DOJ’s Dismissal of the HCR ManorCare Fraud case demonstrates an underlying policy shift in the current Administration’s “fight” against Medicare Fraud
Press Release: United States, ex rel. Christine Ribik v. HCR ManorCare Inc., (E.D. Virginia)
November 21, 2017
The Law Office of Jeffrey J. Downey, McLean Virginia.
“On November 8, 2017 the Department of Justice signaled its surrender in one of the largest False Claims Act cases ever filed against a nursing home chain for Medicare Fraud,” explains Jeffrey J. Downey, the attorney who represents whistleblower Christine Ribik, who initially filed the case in 2009.
Summary judgment was set to be decided on November 9, 2017, but the Department of Justice and defense counsel for ManorCare filed a joint motion late in the afternoon of November 8, to continue summary judgment and stay all proceedings. The filing noted that the United States “intends to dismiss the case with prejudice” and Defendants have advised the United States of their intent not to seek “any fees and expenses in connection with this matter.” Both the DOJ and defense counsel joined in this motion, noting that “any such hearing would be a waste of the Court’s resources.”
“It’s surprising that after years of pursuing this matter that the DOJ would simply dismiss the case after uncovering corroborating evidence of Medicare fraud,” explains Downey. “Prior to this motion, as shown by DOJ’s own opposition to summary judgment, the DOJ had obtained compelling evidence of fraud. Defendants had admitted to a 100% increase in their Ultra high billing level, the most expensive level of therapy services billable to Medicare. ManorCare had produced documents which showed that their administrators improperly attempted to influence the billing levels of therapists. As argued in their summary judgment opposition, the Government cited compelling evidence showing how regional operations managers sought to influence the independent judgment of therapists, many of whom resigned from ManorCare because of these practices. The Government even referenced Medicare Entitlement training that ManorCare provided to its therapy staff, which was designed to encourage therapists to maximize the amount of therapy minutes for Medicare patients. To review the Government’s Summary Judgment opposition, click here.
“I’ve been involved in multiple fraud cases involving nursing homes, but this was the first time that Defendants had their own fraud super hero,” explains Downey. “But the most compelling evidence outlined by the Government involved ManorCare pushing dying and medically unstable patients into therapy – no jury would have allowed them to get away with such abuse,” explains Downey. “Its upsetting to watch a case like this get bounced on a legal technicality, while the DOJ turns its back on the whistleblowers who exposed this fraud over a decade ago.”
“Under the False Claims Act the Relator has a right to object to any settlement that is not fair, adequate and reasonable.” 31. U.S.C. 3730 (c)(2)(B). The day before the Motion for Summary Judgment, we had informed DOJ that Ribik would not consent to the deal,” explains Downey. “While DOJ and Defendant do not consider this a ‘settlement,’ there is consideration that the Government is receiving in exchange for dropping all claims – an agreement by ManorCare not to go after DOJ for a discovery motion they lost, which included the sanction of paying attorney’s fees. In that Rule 37 Discovery Motion, ManorCare successfully excluded an expert who had been selected by DOJ because she produced some handwritten notes after her deposition, which she had misplaced,” explains Downey.
“I was surprised that DOJ did not seek to appeal the Magistrate’s exclusion of the Government’s key expert witness, as the ruling of the Magistrate Judge can be appealed to the presiding Judge without taking the ruling to the Court of Appeals,” explains Downey. Other district courts considering similar issues have not excluded experts even when they destroyed their notes. The Federal Rules of discovery were modified in 2010 to eliminate the requirement that experts even retain earlier versions of their reports. Here, the expert at issue had produced a 400 page report, along with her comments to the draft of the report, which were exchanged with the other reviewers. As the case had been pending for years, her notes had been accidentally misfiled with some closed matters and witness did not realize it until after her deposition. But she did the right thing and notified DOJ who did produce the notes to the defense. Under these circumstances, an appellate Court could have found that excluding the expert was error, but DOJ has simply been unwilling to push this issue further,” explains Downey.
“I don’t know who in the Department of Justice made this final decision,” explains Downey. Typically, decisions of this magnitude are made at the highest levels. When I discovered what DOJ was planning to do, I immediately wrote to the Deputy Attorney General Rod Rosenstein, to voice my objections to the dismissal. I have concerns that the Trump Administration’s close ties to the Carlyle Group, who partially owns ManorCare, could have influenced this decision. I requested that the Deputy Attorney General appoint special counsel to independently evaluate this deal because of the potential conflict of interest that DOJ has, especially where they are seeking to dismiss this case in part to cover-up their own discovery failures,” explains Downey. “We have not received a response from Rosenstein. Since the Government and Defendant sought a dismissal, as opposed a settlement, it is not subject to a Court review based on the fair, adequate and reasonable standard,” explains Downey.
