Whistleblower suit accuses hospital of retaliation

HARRISONBURG – A federal judge said Wednesday he will issue a written opinion on whether to allow a whistleblower lawsuit against Shenandoah Memorial Hospital to continue.

The plaintiff in the lawsuit, Tonya Scates, is a former ultrasound technician who says she was fired from the hospital as retaliation for complaints she made to her supervisor about how ultrasound images were being counted in billing procedures. The suit accuses the hospital of responding to Scates’s complaints by firing her in January.

Attorneys from each side spent Wednesday’s hearing focusing on whether Scates’s complaint against the hospital contained enough details for her actions to be covered by the federal False Claims Act.

The act is a tool used by the federal government to collect damages from persons and companies who defraud government programs such as Medicare and Medicaid. It also contains a provision designed to discourage retaliation against whistleblowers by allowing them to collect damages plus attorney fees in cases of retaliation linked to reports of fraud against the government.

Scates contends that hospital technicians were taking fewer ultrasounds of OB/GYN patients than were required to meet billing standards under the Medicare and Medicaid programs.

Scates’ suit is asking for an unspecified amount of economic, compensatory and punitive damages, plus costs and attorneys fees and any other compensation that a judge considers “just and equitable.”

“Scates feared that (Shenandoah Memorial Hospital) would face charges of fraud for reporting a billing code that corresponded to a full ultrasound when, in reality, they took only three or four ultrasound photos,” the complaint states.

U.S. District Judge Michael F. Urbanski initially sounded skeptical of arguments by Scates’ attorney, Kellee Boulais Kruse of Washington, D.C. But later, Urbanski mentioned the possibility that changes in the law and recent court opinions may be enough to allow Scates’ suit to continue.

Andrew Baugher, the hospital’s attorney, contended that Scates’ complaints were not detailed enough to be construed as a warning against fraud. He said they were more in line with run-of-the-mill inquiries that are not covered by the False Claims Act.

“This is nothing more than what goes on in hospitals thousands and thousands of times everyday across this country,” Baugher said of Scates’ interactions with her supervisor, James Ziner, the hospital’s radiology director.

Urbanski said he found little in the complaint that rose to the level of actions that would qualify Scates as a whistleblower under the law.

“It’s very, very thin as to its allegations of a (False Claims Act) claim,” Urbanski said.

Kruse disagreed.

“There is a violation alleged here,” Kruse said, citing a portion of the complaint in which Scates reported telling Ziner of “inconsistencies” between hospital practices and proper ultrasound billing codes specified by the American Medical Association.

Urbanski said he wanted to study recent changes to the False Claims Act and recent court decisions before issuing an opinion.

“I think there’s a real issue here, and I just have to drill down,” he told Kruse and Baugher.

Contact staff writer Joe Beck at 540-465-5137 ext. 142, or jbeck@nvdaily.com