United States ex rel. Horsley v. Comfort Care Home Health, LLC

UNITED STATES OF AMERICA, ex rel. ERIN HORSLEY, Plaintiffs, v. COMFORT CARE HOME HEALTH, LLC; et al., Defendants.

Case No.: 2:19-CV-00229-RDP

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

July 15, 2020

MEMORANDUM OPINION

This case involves a qui tam action filed by Plaintiff-Relator Erin Horsley ("Relator" or "Horsley") against Defendants Comfort Care Home Health, LLC, Woodland Home Health Services-CRMC, LLC, Trilogy Physical Services, LLC, Jonathan James, Alan Stewart, and Steve Carmen. (See Doc. # 1). She asserts claims under the False Claims Act. See 31 U.S.C. § 3729. Horsley originally filed this action, but the United States thereafter intervened pursuant to its authority under 31 U.S.C. § 3730(c)(2). After doing so, it reached a proposed settlement with Defendants, and has now filed two motions: one asking the court to find the proposed settlement is fair, adequate, and reasonable (Doc. # 21); and the other seeking dismissal of all unreleased claims (Doc. # 22). Horsley opposes the motions. The motions are fully briefed (Docs. # 26, 27, 32). After careful consideration, the court concludes that both motions (Docs. # 21, 22) are due to be granted.

I. Background

This case stems from claims that several home health care companies engaged in Medicare fraud. Because the procedural history of this case is complex, the court has divided the "Background" portion of this opinion into three sections. The court first reviews the legal background of this case, including an overview of the False Claims Act and the relevant Medicare reimbursement processes applicable to home health care companies. The court then discusses the factual background of this case, including the parties' relationships with one another. Finally, the court details the relevant procedural background of this action, beginning with the filing of Plaintiff-Relator's complaint through the government's decision to intervene and eventually settle the case with Defendants.

A. Legal Background

The False Claims Act ("FCA") is a federal statute that prohibits any individual or entity from knowingly submitting a false or fraudulent claim to the government for compensation or approval, or knowingly making, using, or causing to be made or used, a false record or statement that is material to a false or fraudulent claim. See 31 U.S.C. §§ 3729(a)(1), 3729(a)(1)(A)-(B). The FCA also forbids anyone from concealing or circumventing any obligation to remit money back to the federal government. 31 U.S.C. § 3729(a)(1)(G). The terms "knowing" or "knowingly" are defined in the Act and they cover any individual who, with regards to material information: "(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information." 31 U.S.C. § 3729(b).

Recognizing that the government will not always be able to detect or protect against fraud, Congress authorized private parties to bring claims on behalf of the government. "In a qui tamaction, [a] relator pursues the government's claim against the defendant, and asserts the injury in face suffered by the government." United States ex rel., Farmer v. Honduras, No. 17-00470-KD-N, 2020 WL 496509, at *5-6 (S.D. Ala. Jan. 30, 2020) (internal quotation marks and citations omitted), appeal docketed, United States v. McAvoy, No. 20-10604 (11th Cir. Feb. 18, 2020). The United States remains the real party in interest. United States v. Everglades Coll., Inc., 855 F.3d 1279, 1289 (11th Cir. 2017). "In bringing a qui tam action the relator in effect su[es] as a partial assignee of the United States." Id. (bracketed text in original). "If the United States decides to intervene, the government acquires 'primary responsibility for prosecuting the action,' although the relator remains a party" to the action. United States ex rel. Hunt v. Cochise Consultancy, Inc., 887 F.3d 1081, 1086-87 (11th Cir. 2018) (internal quotation marks and citations omitted), cert. granted sub nom. Cochise Consultancy, Inc. v. U.S. ex rel. Hunt, 139 S. Ct. 566 (2018), aff'd, 139 S. Ct. 1507 (2019).

