Operators mull bankruptcy as a hedge against lawsuits

A federal judge in Florida has tossed a $347 million False Claims Act verdict against a nursing home operator, saying there wasn’t evidence the government would have withheld payment if aware of the billing violations later brought by a whistleblower.

In Ruckh vs. CMC, one-time employee Angela Ruckh claimed Consulate Health Care, previously operating as La Vie Rehab, overcharged Medicare and Medicaid by inflating therapy claims.

A jury verdict led to a March 1 judgment calling for $115 million in Medicare and Medicaid damages, tripled under provisions of the False Claims Act, and a minimum penalty of $5,500 for each of the 446 cited false claims.

Consulate was expected to pay $331 million of that, Bloomberg BNA reported at the time, with 15% to 25% going to Ruckh.

But Thursday’s decision by U.S. District Judge Steven D. Merryday relied on the U.S. Supreme Court’s ruling in Universal Health Services v. Escobar, effectively finding that federal and state payments made after the defendants’ claims were “very strong evidence” that the allegations weren’t material.

The Department of Justice wasn’t involved in the five-year-long case, though prosecutors tried unsuccessfully to submit a statement of interest once Consulate petitioned the court to set aside the verdict.