Kathleen McDermott, Speaker Material, Differences of Opinion, and Statistical Sampling: Legal Development in False Claims Act Litigation ABA s 2017 Southeastern White Collar Crime Institute September 7 at 8:50 AM Consulate Health Care (March 1, 2017) (Post-trial motions pending) District: Middle District of Florida Judgment: $331 million A February jury verdict against Consulate Health awarded $347 million in FCA damages and penalties to the government, finding that Consulatemanaged nursing home entities violated the False Claims Act by submitting up-coded therapy claims to Medicare and Medicaid. The government declined to intervene in the whistleblower suit, and the relator, Angela Ruckh, proceeded independently. Ruckh was registered nurse who worked as a consultant at two Consulate-managed skilled nursing facilities. Life Care Centers of America (October 24, 2016) North American Health Care (September 19, 2016) United States v. Judgment was entered on March 1, 2017 requiring Consulate to pay $331 million. On March 29, 2017, Consulate filed a motion for judgment as a matter of law. On April 11, 2017, the government sought leave to file a statement of interest, opposing Consulate s motion. The matter is ongoing. District: Eastern District of Tennessee FCA Settlement Amount: $145 Million Corporate Integrity Agreement: Yes (5 years) After lengthy litigation proceedings, the government and Life Care resolved allegations that between Jan. 1, 2006 and Feb. 28, 2013, Life Care submitted false claims for rehabilitation therapy by engaging in a systematic effort to increase its Medicare and TRICARE billings by evaluating patients at the highest level of Medicare reimbursement for skilled nursing facilities Ultra High patients who require a minimum of 720 minutes of skilled therapy from two therapy disciplines (e.g., physical, occupational, speech), one of which has to be provided five days a week. District: Northern District of California FCA Settlement Amount: $28.5 Million Corporate Integrity Agreement: Yes (5 years) North American Health Care Inc. was alleged to have violated the False Claims Act by causing the submission of false claims to government health care programs for medically unnecessary rehabilitation therapy services provided to residents at NAHC s skilled nursing facilities. The charges claim NAHC s inpatient skilled nursing facilities subjected its residents to unnecessary occupational, physical and speech therapy. Notably, the Chairman of the Board of Directors and the Senior VP of Reimbursement resolved individual FCA liability for $1 million and $500,000 respectively. District: Southern District of Florida FCA Settlement Amount: N/A
Philip Esformes, Odette Barcha, and Arnakdi Carmouze (July 21, 2016) (Ongoing Criminal Litigation) Five Star Quality Care (June 24, 2016) Kindred Healthcare (January 12, 2016) SavaSeniorCare, LLC (October 29, 2015) (Ongoing Litigation) Hebrew Homes The government indicted three individuals for conspiracy, obstruction, money laundering and health care fraud, asserting that they caused the submission of over $1 billion in fraudulent claims to the Medicare and Medicaid programs. The government alleges, among other things, that the three defendants orchestrated the payment of kickbacks and bribes to physicians to induce them to certify the need for medically unnecessary services and submitted false claims for these and other ineligible services and services never provided. The scheme is alleged to have involved 30 skilled nursing homes and assisted living facilities in the Miami area. District: Central California FCA Settlement Amount: $8.6 million After it self-disclosed conduct to pursuant to the OIG s Self Disclosure Protocol, Five Star Quality Care agreed to pay $8,601,795 for violating the Civil Monetary Penalties Law, including provisions applicable to physician self-referrals and kickbacks. OIG alleged that from January 2010 through July 2014, Five Star Quality Care-CA, LLC submitted claims for skilled nursing services without proper certifications, therapy plans, or adequate documentation, and that from September 2014 through December 2014, it paid remuneration to a medical director in exchange referrals. FCA Settlement Amount: $125 million Government lawsuit alleged that contract therapy providers RehabCare Group Inc., RehabCare Group East Inc. and their parent, Kindred Healthcare Inc. violated the False Claims Act by knowingly causing skilled nursing facilities (SNFs) to submit false claims to Medicare for rehabilitation therapy services that were not reasonable, necessary and skilled, or that never occurred. The government s complaint alleged that RehabCare s policies and practices, including setting unrealistic financial goals and scheduling therapy to achieve the highest reimbursement level regardless of the clinical needs of its patients, resulted in the submission of false claims for unreasonable and unnecessary