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By The federal government apparently believes that the survey and enforcement process does not sufficiently identify and sanction long term care facilities which provide poor care. Therefore, the U.S. Department of Justice has begun to file civil actions against long-term care facilities under the False Claims Act ("FCA") for the provision of poor quality care. The theory is as follows: When representatives of long-term care facilities sign provider agreements to participate in the Medicare and Medicaid program, they agree to bill only for services which have been provided. When a facility provides poor quality care to its residents and bills the government for that care, it has submitted a false claim for payment. That is, the facility is billing for services that it did not adequately provide in accordance with federal law and regulations. Two cases which were filed by the Department of Justice in 1996 are worth noting. The first case, U.S. v. GMS Management-Tucker, Inc. ("the Geri-Med case"), has been widely publicized. This case represented the first time that the government had used the FCA to enforce the provision of quality care in a long-term care setting. The primary care issues involved in that case concerned pressure sores and malnutrition. The facility and its management company entered into a settlement in this case, which included $600,000 in damages and monthly reports to the U.S. Attorney’s office. The facility and its management company also agreed to establish a corporate compliance program and to perform certain specific quality assurance and care functions. Because this case was settled before trial, the long-term care community was not certain whether the government's theory could be sustained in a court of law. That question, though, was answered in U.S. ex rel. Aranda v. Community Psychiatric Centers ("CPC") of Oklahoma. The CPC case is the first case in which a court has found that the government’s complaint under the FCA was sufficient to state a cause of action with regard to the provision of quality care. That is, the court found that the case could not be dismissed on legal motion, but that it should be heard by a jury. Because this court decision was made in response to a motion to dismiss the case and also because it was made by a district court judge in a different area of the country, it technically does not have any precedential value to providers in Ohio. Nevertheless, it is interesting because it provides insight into how an Ohio court might react in a similar situation. In the CPC case, the government alleged that appropriate precautions were not taken and that physical injury to, and sexual abuse of, patients occurred because of inadequate conditions, such as an understaffed shift, lack of monitoring equipment, and inappropriate room assignments. The government also alleged that the goals and interventions outlined in the patient’s care plans were not implemented. According to the government, this amounted to an FCA violation because: (1) CPC submitted bills to the federal government for inpatient psychiatric care of government insured patients; (2) by submitting the bills, CPC implicitly certified that it was abiding by applicable laws, which required the provision of appropriate quality care and a safe and secure environment; and (3) CPC knew that it was not providing its patients with an appropriate level of care. In response to the government’s allegations, CPC argued several points. First, CPC noted that the requirements for billing make vague references to the fact that a facility must provide "quality care" or adhere to a "professional standard of care." CPC pointed out that the government did not identify any law which imposes an objective standard of safety or quality of care on a facility as a billing requirement, and that absent such an objective standard, CPC could not "knowingly" fail to comply with it. The court found no merit in CPC’s vagueness argument, and stated that a problem of measurement should not bar an action under the FCA against a provider of poor quality care under "appropriate circumstances". CPC also argued that the existence of the nursing facility survey and enforcement process precluded FCA liability. The court responded, however, that there is no indication that the regulatory scheme designed to assure compliance with the requirements for participation in the Medicare and Medicaid programs was intended to be the exclusive remedy for poor quality care. Similar to the second argument, CPC alleged that the annual surveys required by the government resulted in affirmative certifications that it was in compliance with the applicable requirements for participation, and thus it was prevented from knowingly violating the FCA. The court dismissed this defense summarily, stating that "CPC contends, in essence, that it could submit claims to the Medicaid program with impunity based on these certifications that it was eligible to participate in the program." The implications of the Pennsylvania and Oklahoma cases are significant. The provision of "inadequate" care may translate into a false claim for payment to the government. This is important in light of the fact that: (1) the FCA provides for treble damages and penalties of $5,000 to $10,000 per claim submitted for payment; (2) the adverse publicity which will result when the case is announced in the press; (3) the possible exclusion from government health programs; and (4) the fact that the lawsuit could encourage other lawsuits against your facility. The Justice Department and HCFA have a memorandum of understanding that requires HCFA to notify the local U.S. Attorney’s Office if HCFA intends to impose civil money penalties against a long-term care provider. This "understanding" is in addition to the government’s anti-fraud initiative, Operation Restore Trust, which is slated to be activated in Ohio sometime during 1997, and the recently passed fraud and abuse enforcement initiatives in the Health Care Portability and Accountability Act of 1996. All of these activities are likely to translate into more fraud and abuse enforcement activity with respect to Ohio’s long-term care community. Providers can take some comfort in the fact that Justice Department representatives have repeatedly indicated that they will seek to apply False Claims Act remedies to quality of care issues only in the most egregious cases. So far, these representatives have been true to their word. The Geri-Med case involved a resident with 26 pressure ulcers, an exposed shoulder joint and a gangrenous leg; the CPC case involved the sexual abuse of mentally disturbed children. There are no guarantees, however, that the government will not expand the use of this remedy. In order to minimize the risk of exposure to liability under the FCA, Medicare and Medicaid certified long-term care facilities should adopt internal mechanisms to monitor quality of care issues, e.g., a workable corporate compliance program. Although an internal compliance program is not a guarantee that your facility will escape a False Claims Act lawsuit, the government has made it clear that preventative measures and self-policing will definitely be considered in determining the degree of culpability and the appropriateness of the remedy.
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