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Eleventh Circuit reverses district court, finds that sufficient evidence supported verdict against defendant nursing home facilities in False Claims Act case filed by former employee

On June 25, 2020, in Ruckh v. Salus Rehabilitation, LLC, et al, No. 18-10500, the Eleventh Circuit Court of Appeals reversed a district court ruling which had set aside a jury verdict in favor of the plaintiff in a qui tam action brought under the federal False Claims Act, 31 U.S.C. §§ 3729 et seq. (the “FCA”), and the Florida False Claims Act, Fla. Stat. §§ 68.081 et seq. (the “Florida FCA”). The plaintiff in the case is a registered nurse who acted as the initial whistleblower or “relator” in the case),and the prosecuted the action on her own after both the United States and the State of Florida declined to intervene. The defendants are two Florida nursing home facilities and related entities. The plaintiff claimed that that the defendants were misrepresenting the services they provided to Medicare beneficiaries and failing to comply with certain Medicaid requirements in three ways: first, the defendants routinely engaged in “upcoding” regarding Medicare charges, or the artificial inflation of codes for services; second, the defendants engaged in “ramping” regarding Medicare charges or the timing of spikes in treatment to coincide with Medicare assessment periods, which exaggerated the required payment levels; and third, the defendants submitted claims for Medicaid reimbursement without creating or maintaining comprehensive care plans. The federal trial jury found the defendants liable for the submission of 420 fraudulent Medicare claims and 26 fraudulent Medicaid claims and awarded $115,137,095. After applying statutory trebling and penalties, the district court entered judgment in favor of the relator, the United States, and the State of Florida in the total amount of $347,864,285, but subsequently set aside the verdict and judgment as unsupported by the evidence, relying mainly on the assessment that the relator failed to introduce evidence of materiality and scienter at trial. The district court held that “the relator failed to offer competent evidence that defendants knew that the governments regarded the disputed practices as material” and would have refused to pay the claims had they known about the disputed practices. The Eleventh Circuit disagreed regarding the Medicare counts, finding that the upcoding and ramping practices were material and that it was within the jury’s province to determine whether “mistake” was an implausible explanation for the defendant’s actions. However, the Eleventh Circuit concluded that the district court did not err in dismissing the counts relating to the 26 Medicaid claims, finding that the lack of comprehensive care plans could not establish Medicaid fraud as a matter of law. The defendants also argued that the plaintiff had no standing to appeal because she had assigned 4% of her recovery to a litigation funding company. The Eleventh Circuit rejected this argument based on the plaintiff’s continued interest in the balance of the recovery.