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From Health Law Daily, August 21, 2014

‘Worth less’ services by nursing facility were not ‘worthless’ 

By Harold M. Bishop, JD

The U.S. Court of Appeals for the Seventh Circuit has vacated a jury verdict in a qui tam and retaliatory discharge action rendered in favor of two nurses and against their employer, a long-term care nursing facility. The court found that both of the relators’ trial theories, that the facility provided “worthless services” and engaged in false certification of its reimbursement claims, did not support the jury’s verdict on the qui tam claims. The relators’ retaliatory discharge claims also failed because they offered no evidence from which a reasonable jury could infer that they were trying to investigate or report suspected fraud on the facility’s part at the time of their discharge (United States ex rel. Absher v Momence Meadows Nursing Center, Inc., August 20, 2014, Manion, D).

Background. Vanessa Absher and Lynda Mitchell (relators) are nurses who were formerly employed at the Momence Meadows Nursing Center (Momence) in Kankakee, Illinois. Absher, a licensed practical nurse, worked for Momence from December 1997 to February 2003, resigning her position on February 8, 2003. Mitchell, a registered nurse, worked for Momence from the beginning of 2001 to 2003. In February 2003, Momence terminated Mitchell’s employment.

On September 29, 2004, the relators filed a qui tam action alleging that Momence knowingly submitted “thousands of false claims to the Medicare and Medicaid programs” in violation of the False Claims Act (FCA), 31 U.S.C. sec. 3729et seq.Relators also alleged that Momence violated the Illinois Whistleblower Reward and Protection Act (IWRPA), 740 ILCS 175/1et seq. by retaliating against them by terminating Mitchell and constructively terminating Absher for reporting evidence of Momence’s fraud. The United States and Illinois declined to intervene in the case.

At trial, the relators presented evidence of numerous instances of non-compliant care provided at Momence and that Momence actively concealed the extent of the non-compliant care from the government. The jury concluded that Momence submitted 1,729 false claims, imposed an $11,000 penalty for each false claim (amounting to over $19 million in fines), and awarded compensatory damages in an amount in excess of $3 million. The jury also awarded $150,000 to Absher and $262,320 to Mitchell on their retaliation counts. The district court entered judgment for the United States in the amount of $9,091,227, trebling the $3 million damages award, but vacated the statutory penalties, concluding that they violated the Eighth Amendment’s Excessive Fines clause. Momence appealed.

Jurisdiction. On appeal, Momence first argued that the court lacked jurisdiction over the relators’ FCA claims because they were not the “original source” of the information leading to the action. Momence contended that the relators’ FCA claims were based upon incidents of non-compliant care documented in government survey reports that gave rise to administrative penalty proceedings. The Seventh Circuit, however, found that the relators also offered independent evidence that Momence refused to chart incidents of scabies, pressure ulcers, and rashes. Moreover, the court found that the surveys’ disclosure of Momence’s provision of non-compliant care and the related administrative penalty proceedings were not enough to prevent jurisdiction because the surveys did not disclose facts establishing that Momence misrepresented the standard of care in submitting claims for payment to the government. As such, there was no jurisdictional bar to the relators’ FCA claims.

Qui tam claims. The Seventh Circuit found that both of the relators’ trial theories, that Momence’s provided “worthless services” and engaged in false certification of its reimbursement claims, did not support the jury’s verdict on the qui tamclaims. According to the court, the “worthless services” theory of FCA liability requires a showing that the performance of the service is so deficient that, for all practical purposes, it is the equivalent of no performance at all. That was not the case here, according to the court. Momence’s services may have been of diminished value (i.e., “worth less”), but they were not worthless.

The Seventh Circuit also found that the evidence presented by the relators was insufficient to prove false certification of claims by Momence. First, the court found that the relators failed to argue to the jury their theory of implied certification at all. Second, on their theory of express certification, the relators: (1) failed to argue to the jury that while Momence certified in its plans of correction that it would remedy deficiencies found during government surveys, it in fact had no intention of doing so; and (2) failed to offer any evidence regarding how many CMS-required Minimum Data Sheet (MDS) forms on each patient contained false certifications.

Retaliation claims. With regard to Mitchell, the Seventh Circuit found that she failed to offer evidence from which a reasonable jury could find that she engaged in protected conduct under the FCA or the IWRPA. According to the court, while Mitchell’s complaints demonstrated her concern about the standard of care provided at Momence, there was nothing to suggest that she was trying to investigate or report suspected fraud on Momence’s part at the time of her discharge.

Absher was not terminated by Momence, but nevertheless contended her resignation was a constructive discharge because she could not bear to continue working at Momence due to the poor care provided to patients. The Seventh Circuit noted that Absher did not contend that Momence provided substandard care to patients in order to push her to resign. In addition, even if Absher established that she was constructively discharged, she (like Mitchell) offered no evidence from which a reasonable jury could infer that she was trying to investigate or report suspected fraud on Momence’s part.

The Seventh Circuit found that the relators’ qui tam and retaliation claims failed as a matter of law. The judgment against Momence was vacated and the matter remanded to the district court with the instruction that judgment be entered for Momence.

The case numbers are 13-1886 and 13-1936.

Attorneys: Michael Timothy Anderson (Murphy Anderson PLLC) for Vanessa Absher. William James Brinkmann (Thomas, Mamer & Haughey LLP) for Momence Meadows Nursing Center, Inc.

Companies: Momence Meadows Nursing Center, Inc.

MainStory: TopStory QuiTamNews CMSNews BillingNews CoPNews FCANews FraudNews EmploymentNews LTCHNews MedicaidPaymentNews PaymentNews PartANews ProgramIntegrityNews QualityNews IllinoisNews IndianaNews WisconsinNews

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