services to Medicare patients. District: Middle District of Tennessee FCA Settlement Amount: N/A The government s complaint alleges that Sava exerted pressure on its SNFs to meet unrealistic financial goals that resulted in the provision of medically unreasonable, unnecessary and unskilled services to Medicare patients. Sava allegedly set these aggressive, prospective corporate targets for the highest Medicare reimbursement rates to significantly increase Sava s revenues without regard for its patients actual clinical needs and then pressured its staff to meet those goals. Sava also allegedly delayed discharging patients from its facilities, even though the patients were medically ready to be discharged, in order to increase its Medicare payments. The three lawsuits were originally filed by whistle-blowers, all former employees at SavaSeniorCare facilities. The allegations are denied and in litigation. District: Southern District of Florida
Health Network Inc., FCA Settlement Amount: $17 Million (June 16, 2015) Corporate Integrity Agreement: 5 year CIA The Government alleges that from 2006 through 2013, Hebrew Homes hired numerous physicians as medical directors pursuant to contracts that specified numerous job duties and hourly requirements. The various facilities had several such medical directors under contract at any given time, paying each several thousand dollars monthly. The United States alleged that in reality these were ghost positions, and that most of the medical directors were required to perform few, if any, of their contracted job duties. Instead, they were allegedly paid for their patient referrals to the Hebrew Homes facilities, which increased exponentially once the medical directors were put on the payroll. ManorCare (April 21, 2015) (Ongoing Litigation) Aegis Therapies (March 30, 2015) District: Eastern District of Virginia FCA Settlement Amount: N/A Ongoing Litigation Corporate Integrity Agreement: N/A Ongoing Litigation On April, 2015, the government intervened in an action consolidating three separate qui tams. The government s complaint alleges that ManorCare, pressured SNF administrators and rehabilitation therapists to meet unrealistic financial goals that resulted in the provision of medically unreasonable and unnecessary rehab services to Medicare and Tricare patients by corporate practices that involve: (1) corporate managers set Ultra High billing targets without regard to patient need, and threatened therapists with sanctions for failing to meet the targets (interfering with clinician judgment); (2) engaged in ramping (i.e., providing more therapy during assessment reference periods, that was not reasonable or necessary, to ensure the highest billing level, and then providing less therapy during non-assessment reference periods); (3) kept patient s in the SNFs despite a recommendation from the treating therapist that the patient should be discharged. and(4) includes allegations that there were policies in place to delay or prevent discharge. District: Southern District of Georgia FCA Settlement Amount: N/A. Defense Motion for Summary Judgment Granted. Qui Tam. DOJ intervened January 10, 2013, alleging that Aegis provided medically unnecessary therapy services. The complaint alleged patients would be subjected to skilled services for the full period that Medicare would cover the benefits (100 days), at the highest possible RUG legal regardless of a patient's condition, goals, or progress.. Aegis moved for summary judgment, arguing that DOJ s experts relied on a significant improvement standard to analyze patient care, whereas the CMS Manual requires material improvement. The court agreed that the experts had applied the wrong standards and additionally found the experts were unqualified and overzealous in addition to applying the wrong clinical standard. As a result, the court found that without the expert testimony, DOJ could
Ross Manor (March 30, 2015) Catholic Health Care System (ArchCare) (March 2, 2015) not establish falsity. The Court also found that DOJ could not establish the knowledge element. The government had relied on corporate emails allegedly establish benchmarks and telling therapists to sell their therapy. The Government attempts to transmute evidence of Defendants' efforts to measure trends in its billing and to instruct its therapists on effective Medicare documentation into evidence of a nefarious plan to defraud the Government. However, this evidence merely establishes that Defendants employed prudent business practices, and does not create a material issue of fact as to whether Defendants' knew they or their therapists were submitting false claims to the Government. FCA Settlement Amount: $1.2 Million The settlement agreement resolved allegations that Ross Manor-a nursing home- was (1) engaging in ramping (i.e., providing more therapy during assessment reference periods, that was not reasonable or necessary, to