Federal Judge Orders DOJ to Pay ManorCare’s Legal Fees in Fraud Case

A federal judge ordered the U.S. Department of Justice to pay HCR ManorCare’s legal fees in a Medicare fraud case, citing missteps by the government.

U.S. Magistrate Judge Theresa Carroll Buchanan of the Eastern District of Virginia also struck a key expert witness in the case, which sees the provider accused of submitting millions of dollars worth of reimbursements for unneeded therapy services.

The National Law Journal first reported the judge’s actions.

Expert witness Rebecca Clearwater will not be allowed to testify, and her deposition testimony will be stricken. In addition, Buchanan forbade her to testify on her review of medical records in the case.

“I have looked at this stuff, and I’m appalled. I’m embarrassed, I’m ashamed that the Department of Justice would rely on this kind of nonsense by a nurse reviewer to get involved in a qui tam case and cost these defendants millions of dollars in legal fees,” Buchanan said at an Oct. 27 hearing, according to a transcript.

Late Disclosures

The DOJ and ManorCare’s legal team from Reed Smith have tussled over evidence related to Clearwater, with the DOJ’s delayed disclosure of 131 pages of notes she had written at the center of the dispute.

The Toledo, Ohio-based ManorCare’s attorneys have argued the case should either be dismissed or Clearwater should not be allowed to testify, citing omissions in Clearwater’s three-day deposition in August. The handwritten notes that were not disclosed in Clearwater’s deposition were “in certain material respects inconsistent” with the opinion she wrote in her report, according to ManorCare’s lawyers.

Clearwater had misunderstood what prosecutors meant by notes when they asked her for documents in discovery, and the DOJ had not been aware of the confusion the DOJ said in a brief filed prior to the hearing last week, according to The National Law Journal.

The DOJ characterized ManorCare’s request for sanctions as “extreme” and suggested another deposition of Clearwater, arguing the U.S. had taken steps to obtain and produce the notes as fast as possible when it learned of their existence.

Narrow Scope

Jeffrey Downey, a lawyer who represents Christine Ribik, the whistleblower who filed the initial complaint against ManorCare in 2009, told Skilled Nursing News that Clearwater had essentially misplaced the handwritten notes and came forward after discovering this.

“Our position is that the judge overstepped her authority and inserted her own opinions about the case,” he said.

While Buchanan’s ruling does favor ManorCare, in that a case against them for significant damages would be difficult to assess without an expert witness, Downey noted it isn’t clear whether the ruling with be sustained.

“Misplacing her notes is not a sufficient basis to exclude [Clearwater],” he said.

Asked if this has any potential significance for False Claims Act cases, which have drawn criticism from various industries, Downey indicated Buchanan’s ruling is too narrow in scope, as it deals with whether an expert should be excluded.

“I don’t see this having significant precedent for other cases coming down the road,” he said.

A summary judgment hearing is slated for Nov. 9.

Written by Maggie Flynn

Maggie Flynn
Business reporter
When she's not working, Maggie enjoys running, reading, writing and sports, in no particular order. Favorite things include murder mysteries, Lake Michigan and the Pittsburgh Penguins.

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