Earlier this summer, the Eleventh Circuit issued an opinion in one of the largest False Claims Act (FCA) cases in recent years'at least in terms of recovery'reinstating the majority of a massive $350 million jury verdict. See Ruckh v. Salus Rehabilitation, LLC, 963 F.3d 1089, 1102 (11th Cir. 2020). The decision weighs in on a number of key and emerging FCA issues, including materiality under Escobar and relator standing. While the decision is great news for relators and the government, the Eleventh Circuit's reasoning, especially with regard to Escobar, is less than clear and leaves much open to interpretation.
We at Qui Notes have been following Ruckh and previously reported on the DOJ's amicus brief, which noted the inherent tension between Escobar's materiality analysis and the practicalities of the government's enforcement and payment practices. To recap the facts briefly, a registered nurse and former employee of a skilled nursing facility in Florida brought a qui tam action alleging FCA violations based on fraudulent Medicare and Medicaid billing. The relator claimed that several nursing facilities and other affiliated companies: (1) artificially inflated Medicare patients' Resource Utilization Group (RUG) scores using methods known as "upcoding" and "ramping" to yield increased Medicare payments; and (2) failed to maintain "comprehensive care plans" for Medicaid patients as required under Florida Medicaid rules, as part of a scheme to keep the cost of care for Medicaid patients down. After trial, a jury awarded a verdict that, with trebling and statutory penalties, approached $350 million dollars. However, after the verdict, the defendants filed a renewed motion for judgment as a matter of law arguing that the relator failed to provide evidence of materiality. The district court agreed and threw out the verdict. The court reasoned that the allegations could not possibly be material because the government kept...
