A federal judge this week tossed a nearly decade-old False Claims case that targeted what was once the nation’s largest nursing home chain, writing that the lawsuit was grossly short on evidence.
Providers may portray the case as a prime example of how individuals could try to abuse the legal system against caregivers.
Philip Hunter, a registered nurse who worked at a Golden LivingCenter in Alabama for just over two months, brought a case nine years after his employment ended. He alleged the chain and 10 related owners “engaged in a scheme to routinely overbill Medicare and Medicaid over a years-long period at 273 nursing homes.”
But his charge that those owners billed the government for “worthless” services was ultimately undermined by his own statements that employees worked extra hours or filled additional roles to deliver needed care.
The suit was filed in 2015, but it was only last year that the federal government and several states connected to the False Claims investigation declined to intervene on Hunter’s behalf. Hunter’s suit targets Fillmore Capital — the private equity firm that bought Golden Living in 2006 — as well as GGNSC Holdings, GGNSC Administrative Services, Beverly Enterprises and other companies once affiliated with Golden Living.
Hunter had argued that the owner “made intensive efforts” to fill beds with high-acuity residents and increase their reimbursement while simultaneously imposing “staffing targets” that limited the number of medical personnel available based on the number of patients rather than their needs.
Citing his own experts, he told the court it “was physically impossible” for staff to appropriately treat their patients, given the number of employees they had, but that defendants still billed Medicare and Medicaid based on falsified RUG scores, MDS assessments and medical records.
But in his Monday ruling, Chad F. Kenney, US District Court Judge for the Eastern District of Pennsylvania, spent pages outlining a sheer lack of preliminary evidence to support those claims, or proof of a scheme that involved any specific employees.
The judge noted that Hunter didn’t name any individuals who submitted false claims, identify specific facilities that submitted false claims, or provide examples of care that was not performed but documented. Hunter “offers only an overview of the scheme, with no accompanying factual explanation of how and whether any false claims were actually submitted,” Kenney wrote.
Hunter, however, did not argue that all claims were false and instead conceded that some care was provided. Without any details on which claims were fraudulent then, Kenney wrote, there would be no parameters for the defendants to understand which claims they should investigate, nor would they have “adequate notice [to] intelligently respond.”
Fillmore Capital, a private equity firm, sold off most of its Golden Living holdings in the mid-2010s. The chain now operates only in Indiana and changed its name to Brickyard in early 2022.
Attempts by McKnight’s Long-Term Care News to reach an attorney for Fillmore and a spokesperson for Brickyard were unsuccessful Tuesday.
Being overworked not grounds for FCA claims
The strongest worded portions of Kenney’s ruling struck at the role of the False Claims Act, and those who would misinterpret it. He reiterated that “a lack of adequate care does not equate to a worthless services claim.”
“The FCA is not ‘a vehicle for punishing garden-variety breaches of contract or regulatory violations,’” Kenney wrote, citing previous case law. “To state a worthless services claim, ‘the performance of the service [must be] so deficient that for all practical purposes it is the equivalent of no performance at all . . . . [A] diminished value of services theory does not satisfy this standard. Services that are ‘worth less’ are not worthless.’”
And as for making false certifications about meeting staffing requirements, Kenney noted that Hunter’s argument also fell short, given that the only current standard is “boilerplate language that ‘skilled nursing facilities and nursing facilities must be in compliance with federal and state requirements.’”
Kenney didn’t argue that employees were told to falsify paperwork as part of a scheme, only that they did so because they found the demands of their job to be difficult.
“Overwork alone does not equate to false claims being submitted, and the allegation of submission of vague and unidentified false claims does not equate to implementing a scheme to submit false claims,” Kenney found.
Staffing has increasingly become a focus of attention in False Claims and fraud cases, including in a series of lawsuits and charges brought by state attorney generals.
