The case of McCaslin v. Harris County Hospital District did not gain a lot of attention when it was filed or when it was settled. Robert E. McCaslin, Jr. was an employee working in the Patient Billing Services department of the defendant hospital. He filed a qui tam lawsuit, under seal, in the U.S. District Court for the Southern District of Texas in October 2003, alleging that the hospital routinely sent billings for services for patients who had been injured in accidents to Medicare (and Medicaid), rather than first sending the billings to primary payers as required under the MSP laws (and, we can assume, similar Texas Medicaid laws.) In addition, the hospital was improperly billing Medicare and Medicaid for treatment provided to jailed inmates.
He first reported his concerns internally within the hospital, but was met with a response that the hospital was acting properly. Phillips and Cohen, the lawyers who represented him, reported "He objected many times to hospital officials about the failure to follow the secondary payer provision. But they ignored him and didn’t change their billing procedures even after the hospital held a Medicare billing seminar that discussed proper procedures in auto accident cases."
What is not revealed in any of the sparse reports on the case is whether the primary payers were liability carriers or other primary payers. When a liability case has been filed, this does not establish that the defendant in the case was negligent and that coverage is available under his liability policy. Apparently the protocol in Texas was to submit billings to the insurance carrier and give the carrier four months to respond. If it has not paid within that time, the billing may then be sent to Medicare for a "conditional payment," with the expectation that it will then be submitted for reimbursement to CMS under the MSP laws. The hospital, presumably, preferred to received a lower payment sooner and chose to omit the four-month submissions period, in light of the virtual certainty that the liability carrier would decline to make payment prior to a finding of responsibility on the part of its insured.
When a "relator" (whistleblower) files a qui tam action in Federal court, the U.S. Attorneys office may intervene and take over the direction of the case. The U.S. Attorney did so in this case. The relator is entitled to a payment of 15 to 25 percent of the government's recovery in that event.
It was reported in March 2007 that the hospital had agreed to a settlement for more than $15.5 million.
The McCaslin case could be the first that has asserted failure to adhere to protocols under the MSP laws as a type of Medicare false claim, but it will certainly not be the last. The recent amendments to the False Claims Act under the Fraud Enforcement and Recovery Act of 2009 and the 2010 Affordable Care Act to add "the retention of any overpayment" by a provider suggests that these claims will be more actively pursued under the False Claims Act in the next few years.