A recent ruling in a False Claims Act Case affirms that relators must be specific with claims. Summary judgment was issued because the relator did not tie allegations to particular patients and bills.

  • The case shows the need for good chart hygiene.
  • Sometimes “little data” are as important as “big data.”
  • Bookkeeping discipline is critical in billing cases.

Risk managers received good news from a recent ruling in a False Claims Act (FCA) case that means that relators alleging medically unnecessary treatment must provide specific evidence to prove their case.

The ruling came in an Illinois federal court that entered summary judgment in favor of skilled nursing facilities and a therapy provider in a Medicare fraud case. The relators alleged that the defendants furnished medically unnecessary therapy. (The case is available online at: https://bit.ly/31sqnmn.)

The court determined that in such cases there must be a clear showing of why a particular episode of therapy was improper for a certain patient, explains Daniel T. Hartnett, JD, an attorney with Clark Hill in Chicago and one of the lead attorneys for the defendants. The court also said that the relators must link that improper treatment to a particular claim tendered to Medicare.

The relator was a former corporate nurse based at a skilled nursing facility in Long Grove, IL. He alleged in a 2010 lawsuit that the facility and two other skilled nursing facilities and a therapy provider committed fraud by providing therapy that was medically unnecessary. They maximized the number of days billed to Medicare at the highest possible reimbursement level, the nurse claimed.

An expert for the relator estimated damages to the government at more than $120 million, but the judge granted the facilities’ motions for judgment on all claims because the relator did not provide evidence showing the medically unnecessary care was provided to a particular patient.

“The lesson for healthcare organizations is that charting hygiene has to be at top of mind at all times. Bookkeeping discipline also has to be a top priority,” Hartnett says. “Those are hardly startling revelations, but they are so critical because in these cases some insider with knowledge of how the organization does business is painting something as improper. You don’t have someone who is not knowledgeable, and they can make allegations that can be quite hurtful.”

Keep an Eye on Little Data

The case also illustrates that even in the era of big data, sometimes the little data matter the most, Hartnett says. The relator made serious allegations, and the statistical expert estimated a substantial defrauding of the government, but Hartnett and his co-counsel insisted that the relator prove the most basic facts of the case.

The relator claimed that the nursing facility provided therapy to the patients that was not medically necessary. He did not claim that the facility just billed for the therapy without providing it, notes Mason N. Floyd, JD, also an attorney with Clark Hill in Chicago.

“The relator in this case tried to look at the data as a whole, doing a statistical analysis of all the days and minutes of therapy that we billed Medicare for. In the end, that proved insufficient because he could not point to a single instance of therapy that was not medically necessary or a single bill to Medicare that was false,” Floyd says. “Instead, he wanted to do a 30,000-foot level analysis and tell the court these data were so out of line that it exemplifies a pattern of fraud. The court said ‘no, you still have to get down to the little data — the claims, the charts.’ That should be very reassuring to healthcare facilities.”

Hartnett notes that the case could have turned out very differently for the skilled nursing facilities if the judge had not insisted on specific findings of medically unnecessary care tied to specific patients and bills.

“The exposure in these False Claims Act cases is so immense that these cases tend to become something of a blood sport,” he says. “Once past the motion to dismiss, there is no easy exit point without paying immense amounts of money.”

Good risk management is the key to defending these cases, Hartnett says.

“I know it’s expensive and it requires lots of repetition when you’re educating your frontline staff, but if you are ever called to answer for the care you billed Medicare for, you’ll be glad you took the necessary steps to document the medical necessity of care,” Hartnett says. “This judgment should reinforce the sound risk management processes that facilities should already have in place.”