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Portion of award reinstated in whistleblower case


A federal appeals court has reinstated an $85.1 million jury award against rehabilitation firms in a case brought by a whistleblower that charged violations of the False Claims Act with respect to Medicare and Medicaid claims.

In 2011, Angela Ruckh, a registered nurse, filed suit against two skilled nursing home facilities, two related entries that provided management services at those facilities and 51 other facilities in Florida and an affiliated company that provided rehabilitation services, charging violations of the False Claims Act and the Florida False Claims act,  according to Thursday’s ruling in Angela Ruckh v. Salus Rehabilitation LLC, d.b.a. La Vie Rehab, 207 Marshall Drive Operations, LLC d.b.a. Marshall Health and Rehabilitation Center, et al.

After a month-long trial, a jury in U.S. District Court in Tampa, Florida, found the defendants liable for the submission of 420 fraudulent Medicare claims and 26 fraudulent Medicaid claims and awarded $115.1 million in damages, according to the ruling.

After applying statutory trebling and penalties, the district court entered judgment in favor of the whistleblower, the United States and the state of Florida for $347.9 million.

The district court then, however, set aside the jury’s verdict as “unsupported by the evidence,” and granted judgment to the defendants as a matter of law.

A three-judge appeals court panel unanimously reinstated the $85.1 million Medicare award, but upheld dismissal of the Medicaid award.

The total award reinstated is more than $255 million after trebling and statutory penalties, according to a spokeswoman for Ms. Ruckh’s firm, Kellogg, Hansen, Todd, Figel & Frederick PLL. 

“Drawing all inferences in favor of the relator, as we must...we conclude that the evidence at trial permitted a reasonable jury to find that the defendants committed Medicare-related fraud,” the ruling said.

It said a jury “could reasonably conclude the defendants engaged in ramping,” which it defined as “the impermissible, artificial timing of services to coincide with Medicare’s regularly scheduled assessment periods and thereby maximize reimbursements.”

On the Medicaid fraud claims, the panel affirmed the lower court’s dismissal of the award. “The relator’s sole allegation as to Medicaid fraud consists of the defendants’ failure to prepare and maintain comprehensive care plans for their residents,” the ruling said.

“Even if we accept this allegation as true, we hold that the failure to do so cannot establish Medicaid fraud as a matter of law,” it said. The whistleblower “was required to prove not only that the defendants failed to comply with this requirement, but that their failure to do so was material.”

The case was remanded for further proceedings.

Ms. Ruckh’s attorney, Derek T. Ho, a partner with Kellogg, Hansen, said in a statement, “We are pleased that the jury’s verdict has been reinstated and we are thankful for our client’s efforts and personal sacrifice to ensure that American taxpayers’ money is not wasted due to fraudulent business practices.”

A defense attorney in the case had no comment.

In May, a federal appeals court overturned a lower court ruling and held that an adult care home operator is entitled to coverage in connection with a False Claims Act lawsuit.






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