7th Cir. Demands Objective Standards in Whistleblower Complaint

On September 1 the Seventh Circuit affirmed dismissal of three of a whistleblower’s four fraud allegations against a mental health clinic, ruling that the allegations were based on the whistleblower’s subjective judgment rather than objective standards.

Rose Presser worked at Acacia Mental Health Clinic as an independent contractor nurse practitioner.  Her False Claims Act complaint alleged four categories of violations.  First, Acacia required that every patient be assessed by four different individuals, each one submitting a charge.  Second, the clinic billed for each assessment, including those performed by a receptionist, under a code reserved for a full a psychological assessment by a therapist or psychiatric evaluation by a psychiatrist.  Third, every patient was required to undergo urine testing during every visit.  Fourth, patients were required to visit the clinic in person for each prescription refill or to speak with a physician.

Rose alleged that, based on her 20 years of experience, these four practices were inappropriate and generated unnecessary services and billings.

The district court dismissed the complaint under Rule 9(b), noting that the complaint “does not even definitively allege that at least one patient bill was submitted to the United States . . . .”  On appeal the Seventh Circuit reversed dismissal of the second category of violations, ruling that Rose’s allegation—that the clinic billed for psychological assessments and psychiatric evaluations that were not performed—met the particularity standard of Rule 9(b).

But the court affirmed dismissal of all three remaining categories of allegations.   The court wasn’t impressed by Rose’s invocation of her own experience and observations as the basis for alleging fraudulent activity, likening it to someone saying, “in my experience, this is not the way things are done.”   To survive the Rule 9(b) test, she should have provided “medical, technical, or scientific context” to show how the actions were forbidden by statute.

The case is United States ex rel. Presser v. Acacia Mental Health Clinic, No. 14-2804 (7th Cir., Sept. 1, 2016).

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