Lawrence Memorial Hospital

After a federal whistleblower lawsuit pending more than four years was dismissed by a judge this week, Lawrence Memorial Hospital says it’s relieved to be vindicated.

Attorneys for the former LMH nurse who filed the suit, however, say they think their evidence was strong and they’re considering an appeal.

“We’re disappointed in the ruling,” said attorney Sarah Brown of Brown and Curry Law Firm in Kansas City, Mo., on behalf of plaintiff Megen Duffy. “Right now we’re trying to evaluate the opinion and decide our options.”

On Tuesday, U.S. District Court of Kansas Judge Sam Crow dismissed Duffy’s 2014 false claims lawsuit against LMH, by granting the hospital’s request for a summary judgment dismissing the case without going to trial.

Duffy’s lawsuit had alleged that LMH, starting as early as 2007, falsified information about the times chest pain patients arrived versus the times they were given electrocardiogram tests, in order to show a faster arrival-to-treatment time and thus increase the hospital’s Medicare reimbursement. Duffy also accused LMH of falsely claiming it complied with federal anti-fraud education requirements for employees, as a condition of payment from the Medicaid program.

She had asked for LMH to pay $11,000 for each false claim plus her legal fees and other relief.

In his order, Crow didn’t rule specifically about the propriety of arrival times reported by LMH, but did note that LMH had been audited by the Centers for Medicare & Medicaid Services three times since 2011, and passed. He also noted that if a patient gets an electrocardiogram prior to completing the hospital’s registration process, that would result in the recorded arrival-to-treatment time being zero.

Ultimately, the judge essentially ruled that regardless of times reported, Duffy’s lawsuit failed to show that they resulted in LMH getting any money it shouldn’t have.

“Plaintiff cannot demonstrate an essential element of her (False Claims Act) claims, that is the materiality of the alleged false statements made by LMH,” Crow wrote in Tuesday’s order.

Duffy still lives in Lawrence and now works as a registered nurse for another employer, her attorney, Brown, said this week.

Duffy worked at LMH from August 2009 to October 2013 as an emergency department nurse.

She said in her lawsuit that she was fired from LMH in October 2013 for the “fabricated reason” that she had sent a threatening text to another employee, the Journal-World previously reported. Duffy claimed she was actually fired because she objected to falsifying arrival times.

In November 2013, Duffy called a Centers for Medicare & Medicaid Services hotline to report LMH for falsifying patient charts and charging Medicare for services it wasn’t providing in order to get more Medicare reimbursements, according to background summarized in the judge’s order this week. A contractor for the federal agency investigated her fraud allegations, and that investigation was closed around July 2014.

That was a few months after Duffy filed her federal lawsuit, in May 2014. The U.S. Department of Justice was served with the complaint but declined to intervene.

In his dismissal of Duffy’s case, the judge ordered that the plaintiff would recover nothing and that LMH could recover costs from the plaintiff.

It’s not yet clear whether LMH will undertake the legal process to attempt to recover costs from Duffy, or exactly what said costs would be.

On Thursday, LMH spokeswoman Janice Early said she didn’t yet have an answer to that question.

In a news release about the lawsuit’s dismissal, LMH called it “frivolous” and bemoaned the high cost to the hospital.

“We have believed this was an unwarranted legal action from the beginning,” Russ Johnson, President and CEO of LMH Health, said in the news release. “Nevertheless, in defending our hospital, it has cost this community hospital over one million dollars.”

Early said the mentioned $1 million was for legal fees alone, beyond what the hospital’s insurance covered.

The figure doesn’t include employee time spent on the matter, which involved multiple employees being deposed and, at one point, a request for the hospital to produce 15,000 medical records, Early said.

“It was quite burdensome,” she said.

Early said implications that hospital employees acted inappropriately “cut to the core.”

“First and foremost, we take care of patients,” Early said. “So when a patient comes to us, especially having chest pain, we do everything to get that patient immediate treatment. To suggest that we would do anything that was otherwise, it was ludicrous to us.”

When asked whether the lawsuit had spurred the hospital to change any of its procedures, Early said no. She emphasized that LMH followed proper policies and had mandatory compliance training for all employees, including education about channels for reporting problems.

“If anything it’s just brought more awareness as to why it’s so important,” she said. “We felt like from the beginning that we were following all the rules and regulations.”

Early said it’s also still unclear whether LMH will pursue action against Duffy in Douglas County District court regarding a countersuit.

After Duffy’s employment at LMH ended, she was paid $9,000 in a termination settlement with the hospital, the Journal-World previously reported. That was to resolve discrimination claims Duffy had raised in administrative complaints, Crow said in his order.

Within Duffy’s federal whistleblower lawsuit, LMH filed the countersuit claiming that Duffy breached that settlement contract and committed fraud by suing LMH.

The settlement agreement was struck a few months after Duffy filed her federal lawsuit, but because the suit was initially filed under seal LMH didn’t know about it when it settled with Duffy, Crow wrote.

Citing a lack of federal jurisdiction, Crow dismissed the countersuit without prejudice, leaving the door open for LMH to re-file those claims in state court.