ensure the highest billing level, and then providing less therapy during non-assessment reference periods); (2) presumptively placing patients in the highest reimbursement level unless it was shown that the patients could not tolerate that amount of therapy, rather than using individualized evaluations to determine the level of care most suitable for each patient s clinical needs; (3) planning the minimum number of therapy minutes required to bill at the highest reimbursement level while discouraging the provision of therapy in amounts beyond that minimum threshold, despite the Medicare requirement that the amount of care provided be determined by patients clinical needs; and (4) providing significantly higher amounts of therapy on the final day of a period that determines reimbursement in order to reach the next highest threshold level. This is one of few therapy settlements against the nursing home customer. FCA Settlement Amount: $3.5 Million Specific allegations resolved by the settlement included that ArchCare was (1) engaging in ramping (i.e., providing more therapy during assessment reference periods, that was not reasonable or necessary, to ensure the highest billing level, and then providing less therapy during non-assessment reference periods); (2) presumptively placing patients in the highest reimbursement level unless it was shown that the patients could not tolerate that amount of therapy, rather than using individualized evaluations to determine the level of care most suitable for each patient s clinical needs; (3) planning the minimum number of minutes of therapy required to bill at the highest reimbursement level while discouraging the provision of therapy in amounts beyond that minimum threshold, despite the Medicare requirement that the amount of care provided be determined by patients clinical needs; (4) arbitrarily shifting the number of minutes of planned therapy between different therapy disciplines to ensure targeted reimbursement levels were
Agility Health, Inc. (February 25, 2015) achieved; (5) reporting that time spent on initial evaluations was therapy time in order to avoid the Medicare prohibition on counting initial evaluation time as reimbursable therapy time; (6) reporting that time spent providing unskilled palliative care was time spent on reimbursable skilled therapy; and (7) reporting estimated or rounded minutes instead of reporting the actual minutes of therapy provided. District: Western District of Michigan FCA Settlement Amount: $1 million Corporate Integrity Agreement: 5 year CIA Qui Tam. Agility Health and Oceana County Medical Care Facility agreed to pay $1 million to resolve allegations that they falsely billed Medicare for inpatient skilled therapy services that were not provided, that were upcoded, and that were medically unnecessary. Specifically, the government had alleged Agility Health billed for services that were purportedly rendered to patients who were mentally and physically unable to participate in therapy programs. Extendicare Health Services (October 10, 2014) ParkVista/LifeCare CPS (September 18, 2014) The settlement also resolved allegations that Agility Health caused false claims for durable medical equipment to be submitted to Medicare. According to the Complaint, an Agility Health employee improperly disclosed protected health information to an outside vendor in 2011 in violation of HIPPA. The vendor used that information to bill Medicare for unnecessary medical equipment that some patients never received. District: Eastern District of Pennsylvania FCA Settlement Amount: $38 Million Corporate Integrity Agreement: 5 year CIA Allegations that between 2007 and 2013, in 33 of its skilled nursing homes in eight states, Extendicare billed Medicare and Medicaid for materially substandard skilled nursing services and failed to provide care to its residents that met federal and state standards of care and regulatory requirements. The government alleged, for example, that Extendicare failed to have a sufficient number of skilled nurses to adequately care for its skilled nursing residents; failed to provide adequate catheter care to some of the residents and failed to follow the appropriate protocols to prevent pressure ulcers or falls. FCA Settlement Amount: LifeCare-CPS - $3.225 Million/Park Vista - $525,000 Government alleged ParkVista submitted false claims to Medicare based on the amounts of therapy that its contractor RehabCare ostensibly provided to ParkVista patients. ParkVista was liable, according to the government, for failing to take sufficient steps to prevent RehabCare from routinely providing high levels of therapy services that were not medically necessary during assessment reference periods (ARPs) in order to cause CoreCare/ParkVista to bill for its Medicare Part A patients at the Ultra High level, and then subsequently providing less therapy to those same patients outside of the ARPs.
