False Claims Act: Employment Claims

This third blog on the False Claims Act is a wakeup call to long term care facilities and management companies (“LTCs”) in their training and employment practices.  It is well-known that LTCs have high employee turnover and difficulty finding applicants, especially for certified nursing assistants (“CNAs”).  In response, many LTCs operate in-house training programs to cultivate a pool of qualified CNAs for hiring.  Here’s the rub: LTCs can be sued under the False Claims Act (“FCA”) for providing services through unqualified or underqualified employees and seeking reimbursement for those services.

In the U.S. Supreme Court’s Universal Health Services, Inc. v. Escobar decision, the Court held that Medicaid reimbursement requests for psychiatric services that were not provided by a psychiatrist can qualify as false claims.[1]  The Court noted that false claims occurred when reimbursement requests were made because the medical facility impliedly certified that the conditions for reimbursement (services by qualified professionals) were satisfied.  If the false information was not revealed at the time of the reimbursement request and the information was material to the decision to reimburse, a viable False Claims Act case can be asserted.

In U.S. v. IASIS Healthcare, LLC, an Arizona federal court found that reimbursements through Medicaid for medical services rendered by known uncredentialed providers was a viable claim under the FCA.  The court noted that all providers must comply with state and federal laws, rules and regulations, including credentialing laws. [2]

A North Carolina federal court granted summary judgment to a FCA plaintiff in March 2017, ruling that a home health agency violated the FCA when it billed for services provided to patients by unlicensed, non-certified aides.  The court stated that the falsity of those claims for Medicaid reimbursements was material to the decision to reimburse.  [3] Medicaid would not have reimbursed for services rendered by a provider who was not properly credentialed.

In recent news, LTCs have been applauded for employing individuals with no background in long term care.  The LTCs boast training programs that win over these employees previously uneducated in senior care.  The goal is to create a pool of applicants, but the effect can be devastating if the new employees are not properly credentialed.  Broadcasting that the LTCs are hiring unqualified employees for on-the-job training in resident care programs that are reimbursable through Medicare or Medicaid may not be in the facilities’ best interests.

When employees are unhappy about long hours and low pay, they may use these new training programs as springboards to False Claims Act cases.  The moral of this lesson is that FCA plaintiffs are winning on claims that services are being provided by unqualified employees. FCA cases were a $ 4.7 billion business for the Department of Justice in 2016.  LTCs need to be wary of how they market their training programs and mindful of the qualification requirements for their workforce before seeking federal agency reimbursements.


  1. Universal Health Services, Inc. v. Escobar, 136 S.Ct. 1989 (2016).
  2. U.S. v. IASIS Healthcare, LLC, 2016 WL 6610675(D.Az. 2016)
  3. U.S. v. Compassionate Home Care Services, Inc., 2017 WL 1030706 (E.D.N.C. 2017)
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