A multi-office team of Reed Smith litigators and health care regulatory lawyers has forced the U.S. Department of Justice (DOJ) to dismiss a billion-dollar False Claims Act (FCA) lawsuit against our long-time client HCR ManorCare. After six years of investigation while three consolidated cases remained under seal, DOJ intervened and filed its own complaint in early 2015, alleging that HCR ManorCare, the industry leader in post-acute rehabilitation care, had delivered unnecessary therapy to patients covered under Medicare Part A in its skilled nursing facilities. DOJ’s theory was consistent with an industry-wide series of cases against other skilled nursing facility providers. HCR ManorCare was determined to fight, certain that the allegations were not true.
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On November 8, 2017, with HCR ManorCare’s motion for summary judgment pending, DOJ advised the federal court in the Eastern District of Virginia of its intention to dismiss the case with prejudice. After two and a half years of discovery, our Reed Smith team had convinced the court that DOJ’s main expert witness, a long-time employee of Medicare contractor AdvanceMed, had lied in her deposition. This resulted in the U.S. magistrate judge overseeing discovery to impose a sanction against DOJ, and the expert’s report and testimony were stricken from the case. One week later the federal district judge granted HCR ManorCare’s motion to exclude the same expert because she was not qualified or reliable. Faced with two court orders excluding its expert witness, DOJ informed the court of its intention to dismiss the case with prejudice, clearly to avoid certain summary judgment. Because of this action by DOJ, it cannot appeal the rulings of the magistrate or district judge.
In this case DOJ sought to extrapolate its expert’s opinions about whether rehabilitation services provided to a sample of 180 patients were reasonable and necessary to a universe of 250,000 claims submitted for patients treated by HCR ManorCare. DOJ was seeking not just to extrapolate damages, but also to extrapolate liability. Our Reed Smith team engaged qualified experts to rebut DOJ’s experts, and also interviewed hundreds of clinicians who treated the sample patients, to confirm that no unnecessary services were delivered.
During discovery, our Reed Smith team obtained multiple sanctions and other favorable rulings from the court to overcome DOJ’s attempts to block discovery from Medicare contractors and hide names of witnesses who provided favorable testimony. As such, our team was able to affirmatively prove that DOJ’s case relied entirely on subjective and undocumented claim denial criteria that were created for litigation by DOJ and its experts.