Episcopal Ministries for the Aging (September 9, 2014) Blackhawk Lifecare Center (June 24, 2014) Amedisys Home Health (April 23, 2014) Alliance Rehabilitation, LLC and Active Physical Therapy Services, In addition, the government alleged (1) that instead of providing individualized assessments, RehabCare put everyone into the Ultra High category, (2) that therapy was scheduled in order to meet the minimum threshold of minutes required to achieve the next highest RUG level; (3) that they shifted the number of planned therapy minutes among disciplines, without regard for patient s medical needs, to ensure achieving the highest RUG level, and (4) that they reported estimated or rounded numbers of minutes of therapy provided, rather than the actual number of minutes of therapy provided. FCA Settlement Amount: $1.3 Million Episcopal Ministries for the Aging contracted with RehabCare Group East to do its rehab therapy in Maryland. The government alleged EMA failed to prevent RehabCare from providing unreasonable or unnecessary therapy to patients in order to increase Medicare reimbursement to the facilities. The government contended that among other things the reported therapy did not reflect the lower amounts of therapy generally provided to patients over the course of their stay. District: Northern District of Iowa FCA Settlement Amount: $500,000 The government alleged that, between January 2007 and December 2009, Blackhawk submitted claims to the Medicare system for therapy services that were not justified by its residents conditions. The government further alleged that, by including costs for the therapy services in cost reports submitted to the Medicaid program, Blackhawk erroneously submitted inflated cost reports. District: Eastern District of Pennsylvania FCA Settlement Amount: $150 million Corporate Integrity Agreement: 5-year CIA Qui Tam. Government alleged Amedisys (a large home health care provider) improperly billed Medicare for ineligible patients and services. Amedisys allegedly billed Medicare for nursing and therapy services that were medically unnecessary or provided to patients who were not homebound, and otherwise misrepresented patients conditions to increase its Medicare payments. These billing violations were the alleged result of management pressure on nurses and therapists to provide care based on the financial benefits to Amedisys, rather than the needs of patients. The agreement also settled Anti-Kickback and Stark Law allegations. 7 different whistleblowers split $26 million award. District: District of Columbia FCA Settlement Amount: $2.78 million Corporate Integrity Agreement: The companies entered into a 5-year Corporate Integrity Agreement
LLC (April 9, 2014) RehabCare Inc. (January 2014) Ensign Nursing Homes (November 2013) Spectrum Rehabilitation, LLC (June 2013) Grace Healthcare (March 8, 2013) Qui Tam. Between January 2007 and August 2012, the companies submitted claims which falsely represented that the physical therapy services being billed were either rendered or directly supervised by the physical therapist identified on the claims by his or her National Provider Identifier (NPI) number. The physical therapist identified on the claim had no involvement in the services rendered. The settlement also resolves allegations that the companies sought payment from TRICARE for physical therapy services that were not provided by the physical therapist identified on the claim. District: Eastern District of Missouri FCA Settlement Amount: $30 million Corporate Integrity Agreement: RehabCare does not appear to have entered into a CIA. Note, however, that RehabCare agreed to restructure certain business arrangements as a result of the settlement. Qui tam. Settlement agreement resolved allegations that RehabCare entered into a prohibited referral arrangement with Rehab Systems of America. District: Central District of California FCA Settlement Amount: $48 million Corporate Integrity Agreement: Ensign agreed to a 5-year CIA covering all of its SNFs in the United States. Two separate qui tams. Settlement agreement resolved allegations that Ensign created a corporate culture that improperly incentivized therapists and others to achieve specified targets, which were set without regard to individualized patient need and could only be achieved by billing at the highest levels. Government also alleged that Ensign billed for therapy not actually provided and that certain patients were kept in these facilities for periods of time exceeding what was medically necessary for treatment of their conditions. Six of Ensign s California SNFs were implicated in the action. District: N/A OIG Report FCA Settlement Amount: N/A OIG Report Corporate Integrity Agreement: N/A OIG Report OIG Report estimated that Spectrum Rehabilitation, LLC (Spectrum), operating in New Jersey, improperly received at least $3.1 million in Medicare reimbursement for outpatient occupational and physical therapy services that did not comply with certain Medicare requirements. OIG reviewed 100 claims in a random sample, and found that Spectrum properly claimed Medicare reimbursement for only 17 claims. Of the 83 remaining claims, 44 contained more than 1 deficiency. According to OIG, These deficiencies occurred because Spectrum did not have a thorough understanding of Medicare reimbursement requirements related to outpatient therapy services and did not have adequate policies and procedures to ensure that it billed services that met Medicare requirements. District: Eastern District of Tennessee FCA Settlement Amount: $2.7 million
