Judge Limits ManorCare’s Defenses in False Claims Act Case

In April 2015, the federal government announced that it was intervening in a False Claims Act case against HCR ManorCare and other related companies for allegedly committing Medicare fraud in the provision of rehabilitation services.  The case is currently pending in the Federal District Court for the Eastern District of Virginia.

On September 8, 2015, the Court denied Defendants’ Motion to Dismiss, finding that the government had alleged sufficient facts to state a viable claim under the False Claims Act.

On October 9, 2015, the government filed a Motion to Strike various affirmative defenses that had been asserted by ManorCare.  The government argued that the striking of such defenses would help narrow the scope of discovery and avoid the improper litigation of defenses that should not apply in the case

On December 8, 2015, Judge Claude M. Hilton granted the government’s Motion in large part, striking many of ManorCare’s defenses including estoppel, laches, waiver, failure to mitigate damages, unclean hands, damages too remote or speculative, public disclosure bar, accord and satisfaction and the statute of limitations.  The court also found that failure to plead fraud with specificity was not an appropriate affirmative defense.  The Court did not strike the affirmative defense of due process.

“This was another important legal victory for the government,” explains attorney Jeffrey J. Downey, who represents the lead whistleblower, an Occupational Therapist.   The Court also noted that the government need not even prove actual damages because the defendants could still be liable for civil penalties under the False Claims Act.  “Now that this motion is resolved, the next stage of this litigation will involve discovery” stated Downey.