On March 31, 2023, the United States District Court for the Eastern District of Pennsylvania dealt a blow to a trio of nursing home providers by denying their motion to dismiss a False Claims Act (FCA) claim brought by the United States Department of Justice (DOJ) under a worthless services theory based on alleged substandard care provided to residents. See U.S. v. American Health Foundation Inc., Case No. 2:22-cv-02344, 2023 WL 2743563 (E.D. Pa. Mar. 31, 2023). Although the allegations raised appear quite serious, the ruling potentially provides a roadmap for relators to plead a worthless services FCA claim against nursing home operators based on the provision of medical services that falls below the applicable standard of care.
In American Health Foundation, the DOJ alleges that three nursing home operators provided “non-existent and grossly substandard nursing home services” to Medicare and Medicaid beneficiaries over a three-year period because, among other issues, the facilities lacked proper infection control and the residents did not receive adequate medical, dental, or psychiatric treatment, lived in dirty, unsanitary, and unsafe conditions, and were overmedicated. The complaint also alleges that two residents died because of inadequate supervision caused by staffing shortages. The DOJ asserts that the conduct resulted in the submission of false claims under the FCA because the services provided were non-existent, grossly substandard, or violated the Nursing Home...
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