Relevant to this action, the government (as part of the Medicare program) will pay for certain home health services, including part-time or intermittent skilled nursing care, speech-language pathology, physical or occupational therapy, part-time or intermittent skilled home health-aid services, and medical social services. See 42 U.S.C. §§ 1395d(a)(3), 1395k(a)(2)(A), 1395x(m). To receive Medicare reimbursement, when creating a patient's plan of treatment, a physician must also certify that the patient meets a certain set of coverage requirements. 42 C.F.R. § 424.22. That is, the physician must certify that: (1) the patient needs the particular type of home health service; (2) the patient was non-ambulatory or homebound (except when receiving outpatient services) and therefore needs the home health service; (3) the patient's treatment plan for home health services has been established and will be periodically reviewed by a licensed physician; and (4) that the home health service was administered to the patient while under thecare of a licensed physician. See 42 C.F.R. §§ 424.22(d), 424.22(a)(1); see also 42 U.S.C. § 1395n(a). Additionally, the physician reviewing the patient's treatment plan must recertify every sixty-days that the patient still needs the home health services, and must provide an as to estimate how much longer the patient will require the services. See 42 C.F.R. § 424.22(b)(1)-(2). If the home health agency transfers or discharges a patient, and the patient returns to the same home health agency, recertification must occur during the first sixty days. See 42 C.F.R. § 424.22(b)(1).

B. Factual Background

Defendant Comfort Care Home Health, LLC ("Comfort Care") manages a number of home health agencies in Alabama including Defendant Woodland Home Health Services-CRMC, LLC ("Woodland"). (Doc. # 26 at ¶ 2). Comfort Care is also a partial owner of Woodland. (Id.). Trilogy Physician Services, LLC ("Trilogy") provides physician home visits for non-ambulatory patients. (Doc. # 26 at ¶ 4). Defendant Alan Stewart ("Stewart") was a partial founder and owner of Trilogy. (Id.). In 2017, he sold his ownership interest in Trilogy and was named COO of Comfort Care. (Id.). Defendant Steven Carman ("Carman") is a regional administrator of Comfort Care, and Defendant Jonathan James ("James") is the agency administrator of Woodland. (Doc. # 26 at ¶ 2).

Horsley¹ worked as a licensed nurse for Comfort Care. (Doc. # 1 at ¶ 5). She claims that Defendants' business practices were designed to "fraudulently maximize billing to the United States by falsely representing the type and severity of patients' medical conditions." (Id.). For example, Horsley asserts that she witnessed countless examples of Comfort Care fraudulently inflating its Medicare billing by amplifying the severity of the patient's medical condition and need for home health services, through a process known as "upcoding." (Doc. # 1 at ¶ 34). Specifically, she alleges that Comfort Care engaged in upcoding at two different levels. (Doc. # 1at ¶ 44). First, Comfort Care provided medically unnecessary home health services by falsely certifying that patients needed a higher level of care than they actually did. (Id.). Second, Comfort Care recertified patients' treatment plans to continue providing home health services, even when they were no longer necessary for the patient. (Id.).

C. Procedural Background

On February 7, 2019, Horsley filed her complaint on behalf of the government against Comfort Care, Woodland, Trilogy, Stewart, Carman, and James (collectively "Defendants"). (Doc. # 1 at ¶ 2). Specifically, Horsley alleged that Defendants violated the FCA by upcoding the severity of patients' conditions, providing medically unnecessary therapy services to patients, recertifying patients who did not need home-health services, improperly "checking-in" new orders for home-health services, and, on at least one occasion, billing for work that was not actually performed. (Doc. # 26 at ¶ 3). Horsley also alleged that Woodland automatically assigns patients to Trilogy without the patients' consent, even if Trilogy's services for those patients were not medically necessary. (Id. at ¶ 5).

After Horsley's complaint was received by the government, it began an analysis of the relevant Medicare claims and data. (Doc. # 26 at ¶ 6). The government pulled Medicare Part A claims² for Woodland and four other Comfort Care home-health agencies to compare recertification rates. (Id.). The government also pulled the Medicare Part B claims for individuals who received home-health services from Woodland in order to find providers, not associated with Comfort Care and Woodland, who could attest to the medical status of the patient beneficiaries. (Id. at ¶ 7). The Medicare Part B claims provided the government with a way to check the home-health diagnoses with other treatment diagnoses for consistency. (Id.). Finally, the governmentviewed Medicare claims from Trilogy to discover the number of patients who received services from both Trilogy and Woodland, by which they could ascertain the amount of money paid by Medicare to Trilogy for those patients. (Doc. # 26 at ¶ 8).

The government conducted approximately nineteen witness interviews and served a number of investigative demands and interrogatories on Comfort Care and Woodland. (Doc. # 26 at ¶ 9). In response, the companies submitted around 47,000 pages of documents. (Id.). The government and several consulting experts reviewed the submissions and found the medical records of twenty-five beneficiaries who received services from Woodland. (Id. at ¶ 10). These twenty-five patients were chosen by the government based on claims data and medical provider interviews. (Id.). Then, medical experts evaluated the medical necessity of...