United States ex rel. Hayward v. Savaseniorcare, LLC
| Decision Date | 27 September 2016 |
| Docket Number | No. 3:15-00404,No. 3:15-01102,No. 3:11-00821,3:11-00821,3:15-00404,3:15-01102 |
| Parties | UNITED STATES OF AMERICA ex rel. RITA HAYWARD, TRAMMELL KUKOYI, and TERRENCE SCOTT, Plaintiffs, v. SAVASENIORCARE, LLC, SAVASENIORCARE CONSULTING, LLC, SAVASENIORCARE ADMINISTRATIVE SERVICES, LLC, and SSC SUBMASTER HOLDINGS, LLC, Defendants. |
| Court | U.S. District Court — Middle District of Tennessee |
MEMORANDUM
This is an action under the False Claims Act ("FCA"), 31 U.S.C. §§ 3729-3733, originally brought by Relators Rita Hayward (Case No. 3:11-00821), Terrence Scott (Case No. 3:15-00404), and Trammell Kukoyi (Case No. 3:15-01102). The Government elected to intervene,1 the cases were consolidated into Case No. 3:11-00821, and the Government filed a 48-page, 211-paragraph Consolidated Complaint in Intervention (Docket No. 59, hereinafter cited as "CC").
The essence of the Government's Complaint is that, between October 1, 2008, and September 30, 2012, Defendants SavaSeniorCare, LLC, SavaSeniorCare Consulting, LLC, SavaSeniorCare Administrative Services, LLC, and SSC Submaster Holdings, LLC (collectively "Sava" or "Defendants,") improperly received millions of dollars by submitting false or fraudulent claims for payment to Medicare for rehabilitation services that were not medically reasonable andnecessary and/or not skilled in nature. Defendants now move to dismiss that Consolidated Complaint, along with the First Amended Complaints filed by Relators Hayward and Kukoyi.2
Common to the Motions to Dismiss is that the allegations fail to state a claim and, more specifically, that the alleged false statements are insufficiently plead. All of the parties point to the Consolidated Complaint to support their arguments on this central issue and it is for this reason, as well as the relevant standards of review, that the Court sets out the allegations in more detail than usual.3 Of course, most of what follows are mere allegations at this point and nothing more.
A. Medicare Benefits Scheme
The Medicare program is divided into four "Parts" that cover different services. Medicare Part A, the one at issue here, generally reimburses inpatient hospital services, home health and hospice care, and skilled nursing and rehabilitation care. It covers up to 100 days of skilled nursing and rehabilitation care for a benefit period, following a qualifying hospital stay of at least three consecutive days.
The daily reimbursement rate from Medicare for skilled nursing services and rehabilitation care varies based on the anticipated nursing and rehabilitation needs of the beneficiary. It depends, in part, on the Resource Utilization Group ("RUG") to which a patient is assigned, and, in part, on the patient's ability to perform certain Activities of Daily Living ("ADL").
There are five RUG levels: Rehabilitation Ultra High ("RU"); Rehabilitation Very High("RV"); Rehabilitation High ("RH"); Rehabilitation Medium ("RM"); and Rehabilitation Low ("RL"). The RUG level to which a patient is assigned depends upon both the number of skilled therapy minutes and the number of therapy disciplines the patient received during a seven-day assessment period as reflected in the following chart:
| Rehabilitation RUG level |
| Requirements to Attain RUG Level |
| RU = Ultra High |
| 1. Minimum 720 minutes per week total therapy |
| 2. At least two therapy disciplines |
| 3. One discipline4 must be provided at least 5 days/week RV = |
| Very High |
| RV = Very High |
| 1. Minimum 500 minutes per week total therapy |
| 2. One therapy discipline must be provided at least 5 days/week |
| RH= High |
| 1. Minimum 325 minutes per week total therapy |
| 2. One therapy discipline must be provided at least 5 days/week |
| RM = Medium |
| 1. Minimum 150 minutes per week total therapy |
| 2. Therapy must be provided at least 5 days/week |
| 3. Can be any mix of therapy disciplines |
| RL = Low |
| 1. Minimum 45 minutes per week total therapy |
| 2. Therapy must be provided at least 3 days/week |
| 3. Can be any mix of therapy disciplines |
(CC ¶ 40). Obviously, Medicare reimburses more for patients that are in the RU category, which is intended to apply only to the most complex cases.
