Judge Reinstates Part of Previously Tossed $348M FCA Verdict Against Nursing Home Manager [Updated]

The U.S. Court of Appeals for the Eleventh Circuit this week reinstated part of a False Claims Act (FCA) verdict that was overturned in 2018, issuing a judgment of more than $255 against two skilled nursing facilities, two related entities providing management services at the facilities, and an affiliated company providing rehabilitation services.

The original judgment of roughly $350 million was thrown out by U.S. District Judge Steven D. Merryday, who argued that the claims were not enough to merit such an amount.

The ruling by the Eleventh Circuit was first reported by Law360.

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In June 2011, registered nurse Angela Ruckh brought the qui tam action against:

  • Sea Crest Health Care Management LLC, which did business as La Vie Management Services of Florida;
  • La Vie’s successor-in-interest CMC II, LLC;
  • Marshall Drive Operations, LLC, which did business as Marshall Health and Rehabilitation Center;
  • Salus Rehabilitation, LLC, which provided rehab services at Marshall;
  • 803 Oak Street Operations LLC, which did business as Governor’s Creek Health and Rehabilitation Center.

The complaint alleged that the defendants violated the False Claims Act by misrepresenting the services provided to Medicare beneficiaries, while also failing to comply with specific Medicaid requirements.

Ruckh alleged that the defendants artificially inflated Resource Utilization Group (RUG) codes for therapy; timed spikes in treatment to coincide with the [assessment reference date] which exaggerated payment levels; and “submitted claims for Medicaid reimbursement without creating or maintaining comprehensive care plans,” according to the opinion delivered June 25.

Both the U.S. government and the state of Florida declined to intervene in the case, which Ruckh prosecuted on her own as a qui tam, or whistleblower, relator.

The case was submitted to a jury on February 13, 2017, with a verdict finding the defendants liable two days later. The defendants renewed their motion for judgment as a matter of law in March 2017; the district court granted that and set aside the jury’s verdict on January 11, 2018. Ruckh appealed in February, and the defendants moved to dismiss the appeal.

That motion to dismiss was denied by Eleventh Circuit, though the June 25 opinion affirmed the Medicaid portions of the judgment remain thrown out.

“With respect to the Medicare claims, we reverse the district court’s grant of judgment notwithstanding the verdict and vacate that part of its opinion,” the court said. “In light of our reversal on the Medicare claims, we remand with instructions for the district court to reinstate the jury’s verdict in favor of the relator, the United States, and the state of Florida and against the defendants on the Medicare claims in the amount of $85,137,095, and to enter judgment on those claims after applying trebling and statutory penalties.”

After the application of trebling and statutory penalties, the total judgement comes to more than $255 million, Michelle Kimmel of Kellogg, Hansen, Todd, Figel & Frederick, who works for the attorneys representing Ruckh, told SNN via email.

*This story originally ran with the headline: “Judge Reinstates $85M of Previously Tossed $348M FCA Verdict Against Nursing Home Manager.” The $85M jury verdict was reinstated; with trebling and statutory penalties, the judgment comes to more than $255 million. SNN regrets the error.

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