HCR 'vindicated' as Justice drops whistleblower lawsuit

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Cavanaugh: “Victory a testament to strong values, ethics.”
Cavanaugh: “Victory a testament to strong values, ethics.”

After a string of settlements and defeats in False Claims Act lawsuits filed against various long-term care providers, one of the biggest found reason to celebrate.

The Department of Justice filed a motion Nov. 8 to drop a False Claims lawsuit it had joined against HCR ManorCare two years earlier. The suit claimed the national provider had submitted false claims for therapy that either weren't warranted or delivered. A plaintiff's attorney had estimated potential damages at $500 million.

The government's arguments against the major provider chain began to unravel late last month, when a judge struck a expert witness' testimony. The judge 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.

The DOJ moved to dismiss the case with prejudice, meaning there would be no payment from HCR.

HCR Chairman, President and CEO Steve Cavanaugh said in a letter to employees, residents and other stakeholders 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.”

Had the lawsuit continued, it would have been one of the largest cases of healthcare fraud against nursing homes in the country, according to Jeffrey Downey, an attorney for the plaintiff.

“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 said.