A federal appeals court has affirmed the dismissal of a lawsuit against private equity firm HIG Capital alleging its ASC management company, Surgery Partners, was running a scheme to bill Medicare for unnecessary urine drug tests, according to court documents filed April 1.
In a lawsuit filed in 2017, Surgery Partners physician Sheldon Cho, MD, and physician recruiter Dawn Baker alleged that Surgery Partners pressured physicians to refer patients for unnecessary urine drug testing, resulting in millions of dollars in fraudulent CMS billing.
In 2020, the federal government settled with Surgery Partners for $41 million but did not intervene against HIG, and the whistleblowers amended their complaint to focus on HIG. Later that year, a district judge dismissed the case against HIG on the grounds that the case against Surgery Partners brought the same claims as the 2017 lawsuit.
In their appeal, Dr. Cho and Ms. Baker argued that their case was not the same as the earlier one because it focused on HIG's conduct, but the appeals court found that the allegations in the appeal had the "same material elements" as the 2017 lawsuit.