Nursing Home Operators Face Over $115M For Medicare Fraud

By John Kennedy

Law360, New York (February 16, 2017, 10:12 PM EST) -- A Florida federal jury on Wednesday found the operators of 53 skilled nursing facilities liable for more than $115 million in damages stemming from false claims they submitted to Medicare and Medicaid after pretending patients needed and received more care than they did.

The jury ruled on False Claims Act allegations brought by whistleblower Angela Ruckh, who worked at two of the facilities as a nurse, and found that the four defendants — CMC II LLC, Salus Rehabilitation LLC, 207 Marshall Drive Operations LLC and 803 Oak Street Operations LLC — had made varying amounts of false claims, backed up by fraudulent records, to Medicare and Medicaid.

Because the False Claims Act calls for treble damages plus an additional penalty of between $10,000 and $22,000 for each false claim, the defendants will likely have to pay in excess of $345 million, according to Mary Inman and Poppy Alexander of Constantine Cannon LLP, who have been watching the case.

The most affected defendant was CMC II, as successor to Sea Crest Health Care Management, doing business as LaVie Management Services of Florida, which submitted 123 false Medicare claims using more than 130 false statements and should be held liable for $109.8 million in damages, the jury said.

Oak Street, which was doing business as Governor’s Creek Health and Rehabilitation Center, submitted four false claims, backed up by about 50 false records, and is liable for $3.3 million in damages. Marshall Drive, which was doing business as Marshall Health and Rehabilitation Center, followed closely with one false claim backed up by about two dozen false records and should be liable for $2 million in damages, the jury said.

Salus, which was doing business as LaVie Rehab, submitted 44 false claims backed up by an equal number of fraudulent records, but shouldn’t pay anything, the jury said. It wasn't immediately clear why.

The judgment is one of the largest False Claims Act jury verdicts in a while, Alexander said, as Inman noted that such cases, given the punitive nature of the FCA and the pressure it puts on defendants to settle, don’t go to trial often.

“This is what happens when defendants roll the dice and take a case to trial,” Inman, a partner in Constantine’s whistleblower practice, told Law360 Thursday. “They face being hit with treble damages as well as penalties.”

Alexander, an associate in Constantine’s whistleblower practice, said that the case is one of the larger FCA cases dealing with skilled nursing facilities to go to trial. Medicare dollars are increasingly finding their way to skilled nursing facilities, which also makes them a target for fraud, she said.

In the instant case, the defendants were artificially increasing the amount of resources they claimed their patients needed in order to get more money from the federal health care programs. This type of fraud has been repeatedly listed as a top area of concern by the U.S. Department of Health and Human Services’ Office of Inspector General, Inman said.

She added that any skilled nursing provider that sees this verdict should take a look at its own Resource Utilization Group assessment policies and ensure that it’s in compliance with the law and not upcoding.

The verdict could also affect how other courts interpret this type of RUG fraud and how RUG standards are supposed to be interpreted, as well as the use of statistical sampling to determine liability, which was an issue in this case, Alexander said.

Neither party could be reached for comment Thursday.

Ruckh is represented by The Cohen Law Group, Kellogg Huber Hansen Todd Evans & Figel PLLC and Delaney Kester LLP.

The companies are represented by Terence J. Lynam and Robert S. Salcido of Akin Gump Strauss Hauer & Feld LLP and Tina Dunsford of the Florida Health Law Center.

The case is U.S. ex rel. Ruckh v. CMC II LLC et al, case number 8:11-cv-01303, in the U.S. District Court for the Middle District of Florida.

--Additional reporting by Alex Wolf. Editing by Bruce Goldman.

Full Article & Source:
Nursing Home Operators Face Over $115M For Medicare Fraud