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From Health Law Daily, September 26, 2018

Public policy outweighed waiver of Medicare related FCA claims against home health care provider

By David Yucht, J.D.

A federal district court in Pennsylvania found that public policy outweighed the enforcement of an otherwise valid waiver signed as part of a separation agreement by former employees of a home health care provider as to Medicare related False Claims Act (FCA) (31 U.S.C. § 3729) claims. Consequently, these former employees had standing to sue their ex-employer. Furthermore, the former employees pleaded with sufficient particularity that their former employer billed the government for home healthcare provided to patients it knew were not homebound. Consequently, the home health care provider’s motion to dismiss was denied (U.S. ex rel. Class v. Bayada Home Health Care, Inc., September 24, 2018, Goldberg, M.).

Bayada Home Health Care, Inc. (Bayada) is a multi-state provider of in-home health care. Former Bayada employees sued alleging violations of the FCA. They alleged that Bayada billed the government for home healthcare provided to patients it knew were not homebound. In so doing it was alleged that Bayada used false records and concealed its obligations to re-pay the government. Bayada moved to dismiss arguing, among other things, that the former employees did not have standing to sue because they signed comprehensive separation agreements when they left their employment, which released Bayada from any and all claims including claims under a number of federal statutes. The court denied Bayada’s motion.

Releases unenforceable. The court determined that the releases included in the separation agreements did not impact on standing to sue. Courts have determined that pre-suit releases bar FCA claims when they can fairly be interpreted to encompass these type of claims and public policy does not otherwise outweigh enforcement. Here, although the FCA was not explicitly listed in the separation agreements, the agreements stated that the employees gave up all claims they "may currently have against Bayada … for any type of damages, costs or fees, lost wages or disability benefits related to her work or personal relationships with the company" including "a full release of any and all claims, charges, lawsuits, grievances or other causes of action… by reason of any matter existing at any time prior to signing this Agreement." The releases included "any claim, known or unknown, related to or arising out of … employment with Bayada and her separation of employment." The court determined that this language was expansive enough to include the present FCA claims.

The court found, however, that public policy outweighed enforcement of the releases. The public policy of FCA cases is to give incentives to encourage insiders to report fraud against the government. Where the government does not have knowledge of the claims that form the basis of an FCA complaint before the release was signed, enforcement of the release interferes with the FCA’s goals of incentivizing individuals to reveal fraudulent conduct. Here, the government did not have sufficient knowledge of the allegations prior to the signing of the releases. The underlying policy of encouraging laypeople to come forward with information to assist with uncovering fraud would not be served by enforcing these releases.

FCA claim stated. The court determined that the former employees plausibly alleged that Bayada violated the FCA. Bayada argued that the former employees failed to state a claim because under the Medicare rules, Bayada was entitled to rely on the judgment of certifying physicians and there was no allegation of the absence or invalidity of physician certifications. Moreover Bayada argued that the complaint did not contain allegations showing that Bayada treated patients who did not meet Medicare’s criteria for homebound status.

The court determined that Bayada’s physician certification argument was not appropriate at this early pleading stage but may be appropriately considered at the summary judgment where it may present facts, such as the existence of proper physician certifications, as evidence of homebound status to refute allegations of falsity. Regarding Bayada’s argument that the complaint lacked allegations demonstrating that Bayada treated patients who did not meet Medicare’s criteria for homebound status, the former employees pled that one patient was frequently away from home. Another patient was frequently leaving home for reasons unrelated to her medical treatment. A third patient participated in weekly trips to a casino, which Bayada knew about and allegedly attempted to cover up by disallowing her from participating in the trips so that she would appear homebound. At this stage in the proceedings, these allegations were made with sufficient particularity to demonstrate that these patients were in fact not homebound.

The case is No. 2:16-cv-00680-MSG.

Attorneys: Gregory B. David, U.S. Attorney's Office, for Susan Class. Asher D. Funk (Polsinelli PC) and Jeffrey M. Kolansky (Archer & Greiner PC) for Bayada Home Health Care, Inc.

Companies: Bayada Home Health Care, Inc.

MainStory: TopStory CaseDecisions CMSNews BillingNews FCANews FraudNews HomeNews ProgramIntegrityNews ProviderNews PennsylvaniaNews

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