United States v. Speqtrum, Inc.

• Decision Date: 13 June 2014
• Docket Number: Civil Action No. 10–2111 JEB
• Parties: United States of America, Plaintiff, v. Speqtrum, Inc., d/b/a Speqtrum Health Care Services, Defendant.
• Court: U.S. District Court — District of Columbia

47 F.Supp.3d 81

United States of America, Plaintiff

v.Speqtrum, Inc., d/b/a Speqtrum Health Care Services, Defendant.

Civil Action No. 10–2111 JEB

United States District Court, District of Columbia.

Signed June 13, 2014

Darrell C. Valdez, U.S. Attorney's Office, Washington, DC, for Plaintiff.

Patrick J. Christmas, Patrick J. Christmas & Associates, PC, Silver Spring, MD, Rita Grant Ndirika, Grant Law Office, Lanham, MD, for Defendant.

MEMORANDUM OPINION

JAMES E. BOASBERG, United States District Judge

Florence Nightingale once said that “nursing is an art.” In this case, the Government contends that employees of one D.C. healthcare provider were better schooled in the art of fraud than the art of nursing.

Defendant Speqtrum, Inc., is a home-healthcare agency that furnishes the elderly and disabled with assistance in the day-to-day activities of living, such as bathing, dressing

, and taking needed medications. D.C. Medicaid, which is subsidized by the federal Medicaid program, pays for many of Speqtrum's services for low-income patients. Somewhere along the way, Speqtrum developed a habit of cooking the books: overbilling for hours not worked, charging the District for clients it did not service, and forging physician signatures on its paperwork. In addition, many of Speqtrum's patient files omitted required treatment-related documents altogether. The District's Department of Health Care Finance discovered this massive fraud during a routine audit of Speqtrum's paperwork in May 2009. The federal Government began its own investigation shortly thereafter, and this lawsuit—alleging violations of the federal False Claims Act, among other laws—followed.

The Government, presenting ample evidence of intentional fraud, now moves for summary judgment. Speqtrum, adducing almost no evidence of its own, opposes and cross-moves for summary judgment. Because the Government has carried its burden in proving at least some of the FCA violations alleged, the Court will enter partial judgment on liability but will require the Government to present additional evidence of liability and proof of specific damages at trial. Speqtrum's cross-motion will be denied in its entirety.

I. Background

The federal Medicaid program is designed to protect the most vulnerable among us. As a jointly funded state-federal effort, it subsidizes healthcare for “low-income persons who are age 65 or over, blind, disabled, or members of families with dependent children,” as well as “pregnant women” and “children.” 42 C.F.R. § 430.0 ; see About Us, Medicaid.gov, http:// www.medicaid.gov/About–Us/About–Us.html (last visited May 23, 2014). To that end, Medicaid funds may be used to pay for home-healthcare and personal-care services. See Medicaid Long–Term Care Services, LongTermCare.gov, http:// goo.gl/VtK8Sp (last visited May 23, 2014). Those at-home services help seniors and others who are struggling to live independently to avoid nursing homes and other forms of expensive, long-term care. Id. ; see also D.C. Mun. Regs., tit. 29, § 5000.2 (Personal-care-aide services are designed “(a) To provide necessary hands-on personal care assistance with the activities of daily living”; and “(b) To encourage home-based care as a preferred and cost-effective alternative to institutional care.”).¹

Needless to say, budgets for these programs are not unlimited. As a result, states and the federal government tightly regulate Medicaid and have devised stiff penalties for defrauding the program. States are the primary drivers of Medicaid regulation. The District of Columbia, for example, has set guidelines that Medicaid providers must meet to be reimbursed for certain services.

In terms of personal-care-aide (PCA) services, providers and their PCA patients must clear several hurdles to qualify for D.C. Medicaid funding. To begin with, patients must have a prescription for PCA services from their medical professional, see D.C. Mun. Regs., tit. 29, § 5004. 1, based on a finding that they “have functional limitations in one or more activities of daily living”—such as bathing, dressing

, or administering vital medications—“for which personal care services are needed.” Id. § 5005.1. After the doctor writes a PCA prescription and the patient receives a referral, the provider must assess “the patient's functional status and needs” within 48 hours. Id. § 5006.1. Seventy-two hours after that, it must draw up a plan of care for delivering services per the doctors' orders and patient's needs. Id. § 5006.2. Those plans must “specify the frequency, duration[,] and expected outcome of the services rendered,” and they must be approved and “signed by the physician within thirty (30) days of prescription.” Id. §§ 5006.3, 5006.6. A registered nurse must review the plan every 62 days, and any “update[ ] or modifi[cation]” must be signed by the physician. Id. § 5006.6. Services must be reauthorized by a physician or advanced-practice registered nurse every six months.Id. § 5006.4.

