Costly Intersection of Quality of Care and False Claims
West Virginia SNF Pays $2.25 Million
In a recent announcement of a $2.5 million False Claims Act settlement based on allegations of substandard care due to insufficient staffing in a West Virginia skilled nursing facility, federal prosecutors sent the message that they intend to "work vigorously" to investigate allegations of substandard care in the long-term care industry and prosecute such cases using the False Claims Act.
Prosecutors See Settlement Amount as "Significant" and Encourage Reporting of Substandard Conditions
On March 29, 2012, the U.S. Attorney for the Northern District of West Virginia ("U.S. Attorney") announced that the former operators of the MonPonte Continuing Care Center located in Morgantown, West Virginia paid $2.25 million to the United States to settle allegations that it submitted false claims to Medicare and Medicaid between September 1, 2006 through May 31, 2007. The U.S. Attorney and the Office of Inspector General for the Department of Health and Human Services ("OIG") alleged the claims for reimbursement were improper due to substandard care for skilled nursing facility patients resulting from inadequate staffing.
U.S. Attorney William J. Ihlenfeld, II stated that "[i]nsufficient staffing at the MonPointe skilled nursing facility led to substandard care and harm to dependent patients, and thus the settlement amount is significant. Medicare and Medicaid expect that providers who submit claims for skilled nursing care services have rendered acceptable nursing care to patients. When inadequate staffing leads to substandard care, claims for reimbursement are illegitimate and false . . . " (emphasis added). The U.S. Attorney went on to encourage anyone with knowledge of inadequate staffing and substandard care to report it.
Federal Prosecutors Step In To Pursue Matter as False Claims Violations After State Inspectors Found Problems
The U.S. Attorney's Press Release stated that the federal investigation started after state inspectors found problems at the skilled nursing facility and temporarily closed it. In addition, the federal prosecutor signaled an intention to continue pursuing quality of care cases using the False Claims Act. The OIG's Assistant Special Agent in Charge Maureen Dixon stated the OIG "will continue to work vigorously with the Department of Justice to investigate any allegations of substandard care.”
The case is noteworthy in that the federal prosecutors chose to handle the case as a federal False Claims Act matter instead of allowing it to proceed through existing survey processes. The False Claims Act is an onerous federal statute that provides for minimum penalties of $5,500 to as much as $11,000 per claim, plus double or triple damages. Critics have argued that the False Claims Act is a "blunt instrument" that should not be used in quality of care cases, but the government continues to use the Act to prosecute such cases.
Prevention Through Identification and Immediate Remediation May Stave Off False Claims Allegations
Providers who find themselves faced with False Claims Act allegations can advance legal arguments challenging the use of the federal False Claims Act in quality of care cases. However, the best chance of avoiding a costly prosecution based on allegations that claims were false because of substandard care involves the implementation of measures to vigorously monitor quality; encourage the flow of information within the organization, residents, staff and visitors; and immediately address indications of substandard care.
A formal compliance program that has the support of upper management and encourages communications and reporting will give a provider the chance to identify and correct problems instead of discovering the existence of quality issues through communications with a prosecutor. Immediately remedying any instances of substandard care identified through reports to the compliance program (or identified in other ways) will also help to demonstrate a compliant environment. Finally, a strong and active Quality Assurance Committee that has a demonstrated track record of addressing quality issues and taking immediate and effective corrective actions will also enhance a provider's ability to identify and address problems before they end up being investigated by a prosecutor.
The U.S. Attorney's Press Release can be found at:
The articles published in this newsletter are intended only to provide general information on the subjects covered. The contents should not be construed as legal advice or a legal opinion. Readers should consult with legal counsel to obtain specific legal advice based on particular situations.