U.S. & Ill. ex rel. O'Donnell v. Am. At Home Healthcare & Nursing Servs., Ltd.
| Decision Date | 20 June 2017 |
| Docket Number | Case No. 14-cv-1098 |
| Parties | UNITED STATES OF AMERICA and the STATE OF ILLINOIS ex rel. AMY O'DONNELL, Relator/Plaintiff, v. AMERICA AT HOME HEALTHCARE AND NURSING SERVICES, LTD., d/b/a ANGELS AT HOME HEALTHCARE, et al. Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Relator and Plaintiff Amy O'Donnell ("Relator") filed this qui tam action under the False Claims Act ("FCA"), 31 U.S.C. § 3729, et seq., and its Illinois counterpart, the Illinois False Claims Act ("IFCA"), 740 ILCS § 175/1, et seq., on behalf of the United States and the State of Illinois. Relator sues corporate Defendant America at Home Healthcare and Nursing Services, Ltd. d/b/a Angels at Home Healthcare ("AAH"), as well at its purported successor, Great Lakes Acquisition Corp. d/b/a Great Lakes Caring ("Great Lakes"). Relator also sues former AAH employees Rachael Fitzpatrick ("Fitzpatrick"), Tami Shemanske ("Shemanske"), and Kim Richards ("Richards") (collectively, the "Individual Defendants").
Relator alleges that, beginning in 2006, AAH and the Individual Defendants routinely engaged in multiple fraudulent Medicare and Medicaid payment schemes, which continued after Great Lakes purchased AAH in approximately March 2015. Relator filed her Second Amended Complaint ("SAC") [69] on February 13, 2017. On March 14, 2017, Defendants AAH, Fitzpatrick, Shemanske, and Richards (collectively, the "AAH Defendants") filed a joint Motion to Dismiss Relator's complaint pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). AAH Defs.' Mot. Dismiss [79]. Great Lakes filed its own Motion to Dismiss the same day. Great Lakes' Mot. Dismiss [76]. This Memorandum Opinion and Order addresses both pending motions, which, for the reasons discussed below, are granted in part and denied in part.
The federal Medicare and Medicaid programs provide government health insurance for elderly, disabled, and low-income Americans. SAC [69] ¶ 45. Both programs, which are administered by the Centers for Medicare and Medicaid Services ("CMS"), reimburse health care providers for certain "home health services" rendered to eligible beneficiaries. Id. ¶¶ 46-47. "Home health services" are defined as "items and services" provided on a "visiting basis" by a home health agency ("HHA") to individuals in their place of residence. 42 U.S.C. § 1395x. Defendant AAH, and later Defendant Great Lakes, are two such HHAs. Potential "home health services" include, inter alia, part-time or intermittent nursing care,physical or occupational therapy or speech-language pathology services, medical social services, and part-time or intermittent services of a home health aide. SAC [69] ¶ 47.
To qualify for home health services, a beneficiary must be: (1) confined to his home or in an institution that is not a hospital, skilled nursing facility, or nursing facility; (2) under the care of a physician who establishes and periodically reviews a plan of care; and (3) in need of at least one of the aforementioned home health services, as certified by a physician. Id. ¶ 50.
According to Relator, HHAs may not solicit patients for home health services. Id. ¶ 48. Instead, HHAs must receive a physician referral. Id. Moreover, the federal Anti-Kickback Statute ("AKS"), 42 U.S.C. § 1320a-7b, prohibits HHAs from paying kickbacks, bribes, or rebates to doctors (or any other individual) in exchange for home health service referrals. Similarly, the Stark Law, 42 U.S.C. § 1395nn(a)(1), prohibits a physician from referring patients to entities with which the physician maintains a financial relationship.
Upon receipt of a physician's referral, an HHA conducts its own initial medical assessment to determine a patient's medical needs and eligibility for home health services. SAC [69] ¶ 58. The HHA documents this initial assessment in an Outcome and Assessment Information Set ("OASIS") form and transmits that form to the government. Id. ¶ 59. Federal regulations require that this data accurately reflect the patient's status at the time of the assessment. Id. ¶ 88.
Medicare pays HHAs through what is known as the Prospective Payment System ("PPS"). Id. ¶ 66. PPS payments are based upon sixty-day "episodes" of care, and are designed to reimburse HHAs for all items and services provided during that period. Id. ¶ 67. These episodic payments are further divided into an estimated payment at the onset of the sixty-day period, followed by a residual payment at the close of the episode. Id. ¶ 71.
Residual payments are occasionally subject to adjustments. One potential downward adjustment—known as a "low-utilization payment adjustment" or "LUPA"—occurs when a patient is visited by the HHA four or fewer times during the 60-day episode of care. Id. ¶ 72. Upward adjustments, on the other hand, may occur when an HHA reaches certain "therapy thresholds." Id. ¶ 73. Under this three-tiered step system, payments are progressively increased when a patient receives six, fourteen, or twenty therapy visits during an episode of care. Id.
In addition to payment adjustments within each episode of care, payments across multiple episodes may be adjusted to account for the patient's changing health condition, clinical characteristics, and service needs (known as the ). Id. ¶¶ 67-68. There are eighty established case-mix groups (known as "Home Health Resource Groups," or "HHRGs"), which are based upon score values derived from the patient's OASIS form. Id. ¶¶ 68-69.
After a patient's sixty-day episode of care has ended, the patient may be recertified for an additional sixty-day period, provided that home health care continues to meet coverage rules. Id. ¶ 74. To recertify, the HHA must determine(through its own assessment) that the patient remains homebound and continues to require a qualifying home health service. Id. ¶ 63. Based upon the HHAs findings, a physician then re-certifies the qualifying conditions and plan of care for the patient. Id. ¶ 62. As with the initial episode of care, the HHA must document its recertification assessment in an OASIS form and transmit that form to the government. Id. ¶¶ 64, 87.
Relator is a licensed registered nurse who was employed by AAH as a case manager between January 2008 and June 2011. SAC [69] ¶ 10. Relator alleges that beginning in 2006, Defendants fraudulently billed the government for millions of dollars of Medicare and Medicaid services that violated the assorted regulations discussed above. Id. ¶ 105. Specifically, Relator alleges that Defendants:
Relator claims that many of these instances involved the Individual Defendants, and continued after Defendant Great Lakes purchased AAH in March 2015. Id. ¶ 4.
Relator originally filed suit in this Court on February 14, 2014. See Compl. [1]. The United States declined to intervene on April 18, 2016, see Notice [10], and the record was unsealed on April 26, 2016. Order [12]. Relator originally brought four claims in her SAC:
SAC [69] ¶¶ 240-96.
In her response to Defendants' motions, Relator "does not contest Defendants' challenges" to Counts II and III. Rel.'s Resp. [85] 3 n. 2. Defendants' motions to dismiss are therefore granted as to those claims. The Court analyzes Defendants' remaining challenges to Counts I and V below.
A motion to dismiss under Rule 12(b)(6) "challenges the sufficiency of the complaint for failure to state a claim upon which relief may be granted." Gen. Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997). To survive a motion to dismiss, a complaint must first provide a "short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), such that the defendant is given "fair notice" of...
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