PSD Wins Bifurcation Ruling in a False Claims Act Case Against its Clients, Limiting Nationwide Claims to One California Hospital
In May 2020, an entity owned by a California physician filed a qui tam action under seal against PSD client emergency medicine provider staffing company and its affiliate alleging the use of upcoding when billing for emergency medical services, including by pressuring providers into charting for critical care services through allegedly “leading queries and misleading information” contained in “chart deficiency notices,” and by allegedly “upcoding” non-critical care to a higher, more profitable levels of care. In April 2024, the United States Department of Justice, the State of California and seventeen other state agencies declined to intervene in the qui tam action, and the case was unsealed.
Although relator plaintiff alleged nationwide schemes involving hundreds of facilities, the relator’s experience and claims were based on its principal’s personal investigation involving a sampling a handful of charts at one California hospital where the relator’s principal worked. In January 2026, PSD filed a motion to limit all remaining discovery to the one California hospital and to bifurcate the case to determining whether any FCA violations occurred even at that one hospital. PSD argued that production of nationwide protected health information for sampling and the prospect of numerous depositions of medical providers nationwide would be unduly burdensome, invasive to patient privacy and disproportionate to relator’s allegations that primarily focused on the one hospital.
The Court agreed with the defendants and, on March 17, 2026, issued a ruling that found nationwide discovery to be disproportionate to the needs of the case and bifurcated discovery to limit efforts to discovery concerning one California hospital rather than allowing discovery concerning services at hundreds of other hospitals nationwide. More recently, the DOJ and state governments of record have consented to the dismissal of the action without any recovery for government entities.
Mary Nguyen, Barry Pollack, Phillip Rakhunov and Joshua Solomon represented the client in this case.
