Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Sunday, July 14, 2024 | Back issues
Courthouse News Service Courthouse News Service

California judge decides against venue transfer in Kaiser fraud case

The federal judge found that two cases involving Kaiser aren't similar and a transfer would likely negatively affect the case schedule of the Northern District of California complaint.

SACRAMENTO, Calif. (CN) — A federal judge on Friday ruled against a transfer of venue for a pending fraud case against Kaiser Permanente, finding that, among other reasons, merging it with a similar case in another district isn’t appropriate at this time.

Several groups that fall under the Kaiser umbrella had sought to move the case filed against them by Jeffrey Mazik, a former Kaiser employee, to the Northern District of California from the Eastern District. Another, similar case was filed first in the Northern District. Kaiser argued it made sense to move the case.

U.S. District Court Judge Dale Drozd disagreed, citing several reasons. The fraud Mazik accused Kaiser of happened across California, including the Eastern District. Additionally, witnesses in the case are in both districts, as well as other states, and the most similar accusations made by Mazik have been removed from his case.

“Defendants do not satisfactorily explain why they chose to wait three years to file their motion to transfer and only then filed it after the most similar allegations had been stripped out of relator’s pleadings,” Drozd wrote.

Mazik, who filed suit in 2019, is considered a relator. He told the government about the fraud under the False Claims Act. Kaiser successfully argued that he couldn’t sue under that Act because he wasn’t the first to accuse the health care consortium.

Drozd in February agreed with Kaiser’s argument, except for an accusation that Kaiser interfered with compliance software that affected its identification of bad information that caused overpayments — a claim that isn’t like the Northern District complaint.

The judge in his Friday decision wrote that he must examine two points to determine if a case should transfer: whether it could have been filed in the Northern District, and consideration of convenience and fairness.

Mazik could have filed in the Northern District, which led Drozd to address Kaiser’s arguments for a venue transfer.

“While defendants argue that relator has failed to make any allegations regarding conduct specifically occurring in the Eastern District, defendants nowhere argue that venue in the Eastern District is inappropriate,” Drozd wrote.

The judge also gave more weight to the government’s wishes about venue, as it’s the real party of interest in the case. The government filed a statement of interest opposing the move.

Pivoting to the convenience of witnesses, Drozd found that had little effect on his decision. Kaiser has shown that two of them live in the Northern District, and two in the Eastern. There are also over a dozen witnesses across the country, including in Los Angeles, Maryland and Georgia.

Drozd also disagreed with what he called Kaiser’s optimism over aligning the Northern and Eastern case management schedules, if the case were transferred. He determined that consolidating the two cases would cause disruptions in a “laboriously negotiated schedule.” Also, moving the case to the Northern District could put Mazik into a situation with little connection to his own complaint, as the similar accusations have since been removed.

Mazik, a former senior practice leader for Kaiser’s National Compliance Office, had accused the consortium of using false data that led to inflated payments, as well as disabling features in software that were used to catch errors.

The more Mazik talked about improper diagnosis codes and overpayments, and tried to push Kaiser toward compliance, the more he was sidelined, he said.

Diagnosis codes are used for Medicare reimbursement. Severe codes mean higher rates, and more profit. Medicare requires health care groups to certify the accuracy of their codes to get paid.

Mazik, whose job was compliance and fraud control, was fired in January 2017.

Categories / Government, Health, Regional

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Loading...