United States ex rel. Martin v. Life Care Ctrs. of Am., Inc.

114 F.Supp.3d 549

United States of America ex rel. Glenda Martin and State of Tennessee ex rel. Glenda Martin, Plaintiffs/Relator,

v.Life Care Centers of America, Inc., Defendant.

United States of America ex rel. Tammie Johnson Taylor, Plaintiff/Relator,

v.Life Care Centers of America, Inc., Defendant.

Case No. 1:08–cv–251

Case No. 1:12–cv–64

United States District Court, E.D. Tennessee, at Chattanooga.

Signed September 29, 2014

Melissa Handrigan, Sarah M. Arni, Shaun Pettigrew, Zach Williams, United States Department of Justice, Theodore L. Radway, United States Attorney's Office, Amy L. Easton, Andy J. Mao, Jonathan H. Gold, Washington, DC, Edwin G. Winstead, U.S. Department of Justice, Denver, CO, Elizabeth S. Tonkin aka Former AUSA, Jeremy Stephen Dykes, Jessica Sievert, Robert C. McConkey, III, US Department of Justice, Knoxville, TN, Giselle J. Joffre, United States Attorney's Office, Boston, MA, Jennifer Aldrich, U.S. Department of Justice, Columbia, SC, Jessica Elliott, Susan Torres, United States Attorney's Office, Mark Lavine, US Department of Justice, Miami, FL, Michael R. Kenneth, United States Attorney's Office, Tampa, FL, for Plaintiffs/Relator.

Daniel K. Winters, Reed Smith LLP, New York, NY, Eileen H. Rumfelt, Miller & Martin PLLC, Atlanta, GA, Don Howarth, Jennifer M. Rosen, Padraic J. Glaspy, Suzelle M. Smith, Howarth & Smith, Los Angeles, CA, Andrew C. Bernasconi, Eric L. Alexander, Kelly H. Hibbert, Lawrence S. Sher, Nancy E. Bonifant, Scot T. Hasselman, Thomas C. Fox, Reed Smith LLP, Washington, DC, Travis R. McDonough, Richard C. Rose, Roger W. Dickson, Kyle W. Eiselstein, Leah M. Gerbitz, Miller & Martin, PLLC, Chattanooga, TN, for Defendant.

ORDER

HARRY S. MATTICE, JR., UNITED STATES DISTRICT JUDGE

Before the Court is Defendant's Motion for Partial Summary Judgment (Doc. 140). For the reasons stated hereafter, Defendant's Motion will be DENIED .

I. BACKGROUND

As a preliminary matter, the Court notes that Defendant is only seeking summary judgment as to the Government's use of statistical sampling for Counts I and II of its Consolidated Complaint in Intervention. See Doc. 152 at 7. Thus, the Court will not address the merits of the Government's identified false claims under the False Claims Act ("FCA") or its claims for unjust enrichment, payment by mistake, and conversion. Additionally, as Defendant is seeking a legal determination solely regarding the use of statistical sampling in cases brought under the FCA, the parties do not dispute the material facts relevant to this determination. The Court will provide a brief background of the allegations stated in the Complaint, and then address the merits of Defendant's arguments.

The Court summarized the procedural posture of this action as well as the allegations set forth in the Government's Complaint in its March 26, 2014 Order on Defendant's Motion to Dismiss:

This consolidated qui tam action was filed separately by relators Glenda Martin and Tammie Taylor. (Doc. 69 at 5). Glenda Martin is a registered nurse and former staff development coordinator of Defendant Life Care Center ("Life Care") in Morristown, Tennessee, and she filed her claim on October 16, 2008. (Id. ). Tammie Taylor is a former occupational therapist at Life Care in Lauderhill, Florida, and she filed her claim on February 23, 2012. (Id. ). The Government moved to intervene as Plaintiff in this case on October 1, 2012, and the Court granted the Government's Motion on November 15, 2012. (Docs. 60, 67). In the same Order, the Court also ordered that Martin and Taylor's cases be consolidated. (Doc. 67)....

Life Care is a corporation that owns over 200 skilled nursing facilities and is headquartered in Cleveland, Tennessee. (Id. at 5). Life Care receives funds from Medicare, a health insurance program established and administered by the United States Government. Between the period of January 2006 through December 2011, Medicare paid Life Care over $4.2 billion for its services, including "inpatient services at its nursing facilities." (Id. at 5).

Each Life Care facility has a Rehab Manager who manages rehabilitation therapy staff and therapy services. (Doc. 69 at 17). The Rehab Manager reports to that facility's Executive Director, who in turn reports to the Regional Vice President and Divisional Vice President. (Id. ). Each facility has therapy staff, including physical therapists, physical therapy assistants, occupational therapists, certified occupational therapy assistants, and speech-language and pathology therapists. (Id. at 18). Each facility also has a Minimum Data Set (MDS) coordinator who is responsible for collecting information needed for the MDS and determining the assessment reference date for Medicare purposes. (Id. ).

