Unlawful Practices in Eldercare

Unlawful Practices in Eldercare

The Maryland Association of Justice has recently featured an article by attorney Richard Neuworth from Lebau & Neuworth, addressing unlawful practices in nursing homes, assisted living facilities, and hospices. This article was published in the Fall 2024 edition of the Trial Reporter. It highlights explicitly prevalent fraudulent activities that lead to claims under the federal and Maryland False Claims Acts. These fraudulent practices include billing for services never rendered, charging for ineffective services, upcoding, and providing kickbacks to other providers. Such schemes can be intricate and challenging to detect. Neuworth has established himself as a prominent advocate for whistleblowers in Maryland, particularly in False Claims Act cases involving alleged "caregiving" companies. Informants may be eligible for significant compensation for verified claims. Below, we summarize key points from our attorney's article, providing insights into the factors we can address at our law firm. If you or anyone you know possesses details regarding this type of fraud, we encourage you to contact us.

 

The Federal False Claims Act and the Maryland False Claims Act (collectively referred to as FCA) offer additional legal remedies for cases against nursing homes, assisted living facilities, and hospices. These remedies, such as negligence, can be pursued independently or alongside other state claims. FCA actions must be filed under seal with a statement of claim, and copies must be sent to the relevant U.S. Attorney's office and/or attorney general. FCA claims focus on fraud, which can be categorized into two types: factual fraud, involving misrepresentation of facts, and legal fraud, relating to the failure to comply with laws and regulations while implying compliance.

 

Cases may involve either or both types of fraud. Many state and federal FCA cases involve healthcare providers misusing government funds. The COVID pandemic has led to increased fraud issues in nursing homes, hospices, and assisted living facilities that received aid like PPP loans and the Provider Relief Fund. Additionally, Medicare's switch to a Patient-Driven Payment Model (PDPM) has introduced another potential source of fraud.

 

FCA claims have several advantages, as they can target a wide range of defendants, including private equity firms, health insurance companies, and various entities receiving government funds. There's no need to prove significant bodily injury, although serious cases may face increased scrutiny. State COVID immunity laws do not shield these claims, and both federal and state FCA claims benefit from longer statutes of limitation. Legal costs might be lower during investigations by the U.S. Attorney and the Maryland Attorney General, since claims must be filed on their behalf. Claimants may also receive substantial awards and attorney's fees based on the violations. If the government gets involved, most cases tend to settle, highlighting several potential challenges.

 

The main types of fraud claims under the False Claims Act (FCA) against nursing homes, assisted living facilities, and hospices:

A. Billing for Services Not Performed or Rendered: This long-standing issue has intensified due to the COVID-19 pandemic and the involvement of private equity firms that prioritize profit over compliance with regulations. Such practices can lead to patient neglect and overcrowding, potentially resulting in injury or death.

 

B. Billing for Unnecessary Services: This type of fraud involves performing services that provide little to no benefit to patients. Examples include excessive physical therapy, unnecessary medical tests, and repetitive telehealth visits. There are also concerns regarding the administration of psychotherapeutic medications by unlicensed providers, which can further jeopardize patient care.

 

C. Worthless Services Cases: This type of fraud involves providing services that hold little to no value for patients, such as denying them necessary food or hydration, particularly affecting vulnerable individuals like diabetics. Inadequate staffing often characterizes these cases, leading to neglect, such as patients being left in soiled clothing or developing severe bed sores without proper care.

 

D. Upcoding in Billing: Upcoding occurs when a healthcare provider charges for a higher-cost service than what was actually delivered. This can include duplicative billing, where higher rates are charged for services not consistently provided. Additionally, hospice patients who are declared terminal but live for extended periods can also be involved in this practice, leading to inappropriate Medicare funding claims.

 

E. Stark Act and Anti-Kickback Violations: These cases focus on improper financial relationships between referral sources, such as hospitals or physicians, and nursing homes or hospices. The law mandates that specialty care must be provided based on medical necessity rather than financial incentives, regardless of how minor those incentives may be.

 

 

Procedural Issues in FCA and Negligence Cases

When a client is scheduled for a deposition in a negligence case while an associated False Claims Act (FCA) case is sealed, it poses significant challenges. Breaching the seal could lead to the dismissal of the FCA case, making it advisable to seek a protective order to prevent the disclosure of any sealed information. It's important to consult with the relevant Attorney General or Assistant U.S. Attorney (AUSA) regarding the deposition to ensure that no confidential materials related to the FCA case are revealed.

 

When managing written discovery for the negligence case, it’s crucial to avoid revealing details about the sealed FCA case. Before acknowledging the FCA case, consult with the AUSA or Attorney General. Additionally, settling the negligence case does not dismiss the FCA claim held by the United States or the State of Maryland. Therefore, after settling the negligence matter, the client cannot bind the government in the FCA case. Defendants in a negligence case may seek indemnification or dismissal of claims but must inform the AUSA or Attorney General of these discussions. Defense counsel could face challenges if the government objects. Additionally, a relator in an FCA case may be substituted if the original relator becomes incapacitated or dies due to negligence, per Federal Rule of Civil Procedure 25.

 

Takeaways:

The State and Federal False Claims Acts offer vital remedies that should be taken into consideration in cases involving hospices, nursing homes, and assisted living facilities, providing a cost-effective approach to increasing the value of claims for the injured parties. Once again, if you or someone you know is experiencing or has knowledge of these forms of fraud, don’t hesitate to contact us at (410) 296-3030—Lebau & Neworth are here to help. 

 




 

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