By Brian Craig, J.D.
A former office manager raised sufficient facts to support allegations of fraudulent billing for in-home personal care attendant services and retaliation.
In a former office manager’s qui tam action under the federal False Claims Act (FCA) against her former employer over alleged fraudulent billing for in-home personal care attendant services, the U.S. Magistrate Judge in Austin, Texas has recommended that the FCA claims raise sufficient allegations to survive a motion to dismiss. In recommending that the district court deny a motion to dismiss, the U.S. Magistrate found that the complaint sufficiently alleges fraudulent billing and retaliation under FCA, fraudulent billing under the Texas Medicaid Fraud Prevention Act, and overtime violations under the Fair Labor Standards Act (FLSA). While the complaint does not satisfy the heightened pleading requirement for all corporate entities named as defendants, the U.S. Magistrate Judge recommended that the former office manager be given leave to amend the complaint as to all defendants (U.S. ex rel. Young v. Kindred Healthcare, Inc., December 30, 2020, Hightower, S.).
A former staffing coordinator and office manager for a healthcare services company that provides rehabilitation services alleges that her former employer which operates longer-term acute care hospitals and rehabilitative services, Kindred Healthcare Inc. and other defendants, were seeking reimbursement from Texas Medicaid for in-home personal care attendant services that were never performed. The former office manager alleges that she was instructed by two co-workers to stop calling personal care attendants and clients to confirm visit details, and that she should be concerned with billing more rather than billing accurately. The former office manager then called her company’s compliance hotline and was terminated 13 days later. The former office manager filed suit against her former employer and other affiliated defendants alleging claims under the FCA, the Texas Medicaid Fraud Prevention Act, and the FLSA. The defendants filed a motion to dismiss.
FCA claims. The court found that the complaint sufficiently alleges claims under the FCA for knowingly presentment of a false claim, knowingly making a false record, violations of the Texas Medicaid Fraud Prevention Act, and retaliation. The complaint provides specific examples of at least two Texas Medicaid clients for whom personal care attendant services were never performed, but for which the defendants billed Texas Medicaid. In support of knowingly making a false recording, the complaint alleges that the defendants knowingly made and submitted false claims through the Vesta system to seek payment from Texas Medicaid for PCA services that were never rendered. The former office manager alleges that the defendants used the false records its coordinators entered into the Vesta system to present false claims to the government. The complaint alleges that creating false records was the mechanism by which the defendants would present false claims for payment. Because the complaint sufficiently alleges claims under the FCA, the complaint also states a claim the Texas Medicaid Fraud Prevention Act.
In support of the retaliation claim under the FCA as a whistleblower, the former officer manager alleges that she engaged in activity protected under the statute, and that her supervisors were aware of that protected activity when she complained about the submission of false claims, and then called the compliance hotline. The former employer alleges that the was terminated 13 days after she called the corporate compliance hotline regarding the alleged submission of false claims. These allegations sufficient to allege a retaliation claim.
FLSA claims. Next, the U.S. Magistrate Judge recommended that the complaint sufficiently alleges overtime violations under the FLSA. The complaint alleges facts that, taken as true, would have triggered the defendants’ duty to investigate whether coordinators were working off the clock and without compensation. The former office manager provides an example of a workweek in May 2016 when she worked more than 40 hours but was not compensated for the overtime hours she worked, which is within the three-year statute of limitations period. Therefore, the former office manager has stated a plausible claim for a willful violation under the FLSA.
Group pleading. The U.S. Magistrate Judge recommended that the district court grant the motion to dismiss certain FCA claims as to certain defendants because the former office manager engages in group pleading. While the former office manager does identify each defendant and allege the corporate relationships among the four entities, she engages in group pleading for many of the allegations supporting her FCA claims, which does not satisfy the heightened pleading requirements for fraudulent claims under the FCA. Because leave to amend should be freely given, the court recommend that the claims be dismissed without prejudice, allowing amendment to bring the party allegations into compliance.
The case is No. 1:18-cv-00806-RP.
Attorneys: Eduardo R. Castillo, U.S. Attorney's Office, for the U.S. Lynne Rachel Kurtz-Citrin, Office of the Attorney General, for State of Texas. Benjamin Lin (Brown LLC) for Cecilia Young. Luke C. Wohlford (Barnes & Thornburg LLP) for Kindred Healthcare, Inc., Girling Health Care, Inc. and Harden Healthcare, LLC.
Companies: Kindred Healthcare, Inc.; Girling Health Care, Inc.; Harden Healthcare, LLC
MainStory: TopStory CaseDecisions CMSNews BillingNews FraudNews QuiTamNews TexasNews
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