States Court of Appeals,Seventh Circuit.

Argued Sept. 19, 2011.

Decided May 21, 2012.

A. Colin Wexler (argued), Attorney, Goldberg Kohn Ltd., Brett E. Legner, Attorney, Office of the Attorney General, Civil Appeals Division, Chicago, IL, Patricia Hanower, Attorney, Department of Justice, Civil Division, Immigration Litigation, Washington, DC, Linda A. Wawzenski, Attorney, Office of the United States Attorney, Chicago, IL, for Plaintiff–Appellant.

John Donley Adams (argued), Attorney, McGuirewoods LLP, Richmond, VA, Sheldon T. Zenner, Attorney, Katten Muchin Rosenman LLP, Jeffrey E. Rogers, Attorney, McGuirewoods LLP, Norman T. Finkel, Attorney, Schoenberg, Finkel, Newman & Rosenberg, Chicago, IL, for Defendants–Appellees.

Before EASTERBROOK, Chief Judge, and KANNE and WILLIAMS, Circuit Judges.

EASTERBROOK, Chief Judge.

Medicare pays teaching hospitals for work by residents (that is, recent graduatesstill in training) on a fee-for-service basis only when a teaching physician supervises the residents. (Technically the payments are “for” the services rendered by the teacher, in the role of the patient's attending physician, but the recipient is the hospital rather than either the teaching physician or the resident.) The costs of providing an extended education to the residents are reimbursed through grants rather than by payments for specific services they perform for patients. During the 1990s, the Department of Health and Human Services concluded that many if not all of the 125 teaching hospitals affiliated with medical schools were billing for unsupervised services that residents performed, thus receiving double compensation. HHS began to audit teaching hospitals' invoices and demand reimbursement. The General Accounting Office (now the Government Accountability Office) conducted its own study and concluded that HHS was right. See GAO, Medicare: Concerns With Physicians at Teaching Hospitals (PATH) Audits (July 1998).

Private litigation has addressed the same topic. Relators may pursue qui tam suits under the False Claims Act, 31 U.S.C. §§ 3729–33, on behalf of the United States and collect a bounty. The risk that unnecessary “me too” private litigation would divert funds from the Treasury led to a proviso in § 3730(e)(4)(A): suits cannot be “based upon the public disclosure of allegations or transactions” in public agencies' official reports unless the relator is an “original source of the information.” (This language was altered in 2010, but that change is not retroactive. See Graham County Soil & Water Conservation District v. United States ex rel. Wilson, ––– U.S. ––––, 130 S.Ct. 1396, 1400 n. 1, 176 L.Ed.2d 225 (2010). We use the language in force when the events underlying this suit took place.)

United States ex rel. Gear v. Emergency Medical Associates of Illinois, Inc., 436 F.3d 726 (7th Cir.2006), concludes that the 1998 GAO report and similar public documents disclose that billing for unsupervised work by residents was an industry-wide practice. This led us to hold that an allegation that a particular teaching hospital had billed for residents' unsupervised work was “based upon” that disclosure, and that only an “original source” of the information could pursue qui tam litigation. Gear was not an original source and lost. We added in Glaser v. Wound Care Consultants, Inc., 570 F.3d 907, 920 (7th Cir.2009), that a private suit is “based upon” a public disclosure when the allegations are “substantially similar,” even if the private relator adds details. That understanding increases the importance of the “original source” exception. But to qualify as an original source, the relator not only must discover the fraud independently but also must disclose it to the government before filing suit. Gear failed to do that—and Robert S. Goldberg and June Beecham, the relators in this litigation, likewise failed.

Goldberg and Beecham filed this suit against a teaching hospital in 2004, two years before Gear and five years before Glaser. They have revised their complaint several times, trying to plead around those decisions. The district court concluded that they failed, and it dismissed the suit. 748 F.Supp.2d 917 (N.D.Ill.2010). Relators believe that they succeeded, and they also rely on United States ex rel. Baltazar v. Warden, 635 F.3d 866 (7th Cir.2011), which they believe narrows the scope of Gear.

As finally revised, relators' complaint alleges that Rush University Medical Center submitted fee-for-service bills to the Medicare program on account of unsupervised work that residents had performed in the hospital's operating theaters. The district court concluded that this kind of allegation tracks the 1998 GAO report and is blocked by § 3730(e)(4)(A). Relators say, however, that they have been more specific about how this hospital billed for unsupervised services. As relators see things, the 1998 GAO report, and the PATH audits more generally, dealt with bills submitted for services that residents had performed all by their lonesome. This suit, according to relators,...