Worthless Services: Giving Nothing Can Cost You a Lot Under the False Claims Act

by Baker Donelson
Contact

Numerous courts have recognized that knowingly billing the federal government for “worthless services” may be a violation of the False Claims Act (FCA). Recently, an Illinois nursing home learned how costly worthless services can be. In U.S. ex rel. Absher v. Momence Meadows Nursing Center, Inc., No. 04-2289 (C.D. Ill.), a jury found the provider liable for approximately $28 million for violations of the FCA and a parallel Illinois statute. The jury found that the government sustained damages of slightly more than $3 million. However, as a result of the FCA’s generous recovery provisions, the nursing home’s financial liability was many multiples greater than the amount of damages sustained by the government. The $3 million in damages were trebled to $9 million. Furthermore, the jury found that the nursing home submitted 1,729 false claims and, with a civil penalty of $11,000 per claim, the total civil penalties amounted to approximately $19 million, on top of the $9 million in treble damages.

The court’s instructions to the jury before it began deliberations highlight the peril for health care providers facing a jury trial on a worthless services claim. The court informed the jury that worthless services are “services that are so inadequate, deficient, and substandard, or so completely lacking in value or utility to a nursing facility patient, that a reasonable person would understand that any services provided were worthless. Services can be worthless, and the claims for those services can, for that reason, be false, even if the nursing facility in fact provided some services to the patient. To find the services worthless, you do not need to find that the patient received no services at all.”

The court further instructed the jury that services could be “worthless” in the following ways:

  • Failure to provide adequate staffing
  • Failure to provide proper equipment maintenance
  • Failure to provide adequate supplies and equipment
  • Failure to provide adequate decubitus ulcer care
  • Failure to maintain adequate control of infectious pests
  • Failure to maintain proper control of residents’ trust funds
  • Providing a dysfunctional governing body

When a jury is presented with inflammatory evidence at trial regarding substandard health care services, and then is asked to make a subjective judgment regarding the value of those services, a defendant provider faces an uphill fight. The provider faces an additional significant challenge because the provider may be found liable even if it did not have actual knowledge that its services were worthless. Under the FCA, a provider is deemed to have “knowledge” of worthless services if it has demonstrated “deliberate ignorance” or “reckless disregard” regarding its deficient services. Failing to address quality-of-care complaints from patients, employees or regulators would be an example of deliberate ignorance. Neglecting to monitor the quality of one’s services would be an example of reckless disregard. Thus, a provider must demonstrate that it did not know, and it had no basis to know, that its care was worthless — or, preferably, demonstrate that its care was not worthless.

The successful defense of a worthless services case will likely depend on the provider proving that, before the incidents in question at the trial, the provider had an effective quality assurance (QA) program in place to detect and correct substandard care. A provider’s use of an effective QA program helps to refute allegations that the provider exhibited deliberate ignorance or reckless disregard for the quality of its services. The design of an effective QA program should meet accepted industry standards, and also should be tailored to meet the circumstances of each provider. Providers should ensure that a sufficient number of objective and measurable quality indicators have been established. Moreover, providers should regularly measure their performance against those indicators, and correct substandard care by implementing an effective action plan. An effective QA plan will go a long way to avoid the delivery of worthless services. Moreover, to the extent a provider’s services are ever considered to be worthless, an effective QA program allows the provider to demonstrate that it did not deliver worthless services knowingly.

Providers may expect to see more worthless-service litigation in the future. Unlike medical malpractice or wrongful-death cases against providers, which may be filed only by injured parties, worthless-service claims under the FCA may be brought by anyone, regardless of whether they were injured by the provider. In addition, the person filing a worthless-service claim is eligible to receive a generous share of any settlement or award in the case — sometimes amounting to multi-million dollar payments. Large verdicts, like the one in the recent Illinois case, will surely encourage others to file worthless service lawsuits.

 

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.

© Baker Donelson | Attorney Advertising

Written by:

Baker Donelson
Contact
more
less

Baker Donelson on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.