There are mounting signs from the Justice Department that this represents a change in policy and not simply the dismissal of a case that became more difficult because of the exclusion of an expert. On October 30, 2017, Michael Granston, Director of the Civil Fraud Section of the Commercial Branch of DOJ announced a new policy change. Instead of allowing declined fraud cases to be prosecuted by the Relator, as anticipated by the False Claims Act statute, now DOJ is going to file motions to dismiss those cases it determines are not meritorious. That policy runs contrary to the language of the False Claims Act which allows Relators to pursue fraud cases where the Government does not intervene. The Government’s intervention rate is well below 25% and in the last few years private attorneys who have prosecuted fraud cases have increasingly taken cases forward without the Government’s intervention, helping further curb fraud and waste. Its estimated that fraud costs taxpayers over 60 billion a year. The Government captures only a very small percentage of the fraud dollars in False Claims Prosecution each year. For example, in 2016 the federal Government recovered about 2.4 billion based on healthcare related claims and settlements. Now, DOJ is going to seek to dismiss those separate private prosecutions, which could significantly reduce fraud recoveries in this Country.
Before the Department of Justice announced their intended dismissal of the ManorCare case, they had also dropped a large lawsuit against UnitedHealth’s Medicare Advantage, which had accused United HealthCare Group and its affiliates of exaggerating how sick its patients were to inflate Medicare payments. This suit was filed in 2009, as was the ManorCare case, yet the Government did not intervene until 2017.
“Attorneys have a duty to zealously represent their clients,” explains Downey. “That duty doesn’t end because you get an adverse ruling from the Court, especially in federal court where there can be rigorous vetting of experts. At the end of the day, DOJ pursued dismissal of this case because they sought to avoid payment of a single sanctions motion and the attendant bad exposure it would bring. It’s not unusual in Federal court for the losing party to have to pay sanctions for the loss of a discovery motion. However, given the enormous resources put into this case and its prosecution, it makes no sense to dismiss a case worth over a half billion dollars because one party had, the Government, to pay some discovery sanctions. This represents some deeper underlying policy shift at DOJ, as there is no other explanation for the abandonment of such a strong fraud case,” explains Downey. “False Claims lawyers throughout the country have been waiting to see how the current administration would live up to its promise to aggressively fight healthcare fraud, which costs the taxpayers an estimated 60 billion a year. Now we know.”
“I am shocked that DOJ is throwing us under the bus,” explains Ribik, the whistleblower who started this case. “I brought these fraud claims to the attention of OIG back in late 2004 and even went to Senator Charles Grassley when I could not get regulators to look into ManorCare. I filed this fraud claim in 2009 and it took the Department of Justice over 5 years to intervene and take my case. During that time two other whistleblowers filed claims against ManorCare. After the Government took the cases over, they obtained strong evidence that corroborated our fraud claims and I was gratified to see that they were finally taking this case to trial,” explains Ribik.
“Coming forward and exposing this conduct puts whistleblowers at risk” explains Ribik. “While I knew that risk going into the case, I never imagined that DOJ would be teaming up with the Defendants at the end of the case to push a quiet dismissal through the court. Fraud in this industry has been rampant and therapists were hoping that a prosecution like this would set an example and deter others from similar conduct. I frequently read posts by therapists complaining about how they feel their judgment is being comprised because they are being forced to treat patients who either do not need therapy or don’t need therapy at the Ultra High (RU) level. Now DOJ is creating the blueprint for others to escape accountability for their fraud,” explains Ribik. “I thought this administration was going to be tough on fraud. I wish someone would prove me wrong. The three whistleblowers who came forward in this case can’t be the only healthcare provider in the country who care about our elders being neglected in skilled nursing facilities, at the taxpayers’ expense. We know that DOJ had interviewed and confirmed fraud with numerous former ManorCare employees and patients. Why aren’t they making an example of ManorCare, instead of giving them a pass.”
For more information about this release, contact Jeffrey J. Downey, 703-564-7318, or email at jdowney (at) jeffdowney.com. On the web at Jeffdowney.com.