False Claims Act Whistleblower Prevails on Appeal

The Second Circuit’s decision in Fabula v. American Medical Response, Inc. establishes that refusal to play a role in an unlawful scheme to defraud the government is protected under the whistleblower protection provision of the False Claims Act. In particular, refusal to falsify documentation about medical services so as to hinder the filing of a fraudulent claim for reimbursement in violation of the FCA constitutes FCA protected activity.

Fabula’s Refusal to Falsify Medicare Documentation

Fabula worked as an EMT at American Medical Response, Inc. (AMR) providing emergency and non-emergency medical transport services, some of which were reimbursable under Medicare.  He alleged that AMR defrauded Medicare by  falsely certifying ambulance transports as medically necessary and submitting claims that it knew were not properly reimbursable under Medicare reimbursement rules.

Where means of transportation other than an ambulance can be used without endangering the patient’s health, Medicare does not pay for ambulance transport.  And to secure Medicare reimbursement, AMR was required to submit accurate information about the condition of patients and medical services that it provided to them.  In particular, the EMT had to fill out an electronic Patient Care Report (“PCR”).  The PCR includes a description of the transported person’s condition, which determines whether a transport qualifies as “medically necessary.”

Fabula alleged that AMR required EMTs to revise or recreate PCRs “to include false statements purportedly demonstrating medical necessity to ensure that runs would be reimbursable by Medicare, whether or not ambulance service was in fact medically necessary in the particular case.”  He knew that the falsified PCRs would be used to qualify for Medicare reimbursement.  Some of the examples of PCRs that AMR managers ordered him to falsify are stark:

• About two weeks after transporting patients to the hospital, “Fabula was asked to revise four of the PCRs by adding information about the patients’ previous surgeries and injuries, implying that such history made ambulance service medically necessary, even though one patient with a chronic allergy issue had no medical need for an ambulance but wanted a ride to the hospital because she thought she could avoid a wait at the hospital if she was brought in by an ambulance, and another patient called for an ambulance only because he felt that he should not have to buy his own cough syrup.”
• In December 2011, Fabula and another EMT “assisted in transporting an obese patient who “had no medical reason to be sent to the hospital, he simply wanted to go there.” The patient was able to walk himself to the stretcher and climb on unassisted. An AMR supervisor instructed Fabula to insert information about the patient’s previous surgeries to justify his transport to the hospital. That same patient called 911 six dozen times during 2011 for an ambulance to bring him to a medical facility to obtain insulin. AMR directed Fabula, under threat of being placed on unpaid leave, to state falsely in the PCRs for those runs that the patient had difficulty remaining in an upright position.”

Fabula refused to falsify PCRs and was warned that failure to alter the PCR would result in his termination.  Shortly after he refused to revise a particular PCR, AMR terminated his employment.

He brought suit under the False Claims Act and the district court dismissed his retaliation claim on the ground that “mere refusal to complete the PCR, without other affirmative acts to stop the alleged fraud, is not protected activity.”

Broad Scope of False Claims Act Whistleblower Protection

Reversing the district court, the Second Circuit rejected AMR’s argument that refusal to falsify Medicare documentation does not qualify as an effort to stop a fraudulent scheme.  The court relied on the FCA’s plain meaning, which protects “efforts to stop 1 or more violations” of the False Claims Act:

• “To the extent AMR contends that Fabula’s refusal does not rise to the level of an affirmative act, and so cannot constitute an “effort,” that argument is refuted by the plain language of the statute. Consistent with the word’s everyday use, Webster’s relevantly defines “effort” as a “conscious exertion of physical or mental power.” Webster’s Third New International Dictionary, Unabridged (2002) (“Webster’s”). Fabula did not simply omit, fail, or neglect to fill out the December 2011 PCR after being instructed to do so — he verbally refused to alter the document as requested by AMR and, despite AMR’s threat of termination, failed to subsequently “arrange a time for reconciliation and transmission of” that PCR.”.
• “Furthermore, interpreting the anti-retaliation provision to draw an arbitrary boundary between efforts that take the form of “internal reporting to a supervisor or company compliance department” and those that amount to “refusals to participate in the misconduct that leads to the false claims,” would make little policy sense. There is, at best, a hair’s-breadth distinction between complaining internally that a practice is illegal under the FCA and advising a supervisor of one’s refusal to engage in that illegal practice.”

The Second Circuit also rejected AMR’s contention that FCA protected conduct is limited to “complaints to [an] employer’s management or in-house counsel, reports to the media, or a reasoned explanation to supervisors that what they were asking him to do violated the law and should cease.”  None of those steps are required to qualify for FCA whistleblower protection and instead the FCA “broadly protects efforts to stop even a single violation of the FCA.”

The Second Circuit’s common sense construction of the FCA’s anti-retaliation provision will provide robust protection to courageous whistleblowers who refuse to engage in schemes to defraud the government