We wrote an article examining recent enforcement actions by the government within the long-term care industry for McKnight’s Long-Term Care News. In the article, we point out that “recent cases reinforce the notion that long-term care providers should pay particular attention to the government’s efforts to police arrangements and business practices that implicate the
Government Settles with Several Entities, Individuals
Last week, Vanguard Healthcare and related entities reached a settlement with the Department of Justice (DOJ) for the stated amount of more than $18 million to settle allegations related to billing worthless services to Medicare and Medicaid programs from 2010 to 2015. The settlement also includes a resolution of claims against two individuals—Vanguard’s majority owner and CEO and its and former director of operations—consistent with the DOJ’s ongoing policy of focusing on individual liability (as discussed here). The CEO and director of operations will pay $212,500 and $37,500, respectively, of the total settlement sum. In its press release, the DOJ called this the “largest worthless services resolution in Tennessee history.”
The United States and the state of Tennessee sued the nursing home chain in September 2016, after the Vanguard entities had filed Chapter 11 bankruptcy proceedings. In the complaint and in claims filed in the bankruptcy cases, the government alleged damages in excess of $56 million. The primary allegations were that Vanguard and its subsidiaries billed Medicare and TennCare for “non-existent, grossly substandard, and/or worthless nursing home services[.]” The alleged inadequate care included staffing and supply shortages, a lack of infection control, failure to administer medications as prescribed, failure to care for wounds as ordered, lack of adequate pain management, and overuse of psychotropic medications and physical restraints, among other quality of care allegations. The government also alleged that Vanguard submitted Pre-Admission Evaluations and Preadmission Screening and Resident Reviews (certifications that TennCare uses to determine a patient’s Medicaid eligibility and required level of care) with forged physician or nurse signatures.
In recent years, civil enforcement efforts involving the FCA have grown significantly. Today, the FCA impacts a vast array of businesses, as it is commonly used to redress false claims for government funds involving everything from government contracts to Medicare and Medicaid to federally insured mortgages. The versatility and reach of the FCA has enabled DOJ to use this powerful enforcement tool to recover more than $20 billion during the last five years alone.
A review of several recent FCA settlements indicates that the DOJ continues to actively pursue FCA claims for a wide range of conduct and in a wide variety of industries.
There are a number of key issues that will drive the government’s enforcement efforts in the coming year and that will have a significant impact on how healthcare fraud matters are pursued by relators asserting FCA claims and are defended on behalf of healthcare providers. In the coming weeks, we will examine these issues in greater depth and why healthcare providers should keep a close eye on these issues. This week, we examine the government’s continued enforcement focus on long-term care providers.
The previous year saw the continued trend of an increasing number of FCA cases based on the theory that long-term care services (e.g., skilled nursing, home health, or hospice) provided to patients were medically unnecessary, and therefore, the healthcare provider submitted false claims in connection with those services. See, e.g., U.S. ex rel. Hayward v. SavaSeniorCare, LLC, No. 3:11-cv-0821 (M.D. Tenn.), United States’ Consolidated Complaint in Intervention (Oct. 26, 2015); U.S. ex rel. HCR ManorCare, Inc., No. 1:09-cv-00013 (E.D. Va.), United States’ Consolidated Complaint in Intervention (April 10, 2015).
On September 29, 2015, the Fourth Circuit granted a petition for interlocutory appeal that may result in the first significant appellate decision to determine whether an FCA plaintiff may rely on statistical sampling to prove liability or damages.
In U.S. ex rel. Michaels v. Agape Senior Community, Inc., relators asserted that a nursing home operator violated the FCA by submitting false claims with respect to hospice and other nursing home-related services. While not in complete agreement, the parties both asserted that the action, in which DOJ declined intervention, involved more than 10,000 patients and more than 50,000 claims. The district court concluded that relators would be required to prove the falsity of each and every claim based upon evidence relating to each particular claim.
The U.S. District Court for the Middle District of Florida issued yet another opinion endorsing the use of statistical sampling in FCA cases. In its April 28, 2015 opinion in United States ex rel. Ruckh v. Genoa Healthcare, LLC., the district court held that the relator could use expert testimony of statistical sampling to establish FCA violations concerning claims submitted by defendants’ skilled nursing facilities.
The relator alleged that the defendants violated the FCA by falsifying reports summarizing patients’ medical conditions and the treatment provided to those patients. Relator further alleged fraud by the defendants who allegedly allowed unauthorized individuals to submit reports to CMS. After the defendants’ motions to dismiss the complaint were denied, the relator moved to admit expert testimony on statistical sampling due to the “voluminous discovery” and the impossibility of “producing and processing the relevant medical records at the fifty-three medical facilities and some fifty-three off-site storage locations within a reasonable time.” DOJ, which did not intervene in the case, filed a statement of interest in support of statistical sampling.