A federal judge tossed out a New Jersey doctor’s lawsuit that could’ve threatened the state’s fraud fight. It’s a call for vigilance despite the win.
Harshad Patel owns a diagnostic imaging firm — X-rays and the like. The state and insurers are investigating him for possible bogus claims. He fired back with a lawsuit. Patel alleged that insurer funding of the state Office of Insurance Fraud Prosecutor allows insurers too much insider influence over who the state investigates for suspected scamming.
Fraud fighters followed the case closely. A successful lawsuit could’ve jeopardized funding of state anti-fraud efforts. Like most states, New Jersey’s fraud bureau is funded by annual assessments of insurers. Funding, however, has zero influence over which cases the state investigates or prosecutes, the state and insurers steadily argue.
Patel filed his original complaint to try and sidetrack their investigation of potentially false treatment claims, insurers contended.
Fortunately, the judge dismissed Patel’s case — with prejudice. He had no legal standing to bring the suit, the judge ruled. Prejudice means Patel can never bring that kind of suit in New Jersey again.
The win ensures that New Jersey fraud fighters can safely return to busting the bad guys. For now.
Fraud fighters must stay vigilant. Patel lost on procedural grounds, leaving his “outsourcing” allegations untested in court. So that legal ball could easily remain in play, even if Patel is out of action. Another medical provider could try the same legal outsourcing gambit, and work around the issue of legal standing.
Several years ago there was a similar outsourcing suit in Massachusetts. We won there also. The Coalition wrote an amicus “friend-of-the-court” brief to support fraud fighters opposing the suit. Where else could a lawsuit rear up?
Fraud fighters should stay alert and watch for outsourcing suits in your backyards. All it takes is a willing claimant with a beef, and a special-interest group with deep pockets.
Insurer funding of state anti-fraud efforts is a time-honored approach that’s fair and works. Let’s keep the system away from ill-conceived lawsuits and instead working to catch fraudsters.