Eleventh Circuit restores most of multimillion dollar verdict in favor of qui tam relator backed by litigation funder

On June 25, 2020, the United States Court of Appeals for the Eleventh Circuit reversed one of the most noted False Claims Act (FCA) decisions to have been handed down in a decade and reinstated most of a 2017 jury verdict holding owners and operators of skilled nursing facilities liable for damages and penalties under the FCA. While applying the same "rigorous" post-Escobar materiality and knowledge standards that led the trial judge to find the trial record showed "an entire absence of evidence" of materiality, the appellate court found that “plain and obvious” evidence of materiality supported a verdict of $85 million in single damages for Medicare fraud. But in affirming the trial court’s rejection of the jury’s verdict finding fraud on the Florida Medicaid program, the panel also showed that Escobar materiality can meaningfully limit the reach of the FCA in the right circumstances.

Background

In 2011, Relator Angela Ruckh filed a qui tam complaint against five defendants who provided and managed the provision of skilled nursing facility services in Florida. Ruckh alleged that the defendants engaged in "upcoding" claims for covered Medicare services by artificially inflating Resource Utilization Group codes to get higher Minimum Data Set assessment scores, and engaged in the "ramping" of treatment – artificially timing services to coincide with Medicare’s regularly scheduled assessment periods to maximize forward-looking reimbursement levels. Both practices, she alleged, had the effect of increasing Medicare reimbursement for the services. She also contended that defendants had failed to prepare and maintain comprehensive care plans for Medicaid patients resident in their facilities. A jury in the U.S. District Court for the Middle District of Florida returned a verdict for the relator, awarding $115 million in single damages. The district court entered a judgment in favor of the relator, the United States, and the State of Florida for nearly $348 million after trebling and the imposition of penalties. Following entry of judgment, the defendants renewed a pending motion for judgment as a matter of law, challenging the findings of both Medicare and Medicaid fraud for lack of materiality.

Read more: Eleventh Circuit restores most of multimillion dollar verdict in favor of qui tam relator backed by litigation funder


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