Court Hits Nursing Home Chain Consulate Health Care with $347 Million False Claims Act Fraud Judgment

A recently announced judgment by a district court held a nursing home chain named Consulate Health Care liable for $347 million dollars in total judgment for 446 cited false claims of unlawfully upcoding Medicare claims for patient therapy services. The judgment was entered by Judge Merryday following a jury verdict finding the Consulate Health Care and other nursing home entities that are managed by Consulate fraudulently submitted upcoded claims to Medicare and Medicaid in violation of the False Claims Act (“FCA”). The twenty day trial was the culmination of a whistleblowing nurse who discovered these upcoded claims while consulting two Consultate managed skilled nursing facilities.

Under the FCA, the Judge is entitled to order the defendant to pay triple the actual damages that the jury finds. Here it was $115 million dollars of damages to Medicare and Medicaid. In addition, the FCA also permits statutory penalties from $5,500 to $11,000 for each false claim submitted by the defendant. Here, the defendant was found to submit 446 false claims. As result, the whistleblower will receive approximately 15 to 25 percent of the total FCA recovery plust attorney’s fees. This means that out of a judgment of $347 million, the whistleblower may walk away with $50 to $80 million dollars. Since the Justice Department declined to intervene in the case, the whistleblower gets a higher percent of the recovery. This is because at that point the whistleblower, or Relator, takes on all of the risk. Moreover, this is a just reward for someone who stems out health care fraud.

As the main enforcement arm of the federal government, the Justice Department reviews all cases filed under the FCA. Then, once the whistleblower case is assessed, the government decides whether it will step in and prosecute or step back and allow the whistleblower to bring the complaint on the government’s behalf. Here, the Department of Justice decided not to step in and intervene.

The FCA is used to stem out fraud related to billing, staffing, and kickbacks. Examples of these are when financial companies are supposed to abide by state and federal laws and chose to ignore them. They also bills for services that were not provided or the bill was submitted at an improperly higher rate of reimbursement for the services. In addition, financial companies are often fount to illegally bill the government for substandard services by fraudulently certifying otherwise. Alternatively, these companies may realize that they have credit from their services that they have to repay to the government, but the companies do not reimburse the government within the 60 day time frame. See these blogs for more examples of the FCA.

If you witness any potential false claims in California (i.e. requests for reimbursement to the government, not actually rendering work when reimbursement is received, or receiving and knowingly retaining an overpayment) by your company, or you are retaliated against for voicing your concern about potential wrongdoing, immediate action is vital. Contact the experienced employment law attorneys at Stephen Danz & Associates for a free consultation to discuss your circumstances and legal options.