Facts

Nicolle O'Neill filed suit against Somnia Inc., PST Services LLC, and other defendants and the federal government and State of California to provide anesthesia services to patients in the Kaweah Delta Healthcare District in Visalia.

PLAINTIFF'S CONTENTIONS: O'Neill alleged violations of the federal and state False Claims Act, retaliation, violation of California's Health and Labor Code, whistleblower retaliation, wrongful termination, and intentional and negligent infliction of emotional distress. Plaintiff alleged defendants committed fraud by repeatedly submitting incorrect anesthesia billing codes to the government for reimbursement. With respect to defendants' use of the QZ code, which was the subject of defendants' motion to dismiss, O'Neill alleged that anesthesia services may be coded as QZ only if there is no anesthesiologist involved and the services are performed by a CRNA. If an anesthesiologist did provide supervision, and the QZ code was still used, O'Neill asserted that this would give rise to liability under the FCA. Further, O'Neill alleged she met with Dr. James Paskert, Kaweah's Chief Medical Officer, and told him that she believed Kaweah was engaged in fraudulent billing. After a short investigation, O'Neill was terminated without cause. However, she contended she was terminated because of her complaints about systematic fraudulent documentation of billing that Somnia knew was occurring.

DEFENDANTS' CONTENTIONS: Defendants denied all allegations and moved to dismiss O'Neill's claims under the FCA and California FCA to the extent they concern defendants' alleged misuse of the QZ billing code. Defendants argued that the QZ code may be used for CRNA service without medical direction by a physician. Moreover, defendants argued that the only restriction on use of the QZ code is that it may not be used to indicate CRNA service that was medically directed. In all other instances, defendants maintained that using the QZ code is permissible under the plain language of the regulations that the QZ code functions as something of a catchall provision.

Result

The court granted defendants' motion to dismiss plaintiff's claims regarding use of the QZ code in billing, finding such practices were immaterial for purposes of a False Claims Act claim. The court found that CRNAs are not required to operate independently in order for the QZ code to be employed and, consequently, use of the QZ code was not false or misleading simply because a CRNA performed the service with supervision. In a separate ruling as to defendants' initial motion to dismiss, the court granted defendants' motion with leave to amend as to O'Neill's negligent and intentional infliction of emotional distress claims. The court denied defendants' initial motion to dismiss as to all other claims.