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United States ex rel. Campos v. Johns Hopkins Health System Corp.

United States District Court, D. Maryland

April 24, 2018

UNITED STATES OF AMERICA ex rel. ANTHONY C. CAMPOS
v.
THE JOHNS HOPKINS HEALTH SYSTEM CORPORATION

          MEMORANDUM

          Catherine Blake United States District Judge

         Relator Anthony C. Campos ("Campos") brings this qui tarn action under the federal False Claims Act ("FCA"), 31 U.S.C. §§ 3729, et seq., against defendant The Johns Hopkins Health System Corporation ("Hopkins"). Campos alleges Hopkins violated 31 U.S.C. § 3729(a)(1)(A) and (B) when it engaged in a scheme to prioritize out-of-state patients and then submitted claims to the federal government representing its compliance with contracts which, according to Campos, prohibited such a scheme. Now pending is Hopkins's motion to dismiss. For the reasons set forth below, Campos has failed to state a claim, and the motion will be granted.

         BACKGROUND

         At the motion to dismiss stage, this court accepts as true the facts alleged in the complaint. See Aziz v. Alcolac, 658 F.3d 388, 390 (4th Cir. 2001). Hopkins is a corporation created in 1986 under the laws of Maryland, which has multiple subsidiaries. ECF No. 10, ¶11. The subsidiaries relevant to this case are the Johns Hopkins Hospital, the Johns Hopkins Bayview Medical Center, Howard County General Hospital, and Suburban Hospital ("Hopkins Subsidiaries"). Id. Campos was the Director of Patient Access Operations at Hopkins from December 2011 to January 2017. Id. at ¶ 6. In that capacity he oversaw a twenty-five person team of operations analysts, operations and call center managers, and patient access managers for approximately eighteen medical departments within Hopkins. Id. He also oversaw a three hundred and seventy person Patient Access call center, which was responsible for scheduling patients for all appointments throughout the Hopkins medical system. Id. Campos is the original source of the facts and information set forth in the complaint concerning Hopkins' activities. Id. at ¶ 8.

         On February 11, 2014, the Centers for Medicare and Medicaid ("CMS") and the State of Maryland entered into the Maryland All-Payer Model Agreement ("Model Agreement"). ECF No. 10, ¶ 17. The Model Agreement establishes how regulated Maryland hospitals, including the Hopkins Subsidiaries, are reimbursed for services by CMS and the State of Maryland through Medicare and Maryland Medicaid. Id. Pursuant to the Model Agreement, Maryland's Health Services Cost Review Commission ("HSCRC"), the agency authorized to set hospital rates in Maryland, follows a Global Budget Revenue ("GBR") Model. Id. at ¶21. Under the GBR Model, an annual budget cap for each hospital in Maryland is pre-established so that each hospital's annual revenue from providing hospital services is known at the beginning of the fiscal year, regardless of the number of patients actually treated or the amount of services actually delivered. Id. The GBR Model was implemented pursuant to a provision of the Social Security Act which authorizes CMS to "test innovative payment and service delivery models that have the potential to reduce Medicare, Medicaid, or Children Health Insurance Program ("CHIP") expenditures while maintaining or improving the quality of care for beneficiaries." ECF No. 10-2, p. 1. .

         On July 14, 2014, the HSCRC and Hopkins entered into an agreement pursuant to the GBR Model (the "Global Budget Agreement"), which used Hopkins's past history regarding the volumes, costs, and patterns of its hospital services to establish Hopkins's annual budget cap. Id. at ¶ 22. Importantly, during the relevant time period, Hopkins's annual budget cap applied only to health care services provided to Maryland residents. Id. at ¶23, except that at Howard County General Hospital services provided to out-of-state patients were also included. ECF No. 10-3, p. 19. Revenue for services provided to out-of-state residents at any of Hopkins's other three hospitals was not counted towards the cap. Id. As a result, any revenue earned by Hopkins for such services increased Hopkins's overall revenue beyond the annual budget cap. Id.

         Three provisions of the Global Budget Agreement are relevant for purposes of this case.

         First, a provision within the "Overview" section:

In accepting this Agreement, each JHHS Hospital agrees to operate within the GBR's financial constraints and to comply with the various patient-centered and population-focused performance standards that have been or will be established by the HSCRC .... ECF No. 10-3, p. 4.

         Second, a provision within a subsection of a section entitled "Monitoring of GBR Operation and Performance, " entitled "Case Mix/Severity Levels":

The HSCRC will pay close attention to the overall case mix and the severity levels within DRGs at each Hospital. If requested, the Hospital will demonstrate to the HSCRC that any reductions in its case mix index or its severity levels are not the result of deliberate efforts by the Hospital to deny, for inappropriate financial reasons, any services to particular patients, or treatments for particular conditions that fall within the scope of the medical capabilities of the Hospital and its attending medical staff. ECF No. 10-3, p. 10.

         Third, a provision within a section entitled "Out-of-Area and Out-of-State Volumes and Revenues":

Significant changes in out-of-state volume and volumes from outside an individual Hospital's PSA and SSA have the potential to positively or negatively affect the success of the GBR Model. In FY 2013, approximately 17.97 percent of the Hospital System's total revenue came from non-Maryland residents. If this percentage changes materially during the term of this Agreement, the HSCRC staff and the Hospital will evaluate the causes of the change to ensure that the goals and objectives of this Agreement, the GBR model and the final contract between CMMI and the State of Maryland are not being undermined by such changes. ECF No. 10-3, p. 14.

         Campos alleges that Hopkins violated these three provisions of the Global Budget Agreement when it engaged in a campaign to recruit out-of-state patients at the expense of instate patients. This campaign was known as the campaign to "fill the plane with the right kind of travelers"-to completely fill Hopkins's hospital schedule, using as many out-of-state patients as possible. ECF No. 10, ¶¶ 27-28. Campos offers numerous details about this scheme. The most relevant are set forth below.

         First, Hopkins's senior management initiated the campaign for the explicit purpose of increasing revenue, which Hopkins could do only by treating out-of-state patients who were not subject to the annual budget cap. Id. at ¶¶ 27-31, 34, 3 7.

         Second, doctors expressed concern about this campaign but were ignored by senior management. Id. at ¶¶ 32-33.

         Third, pursuant to the orders of Hopkins's senior management, the Department of Patient Access began implementing practices and procedures that gave out-of-state patients priority access to appointments. Id. at ¶¶ 35-37. Specifically, all domestic out-of-state patients were to be offered an appointment within thirty days, regardless of clinical urgency or necessity. Id. at ¶ 40. The Patient Access call center, 'which was responsible for ensuring this came to pass, was told to focus specifically on the most profitable departments. Id. at ΒΆΒΆ 40-41. Campos alleges personal knowledge that one of those departments, the Department of Otolaryngology, had a policy that if an out-of-state patient could not initially be scheduled within thirty days, a supervisor was to get involved to ensure that the appointment was provided within that time period. The department had a policy of giving in-state patients an appointment within forty-two days, and there was no ...


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