Oct 242016

FCA Case Against Nursing Home Remanded After Sixth Circuit Applies Relaxed FCA Pleading Standard for the First Time

Kristin Graham Koehler, Kaitlyn Findley and William Hochul III
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On September 30, 2016, the Sixth Circuit remanded a False Claims Act (“FCA”) lawsuit against Brookdale Senior Living Solutions (the “defendant” or “Brookdale”), which alleges, among other things, that physician signatures on home care certifications and care plans were late and that Brookdale paid physicians to provide certifications for patients that did not require home care.  Specifically, the Sixth Circuit reversed and remanded the district court’s dismissal of United States ex rel. Prather v. Brookdale Senior Living Cmtys., Inc., Case No. 15-6377, holding that the relator “sufficiently plead the submission of particular claims to the government because she provided a detailed description of the alleged fraudulent scheme, and included her own personal knowledge of the review of Medicare claims for submission.”

The underlying case was filed in 2012 by relator Marjorie Prather, who worked as a Utilization Review Nurse at Brookdale from September 2011 until November 23, 2012.  In particular, Prather alleged that the defendant submitted various false claims to Medicare due to deficiencies in the claims she reviewed, including the provision of care without physician certifications of the need for home health services or without the required face-to-face encounter documentation.  According to Prather, the requisite signatures and certifications were often obtained months after the treatment had been provided, and in some instances, Brookdale paid physicians to complete the required paperwork.  The Government declined to intervene, and the defendant successfully moved to dismiss the allegations – first in March 2015 (without prejudice) and then again in November 2015 (with prejudice).  In dismissing the allegations in the relator’s Second Amended Complaint, the district court held that Prather “did not adequately plead the specifics of any presentment to Medicare of actual requests for anticipated payment” and failed to plead sufficient detail regarding the time, place, and content of the defendant’s alleged false statements and claims for payment.

On appeal, in a split 2-1 decision, the Sixth Circuit reversed and remanded the district court’s decision after applying, for the first time, an exception to the FCA’s requirement that specific examples of false claim submissions must be alleged.  Instead, the Court explained that the relator’s allegations warranted a relaxation of the rigorous FCA pleading standard because the relator, in her capacity as a Utilization Review Nurse hired to review a backlog of 7,000 Medicare home health care claims missing required physician certifications, had personal knowledge about Brookdale’s billing practices that supported a “strong inference” that false claims were submitted.  In issuing its opinion, the Court acknowledged that circuits are split with respect to whether FCA pleading standards should be relaxed more generally.  However, the Court explained that the “split is not nearly as deep as it first appears” because every circuit that has applied a heightened pleading standard has “retreated from such a requirement in cases in which other detailed factual allegations support a strong inference that claims were submitted.”

It remains to be seen whether the Sixth Circuit’s holding in Brookdale will be followed by other circuits and reflect a trend of easing certain pleading standards for FCA cases by eliminating the need to plead specific examples of false claims as long as plaintiffs provide detail related to a scheme and reliable evidence supporting an inference that claims were actually submitted.

The Sixth Circuit’s decision is available here.

Kristin Graham Koehler

Washington, D.C.

kkoehler@sidley.com

Kaitlyn Findley

KaitlynFindley@sidley.com

William Hochul III

whochul@sidley.com

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