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False Claims Act Statistics, News & Analysis

Nursing Homes Save Payment for Another Day as Court Grants Emergency Motion to Stay $347 Million in Judgments Against Them

We last reported on United States and Florida ex rel. Ruckh v. CMC II, LLC, et al., 8:11-cv-1303 (M.D. Fl.) earlier this month, when a federal jury returned a verdict for $115 million against the defendant nursing homes, finding that defendants had submitted false claims to Medicare and Medicaid for unnecessary patient care or patient care that was never supplied. After trebling and additional penalties, CMC II and the other corporate defendants now face over $347 million in damages. In an unusual turn of events, the defendants filed an emergency motion on March 13 in which they asked the court to stay the execution of judgments pending the Court’s consideration of one or more post-trial motions to be filed by the end of March. The emergency motion went unopposed, and the court granted the motion.

The defendants explained that they “cannot come close to paying the Judgments,” and further, that the judgments would trigger a default on some of defendants’ loans that would “trigger a coextensive financial collapse of approximately 183 non-Defendant affiliated skilled nursing facilities.” The defendants elaborated that they are co-obligors on loans with other non-defendant nursing facilities, suggesting that other facilities not implicated in the lawsuit would be dramatically affected and possibly forced to close if execution of the judgments was not stayed pending consideration of post-trial motions. They also explained that even if they were to enter bankruptcy, substantially all of their assets would be pledged as security to pre-existing creditors, which “would deeply complicate” efforts by the relator and the government to collect on the judgments if they were enforced immediately.

In its order granting the motion, the court cited possible harm to patients as a major factor in support of the stay, stating: “[t]he specter of a ‘cascading default’ that might force the closing of 183 skilled nursing facilities and might displace more than 17,000 vulnerable patients warrants a stay of execution on the judgments during the pendency of the defendants’ renewed motion for judgment as a matter of law.” During the stay, the defendants are forbidden from conducting transactions outside the ordinary course of business, must respond promptly to reasonable requests by the relator and the government for the defendants’ financial information, and must allow the relator and the government to access the defendants’ financial records. Further, the court provided that the relator and the government may request additional requirements if the defendants’ finances or conduct create the need for additional security other than a bond.

The nursing homes’ post-trial motions are due on March 29. A lot is riding on them.

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