False Claims Act Developments: Sixth Circuit Rules that Timing Matters When It Comes to Certifying Plans of Care

By Leah Judge

Reaffirming the importance of patient plans of care, the Sixth Circuit recently held that the timing of a physician’s certification of such plans is material to the government’s decision to pay for home health services. The case marks another circuit court’s application of the materiality standard announced in Universal Health Servs., Inc. v. United States ex rel. Escobar, and serves as a rebuke to recent decisions that have minimized compliance with federal health care regulations as “just too much paperwork.” 

In United States ex rel. Prather v. Brookdale Senior Living Communities, Inc., the court considered the sufficiency of allegations made by Marjorie Prather, a registered nurse whom defendant hired to review thousands of backlogged Medicare claims for home health services. Medicare pays for home health services-which include physical therapy, skilled nursing, speech-language therapy, home health aide care, occupational therapy, and medical social services-under a prospective system of 60-day periods known as episodes of care. For each episode, a physician must certify both that the patient is eligible to receive services, and that a plan of care for service delivery has been created. Such plans contain the precise type, length, and frequency of treatment prescribed for a patient by their physician. Providers like Brookdale must obtain the referring physician’s certification at the time the plan of care is established or “as soon thereafter as possible.”

While reviewing claims at Brookdale, Ms. Prather allegedly discovered that many physician certifications were missing from patient files or had been obtained months after an episode of care began. Brookdale then tasked Ms. Prather with contacting doctors to obtain the missing certifications, without which Brookdale could not claim payment. Ms. Prather soon became concerned that Brookdale wasn’t simply “following up” with doctors who had neglected to sign certifications; instead, she suspected that the company was providing medically unnecessary services to patients and then finding physicians willing to retroactively endorse care they had never prescribed. In 2012, Ms. Prather filed suit against Brookdale, alleging that their failure to timely obtain physicians certifications rendered false their claims for payment from Medicare.

A district court initially dismissed Ms. Prather’s lawsuit in 2015. With one judge dissenting, the Sixth Circuit reversed that decision in Prather I, holding that a delayed physician certification is “acceptable only if the length of the delay is justified by the reasons the home-health agency provides for it.” On remand, the district court again dismissed the case, this time concluding that Ms. Prather had insufficiently alleged that delayed physician certifications were material to Medicare’s payment decision. The same Sixth Circuit panel reversed, again in a two-to-one decision, holding that Ms. Prather had sufficiently alleged materiality, even under Escobar’s “rigorous” test.

The court’s materiality decision is notable for several reasons. First, the panel followed the First Circuit’s lead, concluding that the materiality analysis is “holistic” and identifying three non-exclusive factors that inform it: (1) whether the alleged noncompliance is a condition of payment; (2) whether the government continues to pay claims notwithstanding the noncompliance; and (3) whether the noncompliance goes to the “very essence of the bargain.” Second, the court confirmed that a relator need not allege that the government has refused to pay claims affected by the noncompliance to establish materiality. Indeed, the panel majority chastised the district court for taking “one step too far” when it drew negative inferences against Ms. Prather based on the absence of such allegations. And third, the court rejected as a non-starter the defendant’s argument that the government’s decision not to intervene in the case cut against materiality.

Finally, and most significantly for FCA cases alleging home health care fraud, the court found that the timing of a physician’s certification went to the “essence of the bargain” between the government and Medicare providers. As the court explained, the timing requirement “makes it more difficult to defraud Medicare” by finding physicians to post-hoc validate unnecessary care provided without a doctor’s supervision.

In so ruling, the panel majority disagreed sharply with the dissent, which characterized the alleged practices as “sloppy,” not fraudulent, and noted that a home health care provider is not required “to aver that it has fastidious recordkeeping policies.” The dissent echoed a January 2018 decision from the Middle District of Florida, United States ex. rel. Ruckh v. CMC II LLC et al., in which a federal judge overturned a $350 million FCA verdict based in part on allegations that the defendant skilled nursing facilities had failed to establish comprehensive care plans for patients, resulting in significant patient harm. In a colorful opinion, the Ruckh court gave short-shrift to the purpose of care plans and dismissed the relator’s allegations as “a handful of paperwork defects.” The court also appeared to suggest that the “colossal difficulty of precise, pervasive, ponderous, and permanent record-keeping” could be a winning defense against allegations of healthcare fraud.

But the Prather court got it right. Regulations governing plans of care are not arbitrarily imposed bits of red-tape; rather, they ensure that patients receive the specific, physician-directed treatment for which Medicare has bargained. Holding home health providers accountable for violating these regulations does more than protect taxpayers-it protects some of the most vulnerable people in our communities.

Tagged in: Court Decision, FCA Federal, FCA Materiality, Healthcare Fraud, Home Health and Hospice,