Brookdale Senior Living Beats Medicare Home Health Fraud Lawsuit

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By Eric Topor

Failing to obtain the required physician signature to certify a need for home health care before submitting a bill to Medicare doesn’t make the claim fraudulent ( United States ex rel. Prather v. Brookdale Senior Living Cmtys., Inc. , M.D. Tenn., No. 12-cv-764, 6/22/17 ).

The U.S. District Court for the Middle District of Tennessee dismissed a False Claims Act lawsuit against Brookdale Senior Living Solutions June 22, holding that the timing requirement for obtaining physician signatures for both the certification of need and a face-to-face encounter between the prescribing physician and Medicare beneficiary aren’t material to the government’s decision to pay the claim.

The court based its decision largely on the fact that the whistle-blower Marjorie Prather, a former billing review nurse with Brookdale, couldn’t point to a single instance in which Medicare denied a claim in which a physician signature was obtained after Brookdale submitted a payment claim for home health services.

The ruling provides another example of how the U.S. Supreme Court’s 2016 decision in Universal Health Services has changed FCA litigation, from focusing on whether particular regulations are conditions of Medicare payment to whether they are “material” to the government’s decision to pay claims. The decision appears to be the first district court within the U.S. Court of Appeals for the Sixth Circuit to tackle the Universal Health Services materiality standard.

Payment denials, or lack there of, in the face of alleged regulatory violations were key to Brookdale’s victory here, and could be a guide to both FCA defense counsel and whistle-blower attorneys in how to litigate FCA motions to dismiss.

The ruling hinged on Judge Aleta A. Trauger’s interpretation of Universal Health Services, which held that defendants can only be sued under the False Claims Act if their alleged regulatory violation was material to the government’s decision to pay the claim. Significantly, Trauger found that the timing requirement was an explicit condition of payment, a finding that generally would have sufficed to support Prather’s FCA allegations before the Universal Health Services ruling.

Counsel for the parties didn’t respond to Bloomberg BNA’s requests for comment.

Claim Payments Were Deciding Factor

Prather was hired by Brookdale as part of a team to rush through a backlog of 7,000 Medicare home health-care claims worth $35 million but that were missing required physician certifications and care plans.

The allegations were dismissed once by the district court in 2015, but revived by the U.S. Court of Appeals for the Sixth Circuit in September 2016. The Sixth Circuit said the delay between the end of a patient’s home care treatments and the physician’s certifying signature could give rise to an FCA claims if the delay isn’t “justified.” The Sixth Circuit’s decision came after the Universal Health Services ruling, but the appeals court declined to weigh in on the materiality issue because neither party had a chance to brief the issue after the U.S. Supreme Court’s decision.

Trauger’s decision focused on the materiality issue, not on any justification for the delay in Brookdale obtaining the required physicians signatures on the backlogged Medicare home health claims. Trauger said the case “boiled down” to whether violation of the timing requirement for obtaining physician signatures in the regulation (42 C.F.R. §424.22(a)(2)) makes the claim for payment false.

The court agreed with Prather that the regulation made compliance with the timing requirement an explicit condition of payment for the home health claims. But Trauger noted that a violation of a condition of claim payment isn’t dispositive of whether the regulatory violation is transformed into an FCA violation under Universal Health Services, and the importance the U.S. Supreme Court placed on whether the government pays claims with actual knowledge of compliance violations.

Brookdale pointed to the lack of any Medicare denials for the allegedly deficient claims as evidence that any failure to comply with the timing requirement for physician signatures wasn’t material to the government, and the court agreed. Trauger said this factor “weighs strongly” against a finding of materiality, and that the timing requirement itself wasn’t part of the “essence of the bargain” between Brookdale and the Medicare program.

Barrett Law Office PLLC and Provost, Umphrey Law Firm LLP represented Prather. Bass, Berry & Sims PLC represented Brookdale.

To contact the reporter on this story: Eric Topor in Washington at

To contact the editor responsible for this story: Peyton Sturges at

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