Health Care Industry Takes Note After Nine-Figure Whistleblower Verdict

We’ve previously discussed whistleblower claims in the context of the Wall Street firms, main street banks and defense subcontractors. Though these represent a large share of whistleblower awards, there are many other claims making their way through the court system involving other industries. A recent and notable example comes in the health care world, where a major national nursing home chain was just ordered to pay damages well into the nine figures. To learn more, keep reading.

The case at issue is U.S. ex rel. Ruckh v. CMCII, LLC. The False Claims Act case was brought by Angela Ruckh, a registered nurse and former employee of the defendant, Consulate Health Care. According to Ruckh, her former employer had engaged in a years-long scheme to defraud the federal government of hundreds of millions of dollars. The scheme was aimed at skimming money from Medicare and Medicaid programs by upcoding therapy claims. According to Ruckh, the company would submit invoices for treatments that never occurred, choosing to bill for more expensive procedures than what was actually performed. Since bringing the claim, Ruckh was terminated.

The judgment against Consulate was entered on March 1, 2017, by a court in Florida after a 20-day trial. During the trial, Ruckh testified based on what she learned of company practices while serving as a consultant at two Consulate-managed nursing facilities. The plaintiff’s attorney and their expert witnesses put forward evidence showing that Consulate’s practices resulted in the loss of $115 million to Medicare and Medicaid based on 446 specific incidents of fraud.

Despite the seemingly solid evidence from a credible source, the federal government never intervened in the case. Ruckh filed her False Claims Act case back in 2012, but the government declined to participate. Despite the lack of assistance, she persisted and fought Consulate alone on the government’s behalf. Her case survived a motion for summary judgment and other procedural hurdles meant to deny a jury the chance to hear the case and hand down damages.

Ruckh’s hard work appears to have paid off, both for her and U.S. taxpayers. After deliberating, the jury returned a verdict requiring Consulate to pay $331 million in damages. The extraordinary sum is thanks to provisions of the False Claims Act, which require that damages be tripled in certain cases. Though no one has officially said what Ruckh’s share of the settlement will be, experts say it’s certain to be substantial. In most False Claims Act cases, whistleblowers receive somewhere between 15 and 25 percent of the total damages awarded. Should Consulate actually pay such a sum, that could mean that Ruckh’s stake is between $49 and $82 million, a hefty reward for her efforts to expose a serious example of government health care fraud.

Therapy Upcoding Case Brings $347 Million Judgment Against Consulate, by Emily Mongan, published at McKnight's on March 3, 2017.

Consulate Health Care Clobbered With $347M Fraud Judgment, by Eric Topor, published at Bloomberg on March 3, 2017.