Ruckh v. Salus Rehab., LLC

963 F.3d 1089

Angela RUCKH, Relator, Plaintiff – Appellant,

v.SALUS REHABILITATION, LLC, d.b.a. La Vie Rehab, 207 Marshall Drive Operations, LLC, d.b.a. Marshall Health and Rehabilitation Center, et al., Defendants – Appellees.

No. 18-10500

United States Court of Appeals, Eleventh Circuit.

June 25, 2020

Derek T. Ho, Rebecca A. Beynon, Joseph Solomon Hall, Bradley E. Oppenheimer, Silvija Anna Strikis, James McCormick Webster, III, Kellogg Hansen Todd Figel & Frederick, PLLC, Washington, DC, Kevin John Darken, The Barry A. Cohen Legal Team, Tampa, FL, Royston Delaney, Boston, MA, Charles F. Kester, Calabasas, CA, Delaney Kester, LLP, for Plaintiff - Appellant.

Gregory M. Luce, John Anthony James Barkmeyer, Jonathan L. Marcus, Skadden Arps Slate Meagher & Flom, LLP, Washington, DC, Catherine E. Creely, Robert S. Salcido, Carroll Skehan, Stanley E. Woodward, Akin Gump Strauss Hauer & Feld, LLP, Washington, DC, Jason Alex Watson, Office of Corporate Counsel, TAMPA, FL, Defendants - Appellees

Benjamin M. Shultz, Charles W. Scarborough, Kathleen M. Von Hoene, Associate Deputy Attorney General, Washington, DC, Jill Marie Bennett, Tallahassee, FL, Pam Bondi, Tampa, FL, U.S. Attorney General's Office, Peter John Grilli, Peter J. Grilli, PA, Paul Andrew McDermott, Holland & Knight, LLP, Tampa, FL, for Amicus Curiae.

Henry C. Su, Constantine Cannon LLP, Washington, DC, for Amicus Curiae.

Colette G. Matzzie, Phillips & Cohen, LLP, Washington, DC, for Amicus Curiae.

Peter Douglas Keisler, Sidley Austin, LLP, Washington, DC, for Amicus Curiae.

Scott D. Stein, Sidley Austin, LLP, Chicago, IL, for Amicus Curiae.

Cory L. Andrews, Washington Legal Foundation, Washington, DC, for Amicus Curiae.

James F. Segroves, Reed Smith, LLP, Washington, DC, for Amicus Curiae.

Before BRANCH and MARCUS, Circuit Judges, and UNGARO,^* District Judge.

UNGARO, District Judge:

Relator Angela Ruckh, a registered nurse, brought this qui tam action alleging violations of the False Claims Act, 31 U.S.C. §§ 3729 et seq. (the "FCA"), and the Florida False Claims Act, Fla. Stat. §§ 68.081 et seq . (the "Florida FCA"), against two skilled nursing home facilities, two related entities that provided management services at those and 51 other facilities in the state, and an affiliated company that provided rehabilitation services. The relator appeals the district court's grant, after jury trial, of the defendants’ renewed motion for judgment as a matter of law or, in the alternative, for a new trial.

The jury found the defendants liable for the submission of 420 fraudulent Medicare claims and 26 fraudulent Medicaid claims and awarded $115,137,095 in damages. After applying statutory trebling and penalties, the district court entered judgment in favor of the relator, the United States, and the State of Florida in the total amount of $347,864,285. After judgment was entered, the defendants timely renewed their motion for judgment as a matter of law or, in the alternative, for a new trial. The district court ultimately set aside the jury's verdict as unsupported by the evidence and granted judgment as a matter of law. In the alternative, the district court conditionally granted the defendants’ request for a new trial.

After thorough consideration, and with the benefit of oral argument, we affirm in part and reverse in part. We remand with instructions for the district court to reinstate the jury's verdict in favor of the relator, the United States, and the State of Florida and against the defendants on the Medicare claims in the amount of $85,137,095, and to enter judgment on those claims after applying trebling and statutory penalties.

I.

We begin with an overview of the Medicare and Medicaid programs in the skilled nursing home context, the relevant statutory and regulatory requirements that skilled nursing facilities, like the defendants, must satisfy to obtain Medicare and Medicaid reimbursement, and the consequences for failing to comply with these requirements.

The Medicare Program

The Social Security Amendments of 1965 established the Medicare program, which provides federally funded health insurance to eligible elderly and disabled persons. See 42 U.S.C. §§ 1395 et seq. Medicare Part A pays skilled nursing facilities, or "SNFs," a daily rate for the routine services they provide to each resident. 42 U.S.C. § 1395yy ; 42 C.F.R. § 413.335. Medicare bases its payment amount in part on information provided to it by SNFs. 42 C.F.R. § 413.343. Specifically, Medicare requires SNFs to "conduct initially and periodically a comprehensive, accurate, standardized, reproducible assessment of each resident's functional capacity." Id. § 483.20; see also 42 U.S.C. § 1395i-3(b)(3). The assessments must be made using the resident assessment instrument ("RAI") specified by Centers for Medicare & Medicaid Services ("CMS") and must address several factors, including each resident's cognitive patterns, psychological well-being, disease diagnoses and health conditions, medications, and special treatments or procedures. 42 C.F.R. § 483.20(b)(1).

