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From Health Law Daily, June 23, 2015

False claims termination suit not a qui tam action

By Kayla R. Bryant, J.D.

A nursing home’s motion to dismiss a suit filed by a former employee claiming that her firing was retaliatory was denied. The U.S. District Court for the District of Utah denied Spanish Fork Nursing and Rehabilitation Management, LLC’s (Spanish Fork) motion to dismiss Lori Laird’s complaint that the nursing home dismissed her after she refused to submit what she thought were false claims to Medicare. Although Spanish Fork argued that her complaint failed to follow the process for qui tam actions under the False Claims Act (FCA) (31 U.S.C. § 3729 et seq), the court found that her claim satisfied the requirements for a retaliatory discharge under the FCA (Laird v. Spanish Fork Nursing and Rehabilitation Management, June 17, 2015, Warner, P.).

Refusal to submit claims. Spanish Fork was taken over by new ownership around May 1, 2014. Laird, a registered nurse and the assistant to the director of nurses, was instructed to begin billing CMS for physical and/or occupational therapy for all residents. At the time, only one or two of the residents (approximately 29 in total) were receiving such therapy. Laird was instructed to write new assessment reports for each patient, modify the reports to require therapy, and backdate new orders by two weeks. Laird refused, believing that this would result in fraudulent billings. Other employees backdated the assessment orders and provided unnecessary physical and occupational therapy to all patients at Spanish Fork. Laird reported claims for these services to the CMS Inspector General and the Utah Department of Professional Licensing. Her employment was terminated following the discovery of the reports on May 28, 2014.

Illegal discharge and retaliation. The complaint alleged illegal discharge and retaliation in violation of the FCA. Laird sought reinstatement of her prior position, back-pay, and damages. Spanish Fork moved to dismiss, arguing that the complaint failed to satisfy the requirements for qui tam actions. According to the court, the FCA provides that an employee discharged because of lawful acts done in an attempt to stop violations of the FCA has a basis for a suit against the former employer.

When claiming retaliatory discharge, the facts pleaded must demonstrate that the former employer had been put on notice that the employee was taking action to assist the government in an FCA action. The court found that Laird’s refusal to backdate the claims constituted adequate notice, as she warned the employer of activities that would constitute fraud, and that her allegations were sufficient to state a retaliatory discharge claim.

The case is No. 2:14cv850.

Attorneys: Michael C. Smith (Smith Law) for Lori Laird. Jaryl L. Rencher (Stucki Rencher) for Spanish Fork Nursing and Rehabilitation Management.

Companies: Spanish Fork Nursing and Rehabilitation Management, LLC

MainStory: TopStory EmploymentNews FCANews CMSNews FraudNews SNFNews UtahNews

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