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.

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Employee Surveys: Survey Its Risks First

The long term care industry is known for high staff turnover, which can affect care.  Often, staff separation can burden the available employees with extra duties or shifts.  Residents bond with employees and mourn their separation.  In response to this phenomenon, facilities and management companies have been encouraged to implement employee satisfaction surveys, which raise numerous red flags with employment law defense attorneys.

Employers can use employee satisfaction surveys for a multitude of well-intentioned reasons:  to make employees feel heard, to identify areas that need improvement, and to simply improve communication.  A younger workforce that values their voice being heard, as well as the increased use of technology in the workplace, means the use of surveys as well as other means of obtaining employee feedback are on the rise. While surveys can improve employee retention and performance, surveys can also lead to expensive investigations and lawsuits when managed incorrectly. Not only can the questions posed sometimes give rise to claims, but the employer’s response to the information gathered or lack thereof, can be just as fraught with legal consequences.

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Fourth Circuit Punts the Statistical Sampling Issue Back to the Trial Court

The January 17, 2017 blog identified how the False Claims Act (FCA) can be used to secure significant recoveries by a statistical sampling method.   Statistical sampling is applied when a whistleblower claims that Medicare and Medicaid reimbursement requests are fraudulent.  The statistical sampling feature occurs when a few cases of reimbursements for either care not provided or care outside of the resident’s medical needs (the sampling) are applied to an entire skilled care chain.  This method allows plaintiffs to avoid proving whether each case of fraudulent reimbursement is indeed fraudulent.  Typically, the cases serving as the sample are the best cases, and the remaining, potentially, thousands of reimbursements may not be fraudulent in any aspect.  The unfairness of this approach is clear.

Statistical sampling was before the Fourth Circuit Court of Appeals in the case U.S.A. ex rel. Michaels v. Agape Senior Community. In February, the Fourth Circuit issued its ruling on whether a small sampling of false claims (reimbursement for hospice care and general inpatient services) can be applied across the board to all of the approximately 53,280 claims for reimbursement submitted by Agape’s South Carolina facilities.  The Fourth Circuit stated that the statistical sampling issue was not properly before it on interlocutory appeal and returned the issue to the trial court. 

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How a Justice Neil Gorsuch May Benefit Long Term Care Facilities

As the world knows, Tenth Circuit Court of Appeals Judge Neil Gorsuch is being considered for the vacancy on the United States Supreme Court created by the death of Justice Antonin Scalia.  Judge Gorsuch is a conservative jurist who has opined on federal agencies overstepping their mandates.  That perspective may be very helpful to an over-regulated industry, such as long term care.  In October 2016, the long term care industry saw the Centers for Medicare and Medicaid Services (“CMS”) squeeze in a re-write of its regulations just before a change in administration.  Some of those new regulations can be considered of questionable relevance to the mission of CMS, particularly the prohibition on pre-dispute arbitration.

In the 1935 Social Security Act (“Act”), the Social Security Administration (“SSA”) was established to administer the old-age, survivors and disability insurance program.  Under the Social Security and the Administrative Procedures Acts, the Secretary of the Department of Health and Human Services has the authority to promulgate regulations for the purpose of administering the Act.  That charge includes enforcement of standards for services provided by long term care facilities receiving Medicare or Medicaid funding, or both. The only provisions of the Act that address remedies for noncompliance involve agency-administered remedial programs, fines paid to the agencies and denial of federal funding.  No lawsuit option or private right of action is included in the remedial measures. Facility residents can file complaints with their facilities or an agency ombudsperson. So how does this framework permit CMS to regulate arbitration agreements entered into at admission?  It does not.  

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False Claims Act: How it is Being Applied and Misapplied in Long Term Care Cases

heap of dollars with stethoscopeThe False Claims Act (FCA) allows a whistleblower, called a relator, to sue for false statements made in connection with requests for payment to the government. For long term care facilities (LTCs), this typically arises in the Medicare and Medicaid reimbursement context.  The false claims could be submitting reimbursement requests for care not provided or care not required.  A claim may also arise when valid reimbursement requests are made, but the facility certifies, when submitting the paperwork, that it has complied with all regulatory requirements and, in fact, it has not.  Intent to defraud is not required, but the facility must have actual knowledge of the false claim or must have acted with deliberate ignorance of or reckless disregard for the truth or falsity.

In June 2016, the U.S. Supreme Court broadly interpreted the FCA to apply when a patient was provided psychiatric services and the medical facility sought Medicaid reimbursement.1  The care providers were not properly licensed.  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.  The Court stated that the facility was required to disclose its noncompliance when making the reimbursement request and that the noncompliance did not have to deal with specific terms of payment.  The undisclosed information did have to be a material fact upon which the government would rely when deciding whether to reimburse.

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Corporate Representatives Depositions: How to Defend Against Them

Witness swearing on the bible telling the truthIn the December 5, 2016 blog, we discussed what corporate representative depositions (“CRD”) are and why they are used.  This blog addresses defense tactics and the conduct of CRDs.

As previously noted, the party requesting the CRD is required to identify with reasonable particularity each of the subject areas for questioning.  The corporation can object to the deposition notice when the subjects are so broad or vague that it is impossible to identify a witness.  Language such as “including, but not limited to” can be struck from a deposition notice for noncompliance with the reasonable particularity requirement.  Notices can also be objected to because the information requested is irrelevant, privileged, confidential or a trade secret.  Most courts expect the attorneys to confer before filing motions objecting to the deposition notice.

