Jury verdict overruled in negligence-based false claims case

Billing government programs for poor quality healthcare doesn't trigger false claims liability, according to a ruling last week by the 7th U.S. Circuit Court of Appeals. The court threw out a $9-million jury verdict against Momence Meadows Nursing Center, Inc., an Illinois long-term care facility serving Medicare and Medicaid beneficiaries.

The whistleblowers in this case, Vanessa Absher and Lynda Mitchell, are nurses formerly employed at the facility. They accused Momence of deliberately filing more than 1,000 false claims for non-compliant care that harmed patients or threatened their safety. Among other problems, the plaintiffs offered evidence of Momence's inability to manage pressure sores and control pests. The whistleblowers also offered evidence of a resident wandering off grounds, of a beneficiary scalded in a bath and another patient who died from a colostomy bag malfunction.

But state regulators fined Momence for performance deficiencies and required the center to implement corrective action plans, the circuit court noted. The court disagreed that care provided at Momence was so poor it was worthless, calling that claim "[a]bsurd in light of the undisputed fact that Momence was allowed to continue operating and rendering services of some value despite regular visits by government auditors."

According to the appeals court, the trial judge was "incorrect" to instruct the jury that if Momence billed $200 for services worth only $120, then the government was defrauded of $80.

An article in JD Supra Business Advisor commented on why experts watched Absher v. Momence Meadows so closely. "Because of the huge amounts at stake when a Medicare or Medicaid provider is charged with a False Claims Act violation. First, there's liability for the total amount of the false claims. Then that amount can be tripled. Then there's the penalty of $5,500 for each false bill. On top of all that, because successful whistleblowers can get a large percentage of any recovery, everybody is a potential whistleblower," the article said.

For more:
- read the Circuit Court's decision
- here's the JD Supra Business Advisor article