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False Claims Act Statistics, News & Analysis

A Roll of the Dice: FCA Jury Verdict Finds Over $115 Million in Damages

After betting it all on a federal jury in Florida, four defendants in a non-intervened qui tam FCA action now face more than $347 million in damages. The jury returned a verdict for $115 million, which the court then trebled and tacked on more than $2.4 million in penalties. In United States and Florida ex rel. Ruckh v. CMC II, LLC, et al., 8:11-cv-1303 (M.D. Fl.), the four corporate defendants—CMC II LLC, Salus Rehabilitation LLC, 207 Marshall Drive Operations LLC, and 803 Oak Street Operations LLC—were found to have submitted, or caused to be submitted, false claims to Medicare and Medicaid for patient care that was unneeded, or not supplied at all, at 53 skilled nursing facilities (“SNFs”) in Florida. In rare jury verdicts like this and the verdict we covered last year, the jury’s verdict is only the first bad draw for defendants: trebling, penalties, attorney’s fees, reasonable expenses, and costs are all part of the second wave of misfortune when an FCA defendant loses at trial.

The relator, a registered nurse and former employee of two SNFs managed by defendants, alleged that defendants falsified Minimum Data Set Assessments (“MDS Assessments”) submitted to the government for reimbursement for patient care. Defendants allegedly falsified the MDS Assessments by overstating patients’ medical needs and the amount of care provided to them. By doing so, patients’ ratings for the level of care they needed were inflated, which in turn, generated higher reimbursement rates for defendants from Medicare. Defendants also allegedly falsified MDS Assessments they submitted to Florida’s Medicaid system, by reporting that they had completed necessary care plans for their Medicaid residents, when in fact, they had failed to do so to save costs.

Heading into trial, defendants were at a severe disadvantage because of a discovery-related sanction the court imposed in 2015 after finding that defendants had improperly withheld email evidence during discovery that would reveal defendants’ corporate knowledge and fraudulent intentions regarding the alleged false claims. As a result, the court imposed a rebuttable presumption of established fact with respect to the knowledge element of each of the relator’s claims. After losing a motion for summary judgment in December 2016, and in spite of the handicap presented by the discovery ruling, the defendants nevertheless decided to go all in by letting the case play out at trial. Unfortunately for these defendants, their hand was not strong enough to win in front of the jury.

Trial transcripts have yet to be released, but we will be watching the docket to provide any updates when they are.

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Amy Lamoureux Riella

Amy Lamoureux Riella Partner

Daniel T. Wallmuth

Daniel T. Wallmuth Associate