Kaiser Contractor Can't Allege Schadenfreude
(CN) - A federal judge sidelined "scandalous" allegations that Kaiser welcomes the death of its patients, but left room for amended claims under the False Claims Act.
In a 2012 complaint, ProTransport-1 LLC claimed that Kaiser Foundation Health Plan failed to pay for its services transporting patients with end stage renal disease to dialysis treatment.
The Oakland-based Kaiser allegedly required ProTransport to seek reimbursement from the California Medical Assistance Program, Medi-Cal.
ProTansport said it complained about the conduct and that Kaiser then retaliated by refusing to pay for any transports made by ProTransport and excluding ProTransport from bidding to provide future services to Kaiser.
Since the Medicare Act allegedly requires Kaiser to pay ProTransport in the first instance, the insurer's conduct amounts to fraud, according to the complaint.
Kaiser moved to dismiss the complaint and to strike references that it called "immaterial and improper," leading ProTransport to voluntarily dismiss seven claims. It wanted to preserve only its claims under the federal False Claims Act and California laws against retaliation and unfair competition.
ProTransport drew the court's ire with its claims that Kaiser welcomed, caused and profited from patients' death.
In its complaint, ProTransport said: "Of course, Kaiser knows very well that without dialysis these patients will die within weeks. That is part of Kaiser's plan. Dialysis is expensive, so is transporting patients to and from dialysis. By killing off these patients, Kaiser is left with a much more profitable patient base, resulting in billions in profits."
U.S. District Judge William Orrick on Wednesday called the allegations "immaterial and scandalous."
"References to Kaiser welcoming deaths, causing deaths or profiting from deaths - unsubstantiated by factual allegations - are immaterial and scandalous and should be stricken," the ruling states.
Though Kaiser claimed that the False Claims Act claim was just a disguised attempt by ProTransport to obtain payment for its services, ProTransport insisted that it is trying to secure recovery for the United States.
Orrick agreed that "payments to ProTransport for services provided in the past are not at issue. Nor are payments that might be made in the future, as ProTransport was allegedly barred by Kaiser from bidding to provide future services."
He nevertheless dismissed the claim as inadequately pleaded.
"While the complaint cites to various statutes and regulations to argue that Kaiser's Medical Advantage plan is required to provide the same level of coverage required under Medicare and that medically necessary transports are covered by Medicare, the complaint does not identify which law, rule or regulation Kaiser undertook to comply with that 'is implicated in submitting a claim for payment,'" the 18-page ruling states. "Moreover, the complaint does not identify what 'claims' Kaiser submitted that were 'impliedly' false."
In dismissing a claim for retaliation under the California Health and Safety Code, Orrick noted that the law does not cover "a non-contracted transportation service provider."
ProTransport can allege retaliation unfairness under the unfair competition law, but it cannot claim a violation under the illegal prong of that law, according to the ruling.
Orrick reasoned that this claim is barred because it stems from the nixed allegations under the False Claims Act and Health and Safety Code.