Whistleblower-Originated Case Leads to Settlement: St. Margaret’s Center Nursing Home to Pay $1.3M To Resolve False Claims Act Case
By the Constantine Cannon Whistleblower Team
On February 12, the First Assistant U.S. Attorney for the Northern District of New York, John A. Sarcone III, announced that a skilled nursing facility, the Center for Disability Services Holding Corporation, d/b/a St. Margaret’s Center (“SMC”), agreed to pay $1,300,000 to settle allegations it violated the False Claims Act “by billing for care that was worthless and falsely attesting that it had implemented a compliance program that promoted quality care.”[1] Like many False Claims Act cases, this case was initiated by whistleblowers—here, two former SMC employees—under the qui tam provisions of the statute.[2]
SMC Provides Services to Chronically Ill and Disabled Children
As recited in the Settlement Agreement, SMC operates a skilled nursing facility with about 100 beds.[3] At the facility, SMC provides nursing and rehabilitation services to chronically ill and disabled children and other Medicaid beneficiaries.[4] In the words of First AUSA Sarcone, “St. Margaret’s Center receives millions of public healthcare dollars to care for very sick children. Those children deserve quality care, and I expect all nursing homes will fulfill their obligations to vulnerable residents and the taxpayers who fund them.”[5]
The False Claims Act Allegations Against SMC
In this False Claims Act case, the government contended that “between January 1, 2018 and December 31, 2023, SMC knowingly presented or caused to be presented false claims for payment to the New York State Medicaid Program” because the claims were “for care that . . . was grossly substandard, and therefore, worthless.”[6] In the Settlement Agreement, SMC “admit[ted], acknowledge[d], and accept[ed] responsibility for” certain facts, including that during that period, “the care that SMC provided to its residents did not consistently meet federal and state standards.”[7]
Inspections and surveys by the New York State Department of Health (“NYSDOH”) showed that “SMC did not consistently: ensure that residents were free of any significant medication errors (6/27/2023 survey); provide appropriate respiratory (3/21/2022 survey) and tracheostomy care and suctioning (6/28/2022 and 6/27/2023 surveys); provide sufficient nursing staffing (3/21/2022 survey); and maintain resident records in accordance with professional standards of practice (6/28/2022).”[8] Furthermore, during a March 2022 survey, the NYSDOH “determined that SMC failed to adequately supervise three residents, which NYSDOH found immediately jeopardized the health or safety [of] SMC’s residents.”[9] NYSDOH put SMC into “‘immediate jeopardy’ status from March 21, 2022 until April 28, 2022.”[10] Based on those findings, the Centers for Medicare and Medicaid Services (“CMS”) added SMC to its Special Focus Facility list for nursing homes with a “history of serious quality issues.”[11]
Certifications about SMC’s Compliance Program
Skilled nursing facilities like SMC are required to have in place compliance programs that meet certain legal standards. “As a condition of receiving Medicaid funding an SMC official annually certified that SMC had adopted and implemented an effective compliance program.”[12]
However, the case alleged that “SMC’s compliance program failed to meet one or more statutory and/or regulatory requirements.”[13] In particular, the Settlement Agreement and the DOJ’s press release both call out the fact that SMC’s compliance officer, when questioned under oath, stated that they “had ‘no idea’ how to identify potential compliance risks associated with caring for medically fragile infants and children; and was unaware that SMC had been placed in ‘immediate jeopardy’ status by NYSDOH in 2022.”[14] SMC’s compliance program also did not include quality of care as a potential risk area until after the government investigation began.[15]
Settlement and Corporate Integrity Agreement
To resolve the False Claims Act case, SMC agreed to pay $1.3 million.[16] SMC also agreed to a Corporate Integrity Agreement, which focuses on improving quality of care and resident safety.[17]
Two Whistleblowers Initiated the Case
Like so many other successful False Claims Act cases, this settlement is the culmination of a lawsuit initially brought by two former SMC employees under the qui tam or whistleblower provisions of the False Claims Act.[18] Under the statute, private parties may file lawsuits on behalf of the government and receive up to 30% of the monetary recovery. The whistleblowers who brought these claims to light will receive a share of the settlement proceeds.[19]
Medicare, Medicaid, and Healthcare Fraud Remains a Top Government Priority
The government and taxpayers spend billions of dollars on programs like Medicare and Medicaid so that patients can receive medically necessary healthcare services. Fraud in the healthcare industries plays a major role in driving up costs at the expense of patients, taxpayers, and others. As we highlighted in a recent post, healthcare fraud remains a top priority for government enforcement. Whistleblowers, like the two former SMC employees who initiated this case, play a key role in reporting healthcare fraud. Indeed, it is often insiders like employees or contractors who are in the best position to report fraud and bring misconduct to light. Moreover, Federal and State False Claims Acts provide financial awards to eligible whistleblowers to encourage them to come forward.
Constantine Cannon attorney Ginger Buck commented: “Whistleblower programs and rewards exist to acknowledge the vital role whistleblowers play in recovering funds for taxpayers and protecting the integrity of government healthcare programs.”
Constantine Cannon Represents Whistleblowers
If you believe you have a case concerning healthcare fraud claims or would like to learn more about blowing the whistle, please contact Constantine Cannon’s Whistleblower Team for a free and confidential consultation.
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Sources:
[1] DOJ Press Release, available at https://www.justice.gov/usao-ndny/pr/st-margarets-center-pays-13-million-under-false-claims-act (hereinafter “DOJ Press Release”).
[2] Id.
[3] Settlement Agreement ¶ A, available at https://www.justice.gov/usao-ndny/media/1427591/dl?inline (hereinafter “Settlement Agreement”).
[4] Id. ¶ B.
[5] DOJ Press Release.
[6] Settlement Agreement ¶ K.
[7] Id. ¶¶ E, J.
[8] Id. ¶ E.
[9] Id.
[10] Id.
[11] DOJ Press Release; see also Settlement Agreement ¶ F.
[12] See Settlement Agreement ¶¶ G-I.
[13] Id. ¶ I.
[14] Id.; see also DOJ Press Release.
[15] DOJ Press Release.
[16] Id.
[17] Id.
[18] Id.
[19] Id.
Tagged in: False Claims Act, qui tam,