In addition, all licensed PCA-service providers are required to “maintain accurate records reflecting the specific personal care services provided to each patient.”

Id. § 5007.2. Those records must include “past and current [medical] findings, the initial and subsequent plans of care, and the ongoing progress of each patient,” as well as a “[d]escription and dates of services rendered, including the name of the personal care aide performing the service.” Id. §§ 5007.1, 5007.8(c).

If a provider “[k]nowingly and willfully ma[kes] or cause[s] to be made any false statement or misrepresentation of material fact in claiming, or in determining the right to, payment under Medicaid,” then the District may refuse to reimburse that provider for its services. Id. § 1301.2(a). The provider's agreement with the District, allowing it to render PCA services, may also be terminated. Id. §§ 1301.3, 1302.1.

On top of those penalties, because the federal government funds roughly 70 percent of D.C. Medicaid, see Alison Mitchell et al., Cong. Research Serv., R43357, Medicaid: An Overview 35 (2014), the United States may also seek to recover funds fraudulently obtained. Under the False Claims Act, a provider may be liable if it “knowingly presents, or causes to be presented, to an officer or employee of the United States Government ... a false or fraudulent claim for payment or approval” or “knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government.” 31 U.S.C. § 3729(a)(1)–(2).² Providers that violate the FCA may be “liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person.” Id.

In this FCA case, the federal Government alleges that Speqtrum, a home-healthcare and PCA-service provider, defrauded Medicaid of over a million dollars. The Government charges Speqtrum with a pattern of fraud encompassing both (i) charging the Government for services not rendered—e.g., services allegedly provided to dead or hospitalized patients—and (ii) charging the Government for unauthorized services—e.g., services that were rendered without an operative plan of care.

At this juncture, the Court views the evidence in the light most favorable to the non-moving party, and when facts are in dispute, the non-movant's version governs. In this case, however, because Speqtrum did not produce any affidavits, declarations, or deposition transcripts—or much of any other evidence that the Court could consider at this stage—the Court must treat the vast majority of the facts offered by the Government as conceded. The picture that evidence paints, along with Speqtrum's meager evidentiary contributions, is quite grim.

In late May and early June of 2009, DHCF—which is responsible for D.C. Medicaid compliance—conducted an audit of Speqtrum's D.C. office. See Mot., Attach. 2 (Declaration of Gregg C. Domroe), ¶ 6; Exh. 10 (DHCF Notice of Overpayment Recovery) at 1; Exh. 11 (DHCF Notice of Termination of Provider Agreement) at 2. Such audits are routine and are provided for by D.C. law. See D.C. Mun. Regs., tit. 29, § 5010. During DHCF's visit, its employees randomly reviewed the records of 220 Medicaid beneficiaries. Domroe Decl., ¶ 6; DHCF Notice of Termination of Provider Agreement at 2. Of those records, 208 lacked the documentation required to legitimize the services allegedly rendered. Domroe Decl., ¶ 7. Some files had no plan of care, or the plan of care had gone unsigned. Id., ¶¶ 8, 12. Other plans of care contained forged signatures, as multiple doctors later confirmed after examining the fabricated records. Id., ¶¶ 15–16; Mot., Exh. 3A–E (FBI Doctor Interviews). Other files lacked records to substantiate the amount of time PCAs had supposedly spent with patients. Domroe Decl., ¶ 9. Still other files revealed overbilling for services not rendered, id., ¶ 10, or that the patient was not even receiving services from Speqtrum. Id., ¶ 13. One patient's file could not be located, and DHCF soon discovered that the patient had died prior to the dates on which Speqtrum purported to render its services. See DHCF Notice of Termination of Provider Agreement at 2.

Later that year, the FBI and other government agencies pulled twenty random files belonging to patients who had supposedly received care from Speqtrum seven days a week for eight hours per day. Domroe Decl., ¶ 18. Fifteen of those twenty files contained fraudulent claims, according to interviews with the patients themselves. Id. One of the beneficiaries, for example, received care only from 10 a.m. to 4 p.m. five days a week. Id., ¶ 20. Other patients similarly received services from Speqtrum, but for a lesser number of hours or days per week. Id., ¶¶ 24–27. Another patient claimed she had been receiving services through Ultra Home Health Agency—and only through Ultra—for about four years. Id., ¶¶...