A California whistleblower’s contention that doctors’ medical decisions should be subject to the False Claims Act could have new life, if an appeals court agrees to hear the case.

The lawsuit alleges that the provider defrauded Medicare by improperly admitting skilled nursing residents as hospital inpatients, despite the fact that they didn’t require such levels of care. The case was filed by Jane Winter, the former director of care management at the now-shuttered Tri-City Regional Medical Center, in Los Angeles. A federal trial court had previously tossed the complaint because
Winter couldn’t prove that the hospital knowingly made a false representation to the government, Bloomberg Law reported. But she’s now asking the Ninth Circuit of the U.S. Court of Appeals to reconsider that decision. The case is being “closely watched” since the issue of medical necessity of care is controversial, and could have wide-reaching implications for long-term care operators and others.

Providers have argued that medical decisions are judgment calls, which cannot be deemed knowingly fraudulent. The American Health Care Association and California Association of Health Facilities both filed opinions in defense of the hospital, given the potential “far-ranging consequences” to providers in the case.

In its court brief, filed over the summer, AHCA noted that tying False Claims Act allegations to the medical necessity of services “imposes a significant burden on members of the healthcare industry that goes largely unseen by the public.”

Cases can often take years to resolve, and cost thousands of dollars in legal fees.

“Fraud against the government is unacceptable. However, the cure is not to be found in effectively criminalizing the reasonable exercise of clinical judgment by imposing potentially ruinous financial liability” against providers, AHCA wrote in its court brief.