CHARLESTON – A federal judge is requiring parties in a whistleblower lawsuit to file briefs addressing a recent landmark U.S. Supreme Court ruling.
In a September 12 order, U.S. District Judge Joseph R. Goodwin ordered both sides to file supplemental briefings on the possible effect this summer's Loper Bright ruling, if any, has on the case.
In the original whistleblower complaint filed in 2020, Liesa Kyer claims Thomas Health System Inc. violated the False Claims Act by seeking federal healthcare program payments with claims that violated the Stark Law, which prohibits doctors and other entities from improperly benefiting from self-referrals.
Thomas filed a motion to dismiss Kyer’s qui tam complaint.
Kyer worked as a nurse at Thomas Memorial Hospital. She filed the lawsuit on behalf of the United States for alleged violations of the FCA, the Stark Law and the Anti-Kickback Statute. The federal government elected not to intervene in the case, so Kyer filed an amended complaint with four causes of action.
“Over the last 30 years, the Stark Law has grown complex, nuanced and reliant on agency regulation to define key terms and safe harbors. Relator’s (Kyer) claims and defendants’ (Thomas) arguments for dismissal rely heavily on Stark Law regulations. … Rulemaking has reshaped the Stark Law for the last 30 years.”
But in June, the U.S. Supreme Court issued its landmark decision regarding administrative law in Loper Bright Enterprises v. Raimondo. Along with another case, it overturned the 1984 decision in Chevron U.S.A. v. Natural Resources Defense Council, which had told courts to defer to an agency’s reasonable interpretation of an ambiguity in a law the agency enforces.
“Now, I do not know how Loper Bright will affect relator’s Stark Law claim,” Goodwin wrote in the order. “I do know, however, that my obligation under Loper Bright is different: I must ensure that the Stark regulatory scheme is consistent with the power given by Congress and the statute as it was signed into law. Such is Loper Bright’s instruction.”
Goodwin says he can’t determine if the plaintiff stated a claim without first determining the “contours of the statute.”
“Deeper still, the statute is fleshed out in the regulations,” Goodwin wrote. “Loper Bright mandates that I carefully consider the regulations – without blindly deferring to any agency interpretations. Here, the Stark Regulations build the foundation of relator’s Stark-based claim.”
That, he says, is why he ordered the parties to file supplemental briefing on the effect, if any, the Loper Bright ruling has on the case.
Goodwin says the game has changed with the Loper Bright ruling, which says “it is emphatically the province and duty of the judicial department to say what the law is.”
“I am concerned that I must carefully consider this newest precedent,” Goodwin wrote. “Perhaps, under Chevron, federal courts could wade through Stark Law claims by deferring and defaulting to an agency’s interpretation. …
“That deference is no longer required; indeed, that deference is no longer acceptable.”
Goodwin also says Loper Bright also “will begin to ripple through the Stark Regulations.”
“The only question for the courts is when and how,” Goodwin wrote. “Because I have seen very little research on this intersection of law, the parties should welcome the opportunity to lay out Loper Bright versus Stark for the first time. …
“The problem is that I cannot determine if relator (Kyer) has stated a claim upon which relief can be granted if I do not know what the Stark Law requires.”
Thus, Goodwin orders both parties to address the impact of Loper Bright on the pending claim with briefs required by October 4 and responses to those briefs by October 18.
Kyer is being represented by Chandra Napora and Nathaniel F. Smith of Morgan Verkamp in Cincinnati, Susan M. Coler of Halunen Law in Minneapolis and Tish Chafin of The Chafin Law Firm in Williamson. Thomas is being represented by David B. Honig and Matthew M. Schappa of Hall Render Killian Heath & Lyman of Indianapolis and Robert L. Massie of Nelson Mullins in Huntington.
U.S. District Court case number 2:20-cv-732
