Health Law Alert: "Worthless Services" May Create Liability Under False Claims Act


Health care providers should take note of a recent federal court decision from Kentucky, in which the court refused to dismiss a False Claims Act (FCA) case based on a theory that the provider had billed the Medicare and Medicaid programs for "worthless services." Under this theory, when a provider bills the federal government for a service that the provider knows, or should know, has no value, the provider is liable for making a false claim.

In U.S. v. Villaspring Health Care Center, Inc., 2011 WL 6337455 (E.D. Ky. Dec. 19, 2011), the court concluded that the federal government could proceed with FCA litigation based on allegations that a nursing home had billed the Medicare and Medicaid programs for worthless services. According to the court, when proceeding under a worthless services theory, "[i]t is not necessary to show that the services were completely lacking; rather, it is also sufficient to show that 'patients were not provided the quality of care' which meets the statutory standard." That decision does not stand alone. The Villaspring court relied on an earlier case that endorsed the use of the worthless services theory against a health care provider, i.e., U.S. v. NHC Health Care Corp., 163 F. Supp. 2d 1051 (W.D. Mo. 2001). Numerous other courts have recognized the general principle that knowingly billing the government for worthless services is tantamount to billing for services that were not provided, which is a false claim in violation of the FCA.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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