Consulate Health Care Clobbered With $347M Fraud Judgment

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By Eric Topor

Nursing home chain Consulate Health Care must pay $331 million of a $347 total judgment for illegally upcoding Medicare claims for patient therapy services ( United States ex rel. Ruckh v. CMCII, LLC , M.D. Fla., No. 11-cv-1303, judgment 3/1/17 ; United States ex rel. Ruckh v. CMCII, LLC , M.D. Fla., No. 11-cv-1303, judgment 3/1/17 ).

The judgment entered March 1 by Judge Steven D. Merryday in the U.S. District Court for the Middle District of Florida follows a Feb. 15 jury verdict finding that Consulate and several other Consulate-managed nursing home entities violated the False Claims Act in submitting upcoded claims to Medicare and Medicaid. The verdict came after a 20-day trial in a whistle-blower lawsuit filed by Angela Ruckh, a registered nurse who worked as a consultant at two Consulate-managed skilled nursing facilities.

Terence J. Lynam, a partner in Akin, Gump, Strauss, Hauer & Feld LLP’s white-collar criminal defense practice in Washington who represented Consulate, told Bloomberg BNA March 2 that he is planning to file a motion for the court to set aside the verdict, which could eliminate the judgment altogether if accepted by the court.

That motion is due March 29, and Lynam indicated that he would file an appeal if the motion wasn’t successful ( 34 HCDR, 2/22/17 ).

Two corporate entities (both of which are owned by Tampa, Fla.-based Epsilon Health Care Properties LLC) that owned two nursing facilities managed by Consulate were named as additional co-defendants in the lawsuit and were found liable for $16.3 million of the total judgment. Akin Gump represented these two entities as well.

Glimmer of Hope?

Lynam and Consulate have reason to believe Merryday will be receptive to a motion for judgment notwithstanding the verdict. Merryday said in a Dec. 1 ruling shortly before trial started that Ruckh’s allegations repeated a pattern of “a broad charge and equivocal and scant evidence.”

A similar situation played out in a federal court in Alabama when a district judge granted a hospice provider summary judgment on FCA allegations in a March 2016 ruling after a jury returned a verdict finding that the defendant, AseraCare Inc., submitted false claims.

Lynam hopes that Merryday will be similarly inclined, though the judge denied Consulate’s motion for summary judgment in his Dec. 1 order, saying there was enough disputed evidence to send the case to a jury.

Merryday’s order was largely the product of the damages provisions of the FCA, which mandates a tripling of the actual Medicare and Medicaid damages found by the jury—$115 million—and the minimum statutory penalty of $5,500 for each of the 446 cited false claim submissions.

Ruckh’s share of the settlement hasn’t been determined but is likely to be substantial as FCA whistle-blowers are generally awarded 15 percent to 25 percent of the total FCA recovery, plus attorneys’ fees. The federal government decline to intervene in Ruckh’s lawsuit in 2012, and she continued to pursue the allegations herself.

Surprised ‘How Easy’ Fraud Is

James M. Webster III, a partner in Kellogg, Huber, Hansen, Todd, Evans & Figel PLLC’s white-collar litigation practice in Washington, represented Ruckh, though he said this was his first representation of an FCA whistle-blower. He told Bloomberg BNA March 2 he was “happy with the result” of the judgment, and felt the jury reached a “just verdict.”

Webster said he was surprised “how easy it is for health-care companies to defraud the United States” and individual state governments.

Webster said he appreciated the “professional risk” that whistle-blowers like Ruckh take in filing FCA cases, but he hoped they would continue to come forward, because similar health-care fraud was likely occurring “every day in orders of magnitude greater” than in Consulate’s case.

Kellogg, Huber, Hansen, Todd, Evans & Figel PLLC, Delaney Kester LLP and The Barry A. Cohen Legal Team represented Ruckh. Akin, Gump, Strauss, Hauer & Feld LLP represented the defendants.

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

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

For More Information

The judgment is at

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