HCR ManorCare 'vindicated' as DOJ announces plan to drop lawsuit

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The DOJ filed a motion Wednesday saying it plans to dismiss the case.
The DOJ filed a motion Wednesday saying it plans to dismiss the case.

The Department of Justice on Wednesday filed a motion to drop a False Claims Act lawsuit it had joined against HCR ManorCare in 2015.

The whistleblower lawsuit claimed the provider submitted false claims for levels of rehabilitation services that weren't medically necessary in order to boost its reimbursements. At the time HCR ManorCare slammed the government's joining in the suit as “unjust,” since the company had cooperated with the investigation.

The government's arguments against the major provider chain began to unravel late last month, when a judge struck a expert witness' testimony and ordered the DOJ to pay the provider's legal fees after it came to light that the witness had not disclosed notes pertaining to the case during her deposition.

In its latest motion, the DOJ moved to continue a summary-judgment hearing scheduled for Friday and dismiss the case with prejudice, meaning the lawsuit would conclude with no payment required from HCR ManorCare.

In a letter to employees, residents and other stakeholders sent Thursday, HCR ManorCare Chairman, President and CEO Steve Cavanaugh said the company was “vindicated” by the government's decision.

“To be perfectly clear, we are not settling the case — the government is dismissing it, fully and finally,” Cavanaugh wrote. “This victory is a testament to our strong values and business ethics, but it is also a reminder why our commitment to compliance and doing things the right way is so important.”

The DOJ said in its motion that it will file either an official notice of dismissal or a status report on the case by Nov. 17.

The government's decision to dismiss the case and not appeal the judge's ruling to strike the witness report “shocked” whistleblower Christine Ribik and her attorney, Jeffrey Downey, since evidence produced until this point had backed up Ribik's overbilling claims. He told McKnight's Thursday the government's decision to “simply give up” shows a “deeper policy shift” from the DOJ indicating they may not pursue healthcare fraud cases as vehemently anymore.

Had the lawsuit continued it would've been one of the largest cases of healthcare fraud against nursing homes in the country, with damages over $500 million, Downey noted.

“I think they made this decision because they realized that the trial was going to be more difficult with the exclusion of the expert,” Downey offered.

The plaintiffs have filed an objection to the DOJ's motion, requesting a hearing and criticizing the decision to dismiss as “not being reasonable, adequate or appropriate,” Downey said.