Roberts and Roberts Physical and Aquatics Therapy (February 25, 2013) Fairfax Nursing Center (February 13, 2013) Masonic Villages (October 24, 2011) Mercy Medical Center (February 19, 2010) Benchmark Rehabilitation Partners (June 30, 2010) Corporate Integrity Agreement: Grace agreed to a 5-year CIA. Qui tam. Settlement agreement resolved allegations that Grace pressured therapists to increase the amount of therapy to meet planned targets for Part A Medicare revenue, which were set without regard to individual therapy need and could only be achieved by billing patients at the Ultra High RUG level. District: District of Connecticut FCA Settlement Amount: $328,828 Corporate Integrity Agreement: Entered into an Integrity Agreement (ordered by court) Settlement agreement resolved allegations that Roberts & Roberts (1) billed for outpatient therapy services that were not provided by qualified personnel, and (2) billed for one-on-one therapy sessions when group sessions had been provided or there was otherwise no direct supervision by licensed personnel. Note: One owner plead guilty to one count of obstructing a federal audit for instructing an employee to delay the audit, so that he could alter and augment the patient records. District: Eastern District of Virginia FCA Settlement Amount: $700,000 Qui tam. Settlement agreement resolved allegations that the SNF provided excessive and medically unnecessary physical, occupational, and speech therapy to 37 Medicare Part A beneficiaries between 2007 and 2010. According to DOJ, the therapy services were unskilled, and, in some instances, were performed primarily to capture higher reimbursement rates. Fairfax also allegedly billed for patients who did not qualify for the Medicare Part A skilled nursing benefit. District: Middle District of Pennsylvania FCA Settlement Amount: $325,080.90 Voluntary self-disclosure to the government that from June 2007 through September 2010 one of its contractors that provided rehabilitation therapy services at three of its locations did not maintain accurate daily treatment notes, as required by Medicare regulations. District: Main justice only (no U.S. Attorney s Office involved) FCA Settlement Amount: $2.79 million Voluntary self-disclosure to the government that it failed to provide (or failed to document providing) the minimum number of hours of rehabilitation therapy to its patients between 2005 and 2006. District: Eastern District of Tennessee FCA Settlement Amount: $1.8 million Settlement agreement resolved allegations that between Benchmark submitted claims fort therapeutic exercise to TennCare for Medicaid patients when medical records indicated that the patients had in fact
Connecticut VNA (November 6, 2008) Star Physical Therapy (November 18, 2005) HealthSouth (December 30, 2004) received aquatic therapy, a service subject to reimbursement restrictions. In addition, the government alleged that Benchmark submitted claims to Medicare for medically unnecessary and/or non-reimbursable physical therapy services. District: District of Connecticut FCA Settlement Amount: $165,438 Settlement agreement resolved allegations that a per diem employee, Ronald Procko provided medically unnecessary therapy services and failed to adequately document therapy services. Ronald Procko worked for Connecticut VNA for a 16 month period between November 2004 and March 2006; by the time Connecticut VNA learned of the government s investigation, Procko had already been placed on leave. District: Western District of Washington FCA Settlement Amount: $455,070 Two separate qui tams. Settlement agreement resolved allegations that Star Physical Therapy billed government insurers at a much higher rate for private aquatic therapy sessions when the therapy sessions were in fact provided in a group setting. Note: The company also plead guilty to two counts of Health Care Fraud and was required to pay $655,559 in restitution and damages. Two separate qui tams. Settlement agreement resolved that HealthSouth submitted claims for inpatient and outpatient therapy services (1) without properly certified plans of care; (2) that were performed by unlicensed personnel; and (3) that were billed as one-on-one services when one-on-one services were not provided. DB1/ 91783901.1