Yesterday the Seventh Circuit issued an important decision on False Claims Act liability.  The decision arose out of a whistleblower complaint in the category known as “worthless services” lawsuits.

Two nurses filed a whistleblower suit against the Illinois nursing home where they worked.  Their theory was that the care provided at the home was so poor that it was worthless.  So any bills to Medicare and Medicaid were false claims because they were claims for services that weren’t worth anything.

At the trial level the jury agreed with the two nurses and awarded a $9 million verdict against the nursing home.  The nursing home appealed to the Seventh Circuit, challenging among other things a jury instruction telling the jury that if the home billed $200 for services worth only $120, the bill was a false claim.

The Circuit Court agreed with the nursing home and threw out the verdict.  Succinctly stating its analysis, the Court said, “Services that are ‘worth less’ are not ‘worthless.’”

Why is this so important?  Because of the huge amounts at stake when a Medicare or Medicaid provider is charged with a False Claims Act violation.  First, there’s liability for the total amount of the false claims.  Then that amount can be tripled.  Then there’s the penalty of $5,500 for each false bill.  On top of all that, because successful whistleblowers can get a large percentage of any recovery, everybody is a potential whistleblower.

That’s why this case, Absher v. Momence Meadows, has been so closely watched by the health care industry.