Medicare regulations require SNFs to complete these evaluations, known as Minimum Data Set ("MDS") assessments, at regular intervals.¹ 42 U.S.C. § 1395i-3(b)(3)(C) ; 42 C.F.R. §§ 413.343, 483.20(b)(2). The final day of the assessment interval is referred to as the "assessment reference date," or "ARD." Medicare's assessment schedule includes 5-day, 14-day, 30-day, 60-day, and 90-day scheduled assessments. The assessment looks back over a 7-day period, and Medicare also reserves for the SNFs a grace period during which SNFs have discretion to set the precise ARD.

MDS assessments are designed to be comprehensive, accurate, standardized, and reproducible. See 42 U.S.C. § 1395i-3(b)(3)(A) ; 42 C.F.R. § 483.20(g). Each assessment must be conducted or coordinated and certified as complete by a registered professional nurse ("RN"). 42 U.S.C. § 1395i-3(b)(3)(B)(i) ; 42 C.F.R. § 483.20(h), (i)(1). Each individual who completes a portion of the assessment must sign and certify the accuracy of that portion. 42 U.S.C. § 1395i-3(b)(3)(B)(i) ; 42 C.F.R. § 483.20(h), (i)(2). RNs are guided in completing the assessments by the Resident Assessment Instrument Manual ("RAI Manual"), which is promulgated and regularly updated by CMS. The RAI Manual facilitates accurate, effective, and uniform resident assessment practices by SNFs and fosters a holistic approach to optimizing resident care, well-being, and outcomes.

The accuracy of MDS assessments is critical because under the Resource Utilization Group ("RUG") model, which governed at the time of this lawsuit, CMS tied the amount of its payments to SNFs in part to RUG codes derived from MDS assessments.² Medicare used SNFs’ self-reported RUG codes during assessment periods to set payment rates on a forward-looking basis, and the RUG codes governed payment until the next assessment period. The RUG codes were divided among eight classification groups. The relevant RUG codes began with the letter "R," as they were classified as rehabilitation services. The RUG codes were further divided based on each resident's "activities of daily living" ("ADL") needs. Residents with more specialized nursing needs and with greater ADL dependency were assigned to higher groups in the RUG hierarchy. Because providing care to these residents was more costly, CMS reimbursed SNFs for this care at a higher daily rate. See Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities, 63 Fed. Reg. 26252, 26261–65 (May 12, 1998). The second letter of the RUG codes reflected the number of minutes of therapy services provided to residents, and the third letter indicated the level of nursing assistance provided to the residents. Therapy codes ranged from "Low" ("L") to "Ultra High" ("U"). Nursing codes "A," "B," and "C" generally reflected increasing levels of nursing services and greater ADL dependency, with additional codes "L" and "X" reflecting more extensive services.

To receive Medicare reimbursement, SNFs must electronically transmit the MDS assessment to CMS within 14 days of completing it. 42 C.F.R. § 483.20(f)(3).

The Medicaid Program

The Social Security Amendments of 1965 established the Medicaid program. See 42 U.S.C. §§ 1396 et seq. Medicaid, which is jointly financed by the federal and state governments and administered by the states, helps states provide medical assistance to low-income persons. 42 C.F.R. § 430.0. States pay service providers directly, subject to broad federal rules, and receive partial reimbursement from the federal government for their Medicaid expenses. Id. ; 42 U.S.C. §§ 1396b(a), 1396d(b). Unlike Medicare's fee-for-service model, Florida Medicaid reimburses SNFs for resident care at a flat daily rate. See Fla. Stat. § 409.908(1)(f).

Under Florida's Medicaid program, SNFs are required to present claims that "[a]re documented by records made at the time the goods or services were provided, demonstrating the medical necessity for the goods or services rendered." Fla. Stat. § 409.913(7)(f). "Medicaid goods or services are excessive or not medically necessary unless both the medical basis and the specific need for them are fully and properly documented in the recipient's medical record." Id.

SNFs are required by federal law and Florida administrative law to "provide services and activities to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident in accordance with a written plan of care." 42 U.S.C. § 1396r(b)(2) ; see also Fla. Admin. Code Ann. r. 59A-4.109(2). The written plan of care must:

(A) describe[ ] the medical, nursing, and psychosocial needs of the resident and how such needs will be met;

(B) [be] initially prepared, with the participation to the extent practicable of the resident or the resident's family or legal representative, by a team which includes the resident's attending physician and a registered professional nurse

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