Salus Decision May Offer Relief For Long-Term Care Facilities Accused of False Claims Act Violations, Says LeClairRyan Attorney

ROANOKE, Va., March 21, 2018 /PRNewswire/ -- A lengthy winning streak that prosecutors enjoyed in 2017 — when they won a string of high-profile False Claims Act, or whistleblower, cases against long-term care facilities — may have hit a significant roadblock, representing a "golden ticket" for LTC operators, according to medical malpractice defense attorney Nancy Reynolds in a just-published column for industry publication McKnight's Long-Term Care News.

On Jan. 11, 2018, U.S. District Judge Steven D. Merryday vacated a FCA judgment for nearly $350 million against 53 nursing facilities in U.S. EX REL. RUCKH v. SALUS REHABILITATION, LLC, et al (Case No. 8:11-cv-1303-T-23TBM). The Florida federal court decision was based on the U.S. Supreme Court's Escobar opinion that qualifiedly endorsed a false certification theory, writes Reynolds in the column, "Salus decision offers a golden ticket to some long-term care facilities".

The precedent-setting Escobar decision established that FCA liability can attach when a long-term care facility submits payment claims that make specific representations about services provided but fails to disclose noncompliance with statutory or regulatory standards — the false certification. The Court stated that false certification alone does not give rise to liability unless the noncompliance was material to the government's payment decision, and the operator knew it was material to the payment decision.

Many of the Salus "whistleblower" claims relied on the implied "false certification theory," and the purported FCA violation was for failure to maintain comprehensive care plans and other documentation as required by Centers for Medicare & Medicaid Services regulations, Reynolds notes.

But when the government regularly pays a claim in full, with actual knowledge that certain requirements were violated, that constitutes strong evidence that the violation is not material to the government's payment decision, Reynolds writes, citing Judge Merryday's analysis of Escobar. "This admission also relieves the LTC facility of the knowledge requirement. It cannot be established that the facility knew the noncompliance was material to the payment decision when the government paid the claims with knowledge of noncompliance," she adds.

The Salus decision creates an opportunity for providers because they are heavily regulated and are required to report to, or be assessed by, governmental agencies that pay their claims, writes Reynolds. "Facilities are required, by regulation, to report to the government any events that cause suspicion of or result in serious bodily injury; to establish quality assurance and performance improvement programs and submit them to federal and state agencies each year; and to be subjected to comprehensive annual surveys."

The "golden ticket" for LTC facilities is the opportunity to shield themselves from FCA claims by diligence and detail in reporting non-compliance to government agencies, she advises. Facilities should "continue to be extremely diligent with their reporting requirements since their event reports and surveys may serve as protection against FCA claims, particularly if a whistleblower cites a reported or similar event as the basis for the violation," Reynolds explains. "If the facility has proof that the government was informed and the Medicare or Medicaid claims continued to be paid, the event cited by the whistleblower would therefore not be a material one. This potentially enables the facility to avoid liability under the Escobar and Salus reasoning."

The full column is available at https://www.mcknights.com/salus-decision-offers-a-golden-ticket-to-some-long-term-care-facilities/printarticle/751116/

About LeClairRyan

As a trusted advisor, LeClairRyan provides business counsel and client representation in corporate law and litigation. In this role, the firm applies its knowledge, insight and skill to help clients achieve their business objectives while managing and minimizing their legal risks, difficulties and expenses. With offices from coast to coast, the firm represents a wide variety of clients nationwide. For more information about LeClairRyan, visit www.leclairryan.com.

NOTE TO MEDIA: Nancy Reynolds and other members of LeClairRyan's Long Term Care industry team are available as resources for bylined articles or interviews on various issues impacting the industry.                                                                   

Press Contacts: At Parness & Associates Public Relations, Bill Parness, (732) 290-0121, [email protected] or Lisa Kreda, [email protected]   

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