Health Law Daily Law of the case doctrine prevented provider from arguing defenses raised during prior hearing
Monday, August 13, 2018

Law of the case doctrine prevented provider from arguing defenses raised during prior hearing

By David Yucht, J.D.

A federal district court in New York found that a former nursing home administrator cured a previously deficient complaint alleging False Claim Act (FCA) (31 U.S.C. §§ 3729 – 3733) implied-false certification misappropriation claims against his former employer, Catholic Health System of Long Island Inc. (CHS) by identifying reimbursement claims that CHS submitted in furtherance of an alleged scheme. Based on the law of the case doctrine, the court refused to re-consider arguments that were previously made by CHS during a prior motion in this case. Accordingly, the court denied CHS’s motion to dismiss (U.S. ex rel. Quartararo v. Catholic Health System of Long Island Inc., August 10, 2018, Brodie, M.).

CHS is a healthcare consortium that operates hospitals and nursing homes. In March 2011, the administrator of one of its nursing homes allegedly met with CHS’s accountants and was told that the nursing home might owe the government $13 million in Medicaid overpayments, but not to raise the issue as the statute of limitations on reimbursement was set to expire shortly. In June 2012, a CHS executive informed him that CHS had in fact expended all of the funds which had been held in reserve for future Medicaid overpayment claims. The administrator subsequently discovered alleged misappropriations and false payments from the nursing home’s Medicaid and Medicare funds, including that the nursing home was paying a portion of the salary for various staff members at other CHS facilities who spent little to no time at the Nursing Home and had little to no involvement in the nursing home’s operations. He brought a qui tam FCA action based on federal and state law in September 2012. CHS moved to dismiss, for among other things, failure to state a claim.

March 2017 decision. In March 2017, the court considered, among other things, whether CHS was entitled to summary judgment as to these misappropriation claims. The court found that although the administrator set forth numerous details regarding the allegedly fraudulent diversion and misappropriation scheme, he nevertheless failed to identify any reimbursement claim that CHS submitted in furtherance of the scheme. The court therefore granted CHS’s motion for summary judgment and dismissed the misappropriation claims without prejudice but granted the administrator leave to amend to identify and provide evidence of CHS’s requests for reimbursement during the period of the alleged scheme (See No public disclosure bar, court has jurisdiction, April 5, 2017). As instructed, the administrator amended his complaint. CHS once more moved to dismiss.

Law of the case doctrine. Based on the law of the case doctrine, the court declined to consider what it referred to as CHS’s previously raised arguments. CHS argued here that there was no legal obligation on how to spend Medicaid and Medicare funds other than providing the "prescribed levels of care" as defined by law, that no siphoning of funds occurred from the nursing home because it was part of CHS, that the alleged misappropriation did not impact the per diem rates or calculation of the remediation payment, and that the alleged improper misappropriation expenses were legitimate.

These arguments were all previously raised. However, CHS contended that the court could reconsider these arguments because the court’s prior decision did not specifically address them. Also, CHS argued that the defense of failure to state a claim could not be waived when an amended complaint was filed. And CHS contended that it did not previously move for reconsideration because it had obtained all of the relief requested, "albeit without prejudice."

The court noted that under law of the case doctrine, when a court makes a legal ruling, that ruling governs the same issues in subsequent stages of the same case. Courts should not revisit prior rulings in absent compelling reasons. Here, the court had already considered CHS’s arguments in its March 2017 Decision and declined to do so again. Although the prior decision did not expressly address the current arguments, the court implicitly did so by finding potentially viable misappropriation claims. The court’s denial of CHS’s arguments was a necessary part of its prior holding. The court could not have previously found potentially viable misappropriation claims if it had accepted any of CHS’s arguments. The filing of a materially similar amended complaint was not an "exceptional circumstance" sufficient to preclude the application of the law of the case doctrine. CHS should have previously moved for reconsideration if it believed the court overlooked anything in its March 2017 Decision.

Implied-false certification misappropriation claims. The court also found that the administrator made a sufficient showing of his implied-false certification misappropriation claims. CHS did not argue that the new allegations and evidence failed to meet the court’s directions in the March 2017 decision, but rather, reiterated its prior arguments, and argued that the administrator’s supplying evidence that authentic and proper reimbursement claims were submitted to the government could not cure the defect of the misappropriation claims. Because the administrator cured the previously identified defects in his complaint, and CHS only offered the same previously rejected arguments, the court found that the FAC sufficiently stated implied-false certification misappropriation claims.

The case is No. 1:12-cv-04425-MKB-RML.

Attorneys: Daniel J. Kaiser (Kaiser Sauborn & Mair, PC) for the United States and State of New York. Thomas S. D'Antonio (Ward Greenberg LLP) for Catholic Health System of Long Island Inc. d/b/a Catholic Health Services of Long Island, St. Catherine of Siena Medical Center and St. Catherine of Siena Nursing Home.

Companies: State of New York; Catholic Health System of Long Island Inc. d/b/a Catholic Health Services of Long Island; St. Catherine of Siena Medical Center; St. Catherine of Siena Nursing HomeCases

MainStory: TopStory CaseDecisions CMSNews AuditNews BillingNews CoPNews FCANews FraudNews ProgramIntegrityNews ProviderNews QuiTamNews SNFNews

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