False Claims Act (“FCA”) cases are often thought of in terms of a contractor billing the government for services that were never provided. What if the services that were not provided consist of substandard medical care or treatment? Does a provider or insurer’s failure to adhere to a standard of care as spelled out in Medicare and Medicaid’s statutes, rules and regulations result in the submission of a fraudulent claim under the FCA? In U.S. v. NHC Healthcare Corp., 115 F.Supp.2d 1149 (W.D.Mo. 2000), the United States District Court for the Western District of Missouri found that the federal government did allege a claim under the False Claims Act where the government claimed it paid a health care provider to care for elderly patients and the provider failed to meet the standard of care by not performing “all necessary acts.” Id. at 1155.

The defendant in NHC Healthcare was a nursing home in Missouri certified to participate under both Medicare and Medicaid. The government brought a False Claims Act case against the nursing home claiming that the defendant “had such woefully low staff numbers at its facility that it could not possibly have rendered all the care that it billed the Medicare and Medicaid programs.” Id. at 1151. To support its claims, the government claimed that certain patients at the defendant’s facility developed pressure sores, lost considerable weight and ultimately died because of their substandard care. Id.

In finding that the government had properly alleged a claim, the court in NHC Healthcare cited U.S. ex rel Mikes v. Straus, 84 F.Supp.2d 427 (S.D.N.Y. 1999), for its holding that a healthcare provider can be held to have impliedly certified that it will comply with the relevant standard of care as set forth in Medicare and Medicaid regulations and statutes if that standard lies at the core of the parties agreement. Id. at 1155. The NHC court also noted that defendants who submit bills for procedures that are not performed to the standard of care open themselves up to liability under the False Claims Act. Id. at 1156, citing Aranda v. Community Psychiatric Centers of Oklahoma, Inc., 945 F.Supp. 1485 (W.D. Oklahoma 1996).

The court’s reasoning in NHC Healthcare has broader implications both for medical providers and insurers who provide coverage for services under Medicare and Medicaid. Defendants who fail to satisfy standards of care set forth in relevant statutes and regulations are billing states and the federal government for care that was never actually performed. “Knowingly submitting claims against the United States for Medicare and Medicaid services not actually performed clearly violates the False Claims Act.” Id. at 1156.

For insurers who bill the Medicaid and Medicare programs for mandated coverage, they too open themselves up to liability if they bill the government for coverage yet fail to provide the mandated services. This is often referred to as “underutilization”, where an insurer is receiving a flat fee for coverage, yet fails to provide adequate coverage to its insured. This too triggers liability under the False Claims Act as the insurers are billing for services that are not provided.

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Jason Cornell is an attorney who represents whistleblowers with the law firm Clark Fountain LaVista Prather Keen & Littky-Rubin. Clark Fountain represents plaintiffs in various matters throughout the United States. If you have questions regarding the issues addressed in this or other posts, you can reach Jason at jcornell@clarkfountain.com.