Within each RUG level, reimbursement varies based on the patient's ADL, which considers things such as eating, using the toilet, bed mobility, and transfers (e.g., from a bed to a chair). It also considers the extent to which the patient needs "extensive services," such as intravenous treatment, a ventilator, tracheotomy, or suctioning. ADL scores of A, B, C, L, or X are assigned to each patient. Generally, a patient who can perform the activities of daily living without assistance is an "A"; a patient who requires assistance with all of the activities, but does not require any of theextensive services, is a "C"; a patient who requires only one of the extensive services is an "L"; and a patient who requires several of the extensive services is an "X."
The Medicare daily reimbursement rate varies significantly depending upon the RUG level and ADL score. Just by way of examples, and using the 2012 rates, the rate was $737.08 for an RU patient with an "X" ADL score; $471.71 for an RH patent with a "C" ADL score; and $229.89 for RL patient with an "A" ADL score.
Skilled Nursing Facilities ("SNFs") are required to periodically assess each patient's condition and submit the results on a Minimum Data Set ("MDS") form, which is used to determine the daily reimbursement rate. Generally, patients must be assessed and the MDS form completed on the 5th, 14th, 30th, 60th, and 90th day of the patient's stay in the facility. The date of the assessment is known as the "assessment reference date," and that assessment (except for the first one) looks at the patient for the seven preceding days, which is the "look-back period." (CC ¶ 47). SNFs are required to report on the MDS the number of minutes of skilled rehabilitation therapy the facility provided to a patient during the look-back period as well as the type(s) of therapy provided.
Medicare payments are made prospectively for a defined period of time. For example, if a patient is assessed on day 14 of his stay, and received 720 minutes of therapy during days 7 through 14 of the stay, then the facility is paid for the patient at the Ultra High RUG level for days 15 through 30 of the patient's stay.
Completion of the MDS is a prerequisite to payment under Medicare. The MDS itself requires a certification by the provider that states, in part:
(CC ¶ 51). Forms are submitted electronically to Medicare payment processors. B. Sava's Structure and Operations
Sava is "organized in a pyramidal corporate structure." (CC ¶ 54). Defendant SavaSeniorCare, LLC "sits atop" that structure, and, through its subsidiaries, owned and managed the operations of approximately 185 SNFs in 19 states (including Tennessee) during the relevant period. (CC ¶ 20). The remaining Defendants are (or were) wholly owned subsidiaries of SavaSeniorCare, LLC: (1) SavaSeniorCare Consulting, LLC provided consulting services and operational oversight to the SNFs, and employed most of the corporate-level rehabilitation and operations employees; (2) SavaSeniorCare Administrative Services, LLC performed certain "back-office" services for Sava's SNFs, including submitting claims to Medicare, and employed Sava's Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), Senior Vice President ("SVP") of Rehabilitation Services, and high-level finance employees; and (3) SSC Submaster Holdings, LLC provided services for the SNFs and employed many of Sava's corporate-level rehabilitation and operations employees, some of whom later went to work for SavaSeniorCare Administrative Services and SavaSeniorCare Consulting when SSC Submaster Holdings ceased to exist in 2010.
Tony Oglesby "is at the top of Sava's corporate structure," serving as its CEO since 2005, and acquiring a majority ownership in Sava in October 2013. (CC ¶ 54). The corporate rehabilitation department is led by Stacey Hallissey, who served from 2006 through at least 2012 as SVP of Rehabilitation Services and reported directly to Mr. Oglesby.
"Sava is organized in geographic divisions below Mr. Oglesby," and, although its structure changed over time, for most of the relevant time period, it had two division, East and West, that, inturn, were subdivided into regions. (CC ¶ 55). Division Vice Presidents ("DVPs") of Rehabilitation Services report directly to Ms. Hallissey; the Regional Director of Rehabilitation ("RDR") in each region reported to his or her DVP.
The rehabilitation department at each SNF was managed by a Rehabilitation Program Manager ("RPM") who reported to the regional director and also reported to the SNF administrator. For the most part, the SNF administrators had no clinical training or certification in the provision of skilled rehabilitation therapy, but nevertheless often participated in planning patient care.
The therapy staff of each facility typically included physical therapists, physical therapy assistants, occupational therapists, certified occupational therapy assistants, and speech language pathologists. Each facility also had at least one MDS coordinator (usually a registered nurse) who was ostensibly responsible for collecting all of the information needed for the MDS and determining the assessment reference date. In practice, however, Sava's corporate rehabilitation department pushed facility-level employees to choose the days that would result in the highest RUG level and, therefore, the highest payment.
Control over the submission of claims for services provided at the SNFs was centralized, as was the receipt of reimbursements. That is, even though individual facilities had their...
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