A federal appeals court has revived part of a “whistleblower” lawsuit against Brentwood, TN-based Brookdale Senior Living in which the company was accused of improperly billing for assessments as well as submitting claims to Medicare knowing that they were improperly certified for home health services and lacking medical necessity.
In a 2-1 vote on Friday, the U.S. Court of Appeals for the Sixth Circuit held that appellant Marjorie Prather’s claims were enough to allege violations of the False Claims Act against the country’s largest senior living provider, and it sent the case back to district court for further litigation.
A spokeswoman for Brookdale told McKnight’s Senior Living: “We are disappointed by the ruling and agree with the dissenting opinion. Our company is committed to a high level of quality care for our patients and over the years has operated in their best interest. We intend to vigorously defend ourselves in this case moving forward.”
As McKnight’s Senior Living previously reported, Prather, a registered nurse, originally brought the lawsuit against Brookdale in 2012. It was dismissed in March 2015, however, when a federal judge said that Prather did not allege “with particularity” that Brookdale submitted an actual false claim to the Medicare program. Prather’s subsequent refiling of the lawsuit also was dismissed, in November 2015.
Prather filed an appeal in February of this year, and in March, Brookdale asked the court to uphold the November dismissal.
Court documents filed in the appeal indicate that Prather was part of a team responsible for reducing a backlog of 7,000 claims worth approximately $35 million. Prather maintained that Brookdale had signed up assisted living residents for therapy and home health services offered by subsidiaries, then found doctors who would say that the services were necessary. Prather said that she and others were pressured to speed up the claims review process so that claims could be submitted for payment from Medicare and that team members were told not to pay attention to potential compliance issues, which could impede the review process. Prather also maintained that employees were given bonuses based on the number of claims they processed, and that physicians were paid for the time they spent looking over and signing paperwork.
Friday, the appeals court reversed two actions of the district court and affirmed one.
Prather’s claim that Brookdale’s delays in obtaining physician certification on home health-care needs and care plans violated Medicare regulations can proceed, the court said, because Brookdale’s months-long delays in obtaining physician certifications do not jibe with regulations that require the certifications to be completed at the time a physician establishes a plan of care “or as soon thereafter as possible.”
The appeals court also reversed the district court’s dismissal of Prather’s reverse false claims against Brookdale for knowingly retaining false Medicare payments, but it upheld the lower court’s dismissal of her claim that the company had used false records to support the submission of false claims.
The False Claims Act calls for the reporting of specific examples of false claim submissions, but the appeals court said it was relaxing this pleading standard because Prather’s allegations, based on her personal knowledge, “provide a detailed overview of the alleged fraudulent scheme, and, when accepted as true, it is difficult to deny the strong inference that the specific requests for anticipated payment that Prather identified and described were submitted.”
In a dissenting opinion, however, Judge David W. McKeague wrote that Prather’s case was not the one for which the pleading standard should be relaxed. “Even if Prather is deemed to have adequately alleged a ‘falsity,’ it is merely technical noncompliance and not a truly ‘fraudulent scheme,’ ” he said.