Arizona judge rules against whistleblower and Justice Dept. Source: Above the Law

The U.S. District Court for the District of Arizona has dismissed whistleblower Jerre Frazier’s qui tam complaint against Iasis Healthcare, which alleged that the company allowed unnecessary medical procedures to be performed and illegally compensated doctors for patient referrals.

The case dates back to March 2005 and became the subject of a subpoena by the Office of the Inspector General in September 2005. Frazier, a former vice president for ethics and compliance for Iasis, filed the suit on behalf of the federal government.

In August 2007, the case was unsealed and became a private lawsuit after the Department of Justice declined to intervene, according to the Franklin, Tenn.-based Iasis.

On March 31, U.S. District Judge James A. Teilborg dismissed the case at the conclusion of oral arguments on Iasis’ motion to dismiss.

The lawsuit alleged that, starting in 1999, Iasis, which owns Mesa General Hospital and Mountain Vista Medical Center, both in Mesa, Ariz., received millions of dollars from Medicare, Medicaid and other federal health programs for referrals made by physicians with whom it had “improper financial arrangements for outpatient and inpatient services.” It also stated that the company received millions of dollars from the same programs for “medically unnecessary procedures performed by various physicians with whom [it] has improper financial relationships."

The suit also alleged that many “medically unnecessary” procedures, including interventional cardiology, radiology and other procedures, have been performed at Mesa General Hospital in Mesa, Ariz., and St. Luke's Hospital in Tempe, Ariz.

While the order is appealable, Iasis said that the Court’s order in favor of Iasis effectively brings to an end the qui tam litigation against Iasis in the District Court.

However, Phillips & Cohen, a law firm representing Frazier, plans to appeal the decision with the 9th Circuit Court of Appeals.