Two California Nursing Homes Accused of Medicare and Medicaid Fraud

On August 29, 2014, the United States Department of Justice filed an action against two nursing homes located in Watsonville, California for defrauding the Medicare and Medicaid programs. Filed under the False Claims Act (FCA), the lawsuit seeks recovery of $20 million and alleges that the nursing homes “severely overmedicated numerous residents, causing serious injuries and deaths over the course of six years.” Some of the alleged injuries resulting from the overmedication include “infection, sepsis, malnutrition, dehydration, falls, fractures, pressure sores,” and death.

Lawsuits by federal and state agencies against institutional health care providers, including nursing homes, for failing to provide adequate care (or any care at all) are not new. For years, the Office of the Inspector General, the Department of Justice, and attorneys general of various states have argued that liability under the FCA can be triggered even when care was provided, if that care was insufficient.

The FCA action filed against the Watsonville facilities, however, is potentially significant because it appears to signal a new theory of liability against health care providers. Rather than directly alleging that the care was inadequate or not provided, the gist of the complaint appears to dispute the type of care that was given. Of course, although overmedication as pleaded in the complaint may be tantamount to inadequate care, legitimate disputes can still exist over whether the patients in these cases were, in fact, overmedicated, given each particular patient’s clinical condition, plan of care, and physician orders.

It remains to be seen whether the government will succeed in this action, and it will be worth watching this case and its implications for liability under the FCA. If you have any questions about this alert, please contact Jonathon E. Cohn, or the Arent Fox professional who handles your matters.

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