Recently, the United States filed suit under the False Claims Act against Villaspring Health Care Center, a nursing home located in Kentucky, along with its Chief Executive Officer and parent company. The case arose from allegations of serious neglect of the nursing home's residents. The United States alleged that Villaspring defrauded the United States and the Commonwealth of Kentucky by seeking, and receiving, substantial reimbursement from the Medicare and Kentucky Medicaid programs for care purportedly provided to its residents despite knowing that such "care" was either non-existent or so inadequate as to be worthless.
The United States pled that the care provided to residents of Villaspring was grossly inadequate and so egregiously deficient that it had no medical value. The Complaint provided specific examples of the systemic neglect, including understaffing, failure to provide medication to residents, development of preventable pressure ulcers in residents, failing to treat residents' ulcers and wounds, failure to provide adequate nutrition, failing to send ill residents to the hospital, and overall poor care of at least 30 residents, and explained why such care was worthless. The Complaint went on to allege that Villaspring knew the care was worthless, but submitted or caused to be submitted claims for payment to the Medicare and Medicaid programs.
Villaspring moved to dismiss. In a powerful opposition, the United States took the position that where a healthcare provider abjectly fails to provide adequate care, especially in a case involving elderly and medically frail patients, and bills the government for it anyway, an actionable fraud has been committed. The government emphasized that this "is a fraud case where the services provided to Villaspring's residents fell so far below accepted standards of care that they were essentially worthless, causing very real harm to both the patients and to the government when Defendants billed it for those services." The government "did not receive fair value for the services for which it paid" and "the Defendants' claims for payments are no less fraudulent, and no less actionable under the FCA, than if they had failed to provide any services at all."
The government also argued that the agreements that Villaspring entered into with the government to participate in the Medicare program explicitly conditioned payment on its compliance with applicable laws and regulations. By providing worthless services, the government argued that Villaspring violated its duty to comply with the regulations on which Medicare conditioned payment, such that Villaspring's claims for payment for those services were false.
Click here to read the government's opposition.
The Court denied Villaspring's motion to dismiss for failing to state a claim, holding that the government had standing to bring suit against Villaspring and that it properly stated a claim under the worthless services and implied certification theories of liability. It also held that the Complaint contains specific allegations regarding five representative patients, including the dates on which claims for payment were submitted and the amounts that Medicare and Medicaid paid for each of the patients.
Click here to read the Court's opinion.
This case signals the government's commitment to prosecuting healthcare providers who bill for worthless services, especially where the fraudulent conduct causes harm to patients. If you have information about fraudulent conduct affecting government healthcare programs, contact Andrew M. Beato, an experienced whistleblower attorney with the law firm of Stein, Mitchell & Muse in Washington, D.C.