Some CRDs include deposition dates that are immediately after the lawsuit is filed.  The goal is to obtain testimony before the corporation has had time to obtain all of the responsive information.  An early deposition places the corporation in the position of using the “information is not available” response, followed by attempts by plaintiff’s counsel to obtain sanctions against an unprepared corporation.  If consulting with plaintiff’s counsel over the date is unsuccessful, obtaining a protective order should be requested.

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NLRB Sacks Long Term Care Facility’s Attempt to Avoid Class Actions

Class Action conceptIn Service Employees International Union v. Montecito Heights Healthcare & Wellness Centre, LP, Case No. 31-CA-129747, the NLRB ruled that a skilled nursing facility’s arbitration provision in its alternative dispute resolution (“ADR”) policy requiring its unionized employees to waive their right to bring class actions or to act concertedly violated federal labor law.  If you are non-unionized, do not stop reading here because this ruling has the potential of being applied to non-union workplaces.

The nursing facility’s ADR policy expressly prohibited “employees from joining a class action or representative action.”

Relying on precedent promulgated by the NLRB in Murphy Oil USA, Inc., 361 NLRB No. 72 (2014), enf. denied, 808 F.3d 2013 (5th Cir. Oct. 26, 2015), Judge Raymond P. Green held that the nursing facility violated Section 8(a)(1) of the National Labor Relations Act (“Act”) by maintaining a policy intended to require its employees to waive their right to bring or join a class action regarding their wages, hours, and terms and conditions of employment.  Judge Green explained that he was “bound to follow Board precedent irrespective of contrary opinions by circuit courts, unless and until the Supreme Court makes a definitive ruling on the subject matter in dispute.”  In other words, Judge Green did not want to run afoul of NLRB precedent.

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Corporate Representative Depositions: What They Are and Why They Are Used

Witness swearing on the bible telling the truthCorporate representative depositions (“CRD”) are creatures of federal and state rules permitting parties to lawsuits to take depositions of corporations, associations, organizations and government agencies.  They have been used for decades in products liability cases, but are relative newcomers in long term care litigation. In this section of a two-part blog, I will address the technical aspects of CRDs.  The second blog will cover defending against and conduct of CRDs.

When a party to a lawsuit wants to take a CRD, it sends a deposition notice to the corporation stating that it wants to take the corporation’s deposition.  The notice must set forth, with particularity, the subject areas for questioning.  The corporation is required to identify people who it will offer to testify on each subject area.  The individuals testifying can be anyone who consents to testify on behalf of the corporation.  The person does not have to be the most knowledgeable on the subject, but the corporation must prepare the person to answer the questions.  The witness must testify on all matters known or reasonably available to the corporation.

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Getting in the Crosshairs of the Fair Housing Act

Senioren essen Lunch im PflegeheimThe dining room has been the cornerstone of family life in America for generations. It was Ronald Reagan who once noted, “All great change in America begins at the dinner table.”  Many continuing care retirement communities (CCRC) are finding that the balance between maintaining the quintessential dining room experience for their residents and following the Fair Housing Act (FHA) obligations imposed on assisted and independent living facilities to be a daunting task.  In this article, I review the importance of FHA compliance in dining room policies at CCRC facilities.

Common area dining rooms are often the most popular gathering locations in a CCRC and also the most common areas where policies, enacted with the best intentions, are likely to give rise to claims of discrimination arising under the FHA.  The Civil Rights Act of 1968 includes the FHA, which prohibits discrimination in housing-related practices based on race, color, religion, national origin, sex, familial status and disability.  The FHA’s broad definition of disability includes mental and physical impairments common to CCRC facility residents.  Discrimination based on a disability includes the refusal by the facility to make reasonable accommodations to policies, programs, or services that would allow residents to use and enjoy the facility, including the common areas. 

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You Snooze, You Lose: What an Employer Should First Do When Notified of a Legal Action

woman uses magnifying glass to check contractIt is never pleasant to receive notice of a legal proceeding against you, and employers often wait until the last minute to deal with it, or do worse by trying to eliminate relevant evidence.  Employers are reluctant to hire lawyers early because they believe it will be expensive and complicated. So, what should an employer do after it receives notice of a legal action?  Do the three Ps:  hire a Professional, Preserve evidence, and conduct a Preliminary Investigation.

Hire a Professional

Should an employer hire an attorney if it receives a lawsuit complaint or other notice of a claim? Absolutely, and right away (though, if an employer has applicable liability insurance, then it should place its insurer on notice of the claim and work with the appointed defense lawyer; this article focuses on self-insured employers and employers with high deductibles or self-insured retentions) .  In California, corporate employers must hire lawyers to defend lawsuits, so there is no choice.  Individuals who are employers (e.g., sole proprietorships) may defend themselves in court, but this strategy won’t likely end well. Many employers usually don’t know whether or what information is harmful or helpful and sometimes don’t know what information should be confidential. Your innocent phone call with the opposing attorney (without your lawyer) could result in unnecessary or inadvertent disclosure of harmful information to the other side. Hiring an experienced employment lawyer will reduce or eliminate these risks.

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