On Aug. 27, Judge John Ward of the Eastern District of Texas denied East Texas Medical Center Regional Healthcare System (ETMCRHS) and ETMC Athens the relief they sought against Linnea Rose and the U.S. government in their joint action qui tam, or whistleblower, lawsuit.
Rose filed the suit on June 8, 2005, under the federal False Claims Act, alleging the Henderson County Hospital Authority of being a conduit for making an intergovernmental transfer of funds to the State of Texas which, in turn, allowed ETMCRHS and ETMC Athens to receive federal matching funds. The suit also alleges that the scheme was designed to obtain additional Medicaid matching funds from the feds.
If Ward had granted ETMC its request, he would have quashed Rose’s case, in which she is the designated relator for the U.S. government. As acting whistleblower, Rose is entitled to receive 15 to 30 percent of the proceeds of a guilty judgment fine or penalty, which is typical in whistleblower cases.
The case was pending under seal for almost two years, until the federal authorities decided to intervene and unseal the suit in February of this year.
The suit wants ETMCRHS and ETMC Athens to make full restitution of the funds it alleges were fraudulently obtained.
The case is now expected to go trial unless both sides reach an agreement first. As it stands now, the case is currently headed to trial will determine whether any or all of the additional Medicaid matching funds will have to be returned to the government.