A lawsuit brought under the federal False Claims Act (FCA) by an Indiana resident, involving allegations that an Indiana nursing home had defrauded the Medicaid system, failed to establish that the court had subject matter jurisdiction, according to a recent ruling by the Fourth Circuit Court of Appeals. The court held in United States ex rel. Black v. Health & Hospital Corporation of Marion County that the relator, who filed the qui tam lawsuit on behalf of the United States, did not produce evidence to show that he had originally discovered the allegedly fraudulent acts. Allegations of Medicaid or Medicare fraud are of interest to nursing home negligence attorneys because of the impact fraud can have on the quality of care received by residents. This case primarily demonstrates the complexity of the Medicaid system and the multitude of ways that nursing homes can abide by, or defraud, that system.
The relator, Paul R. Black, reportedly first filed suit against Health & Hospital Corporation of Marion County (HHC), pursuant to the FCA, in U.S. District Court for the Southern District of Indiana in October 2003. When the United States government did not intervene in the suit, he dismissed it without prejudice. He filed the present suit in the U.S. District Court for the District of Maryland in February 2008. The United States has also declined to intervene in this lawsuit.
Black alleges that HHC has used three state-level Medicaid funding systems to present falsified or otherwise fraudulent claims to state and federal Medicaid officials. States may directly reimburse Medicaid providers up to an Upper Payment Limit (UPL) set by the Centers for Medicare and Medicaid Services (CMS), equal to the amount the provider could obtain through Medicare. In order to facilitate reimbursement of providers, CMS allows states to transfer money from local government bodies to the state’s Medicaid fund, in a process known as an intergovernmental transfer (IGT). Finally, CMS may approve expenditures by providers, known as Certified Public Expenditures (CPEs), that allow providers to claim direct reimbursement from federal matching funds. CMS has expressed concerns about the potential for fraud in these systems several times in the past decade.