Metropolitan Hospital Pays $6.25 Million to Settle Federal False Claims Act Case

The Case Background

On December 10, 2003, the law firm of Frank, Haron, Weiner and Navarro announced that Metropolitan Hospital, an acute care facility in Grand Rapids, Michigan, and several related entities agreed to pay $6.25 million to settle the federal False Claims Act case of U.S. ex rel. Mary Scott v. Metropolitan Health Corp., Metropolitan Hospital, et al.

This settlement represents one of the largest settlements for violation of the provisions of the federal Stark anti-kickback law. The case demonstrates the power of the qui tam provisions of the False Claims Act, which permit individuals with knowledge of fraud in government contracts to bring suit on behalf of the federal government.

The Whistleblower: Mary Scott

Mary Scott of Caledonia, Michigan brought this suit in 2002 against Metropolitan under the qui tam provisions of the federal False Claims Act. As a former Senior Vice-President of Metropolitan, Ms. Scott had direct knowledge of the fraudulent conduct that formed the basis of the lawsuit.

Retaliation and Wrongful Termination

Ms. Scott claims that she was terminated by Metropolitan in January 2003 in retaliation for investigating and bringing forward to Metropolitan's Board of Directors the allegations which formed the basis of the suit and settlement.

Metropolitan suspended Ms. Scott, and ultimately fired her, after she told Metropolitan's legal counsel and other officials that she was about to report the fraudulent conduct at issue to the government. These actions demonstrate the type of whistleblower retaliation that the False Claims Act specifically protects against.

Pending Retaliation Claims

The continuing retaliation claims are pending in the United States District Court for the Western District of Michigan. These claims are brought under the whistleblower protection/anti-retaliation provisions of the False Claims Act.

Ms. Scott seeks all relief to which she is entitled for the destruction of her career including:

• Double back pay as provided under the FCA
• Future pay compensation
• Compensation for special damages including humiliation and mental anguish sustained because of termination, discrimination and retaliation
• Interest on all damages
• Attorney fees and litigation costs
• Reinstatement to her former position

Understanding the Stark Anti-Kickback Law

The Stark Law prohibits physicians from referring patients for certain designated health services payable by Medicare or Medicaid to entities with which the physician (or immediate family member) has a financial relationship. Violations of the Stark Law can result in significant penalties and create liability under the False Claims Act.

Lessons for Potential Whistleblowers

This case illustrates several important points for individuals considering filing a qui tam lawsuit:

• Insider knowledge of fraud, especially from senior executives, is highly valuable in qui tam cases
• The False Claims Act provides strong anti-retaliation protections for whistleblowers
• Even if you are terminated, you may be entitled to substantial damages including double back pay
• Working with experienced qui tam attorneys is essential for navigating complex healthcare fraud cases