Medicare, Medicaid, and TRICARE

People of any age can qualify for Medicare in certain circumstances, but Medicare is commonly known as "our country's health insurance program for people who are 65 or older." Medicare, SSA.Gov, http://www.ssa.gov/pgm/medicare.htm (last visited Feb. 3, 2014)("Medicare Overview"). Medicare is financed in part by taxes and in part by "monthly premiums deducted from social security checks." Medicare Overview. Medicare is broken up into four parts: (1) hospital insurance ("Part A"); (2) medical insurance ("Part B"); (3) Medicare advantage ("Part C"), which combines the health care services provided in Part A and Part B; and (4) prescription drug coverage ("Part D"). Medicare Overview. Each part of Medicare has a list of requirements, which determine whether a person will be eligible to receive Medicare benefits. Medicare Overview.

Part A includes coverage for "post-hospital extended care services for up to 100 days during any spell of illness." 42 U.S.C. § 1395d(a)(2)(A). A physician, nurse practitioner, clinical nurse specialist, or a physician assistant must certify that: (1) services are required because the person needs skilled nursing care or other "skilled rehabilitation services" on a daily basis; (2) services "can only be provided in a skilled nursing facility on an inpatient basis;" and (3) services are provided to address the condition for which the patient was receiving care for when he was an inpatient. 42 U.S.C. § 1395f(a)(2)(B) ; 42 C.F.R. § 409.31(b). Additionally, Medicare does not cover services that "are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member[.]" 42 U.S.C. § 1395y(a)(1)(A). A "skilled service" is defined as a service that is "so inherently complex that it can be safely and effectively performed only by, or under the supervision of, professional or technical personnel" such as a physician, registered nurse, physical therapist, occupational therapist, or speech pathologist.¹ 42 C.F.R. § 409.32(a) ; 42 C.F.R. § 409.31(a)(1–3).

Skilled nursing facilities such as Life Care are paid by Medicare through a prospective payment system ("PPS") based on provisions of the Balanced Budget Act of 1997 ("BBA"). Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities, 63 Fed.Reg. 26252–01 (May 12, 1998). The BBA "sets forth the formula for establishing [per diem Federal payment] rates as well as the data on which they are based". Id. The rates are created using the classifications of Resource Utilization Groups ("RUG"), which "uses measures of staff time and service frequency, variety, and duration" to classify patients as different levels. Id. ;Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for Fiscal Year 2006, 70 Fed.Reg. 45026–01 (Aug. 4, 2005). In calculating RUG levels, there are three types of therapy disciplines: occupational therapy, physical therapy, and speech pathology. 63 Fed.Reg. 26252–01. The structure of RUG groups and the daily PPS rate is adjusted from time to time; the RUG–III classification system was in place from January 1, 2006 until October 1, 2010, and the RUG–IV classification system has been in effect from October 1, 2010 until the present.² 70 Fed.Reg. 45026–01.

There are seven RUG–III categories: rehabilitation, extensive services, special services, clinically complex, impaired cognition, behavior, and physical. 63 Fed.Reg. 26252–01. The rehabilitation category is divided into five general sub-levels: (1) Rehab Ultra, which requires 720 minutes of treatment per week, two out of three rehabilitation therapy disciplines being used, and one discipline providing services 5 days of the week or more; (2) Rehab Very High, which requires 500 minutes of treatment per week and one discipline providing services 5 days of the week or more; (3) Rehab High, which requires 325 minutes of treatment a week with one discipline providing services 5 days of the week or more; (4) Rehab Medium, which requires 150 minutes of treatment from any of the 3 disciplines for at least 5 days of the week; and (5) Rehab Low, which requires 45 minutes of treatment a week from any of the 3 disciplines for at least 3 days of the week. Id. The higher the RUG level, the more money a skilled nursing facility will receive from Medicare for providing the services. See id. ("The Ultra High Rehabilitation sub-category is intended to apply only to the most complex cases requiring rehabilitative therapy well above the average amount of service time. This translates into higher charges for therapy services, both because treatment is more frequent and complex, and because length of stay is longer than for other skilled rehabilitation groups.").

RUG levels also consider a person's capacity to perform activities of daily living ("ADL") such as "bed mobility, toilet use, transfer from bed to chair, and eating." Id. ADL scores are broken into 5 different scores based on a person's capabilities ranging from categories of A, B, and C, which are for rehabilitation without extensive services, to categories L and X, which are rehabilitation with extensive services.

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