The United States Department of Justice (DOJ) has filed another False Claims Act case against a long-term care provider premised on the quality of care provided to its residents. The DOJ is increasingly utilizing substandard quality of care as the basis for False Claims Act cases as part of the National Nursing Home Initiative launched by the DOJ in March 2020. Last year alone, the federal government collected over $5.6 billion in recoveries under the False Claims Act.

In this most recent complaint, the DOJ alleges American Health Foundation (AHF), its affiliated AHF Management Corporation, and three affiliated nursing homes provided grossly substandard skilled nursing services between 2016 and 2018. Specifically, the DOJ asserts the facilities failed to follow appropriate infection control protocols and did not maintain adequate staffing levels. The DOJ also alleges one of the facilities housed residents in unacceptable living conditions, gave residents unnecessary medications, failed to safeguard residents’ possessions, subjected residents to verbal abuse, and failed to provide residents with activities and needed psychiatric care. Two facilities are accused of failing to ensure residents had the prescriptions they needed and failed to create and maintain sufficient medical record documentation. 

False Claims Act and Substandard Care Issues

The complaint is the latest example of the DOJ’s use of alleged substandard quality of care issues as the basis for a False Claims Act lawsuit. Under this theory of liability, a health care provider who provides substandard care allegedly violates the False Claims Act when it submits claims for the substandard care because its claims submission certifies the services were provided in compliance with all applicable statutes, regulations, and rules.

The government argues that providers who provide substandard care have not complied with applicable laws and regulations governing the standard of care and therefore, the claim certification submitted by the provider is false in violation of the False Claims Act. Under the False Claims Act, providers can be liable for three times the amount of reimbursement plus a civil penalty ranging from $12,537 to $25,076 per claim as well as face potential criminal penalties and exclusion from participation in government health care programs.

Bottom Line

Nursing facilities should be cognizant that quality of care issues can create not just licensure and Medicare certification issues but also significant liability risks under the False Claims Act. Owners and managers should be vigilant in tracking and monitoring survey results, complaints, and litigation as well as designing programs and mitigation measures to address, correct, and reassess identified issues. Owners should ensure appropriate resources are dedicated to turning around facilities with chronic issues as they are at especially high risk.