More than eight years after first alleging False Claims Act violations against Genesis Healthcare and Sun Healthcare, a group of whistleblowers was given more time to refine its case.
US District Court Judge Mitchell S. Goldberg, chief of the court for the Eastern District of Pennsylvania, ruled Tuesday that he could not block another extension, even though he found the whistleblowers had engaged in “unwarranted delay.”
The case dates to February 2016, when whistleblowers identified only as John Does brought a qui tam case on behalf of the federal government and 20 states. They alleged that the nursing home companies pressured facilities they owned or operated “to increase occupancy rates and recruit heavy-care residents, yet understaffed their nursing homes or staffed them without regard to resident needs.”
The group, which was anonymous until this week, said the defendants knew that their admission and staffing policies led to substandard care that harmed residents. They alleged Genesis and Sun filed “tens of thousands” of Medicare and Medicaid claims for “care and therapy services it did not provide.” The group is seeking damages and penalties that could measure in the millions.
Genesis, then a public company, acquired Sun Healthcare in 2012 in a $215 million deal, combining more than 400 long-time care facilities under one umbrella. Genesis today operates 236 nursing homes in 21 states, according to Care Compare.
Changes five years in the making
The latest wrinkle in this False Claims case was triggered by the federal government’s 2023 decision not to intervene. The involved states also removed themselves.
After that, the whistleblowers asked to submit a new, amended complaint (their second). Genesis and Sun’s attorneys opposed the request and also asked Goldberg to lift the seal on all of the initial court filings they had yet to access.
Typically, a plaintiff can amend a complaint within 21 days after serving it or 21 days after a relevant motion. Other amendments can only be made with the other party’s consent or the court’s blessing.
In this case, Goldberg acknowledged the extensive delay — almost five years have passed since the whistleblowers last amended their complaint. But, he wrote, courts have traditionally allowed plenty of leeway for adding new information, unless additional charges or allegations can be shown to have undue prejudice on the defendant.
“Generally, prejudice includes ‘the irretrievable loss of evidence, the inevitable dimming of witnesses’ memories, or the excessive and possibly irremediable burdens or costs imposed on the opposing party’” the judge wrote, citing a 2008 case. “Prejudice also includes ‘the burden imposed by impeding a party’s ability to prepare effectively a full and complete trial strategy.’”
Goldberg said the operators might have been prejudiced by an extensive period of sealed documents, partly because they were unable to capture testimony of one of the would-be whistleblowers before her death.
Sun also said the government’s delay meant documents, witnesses, and other materials that could be used to affirmatively disprove “baseless allegations” might no longer exist. Likewise, patients or other staff members may no longer be able to remember specific allegations or help refute them.
But the judge said allowing the whistleblowers to amend their complaint now wouldn’t add significant burdens in itself because it did little more than identify the whistleblowers and add the estate of the one who died.
Details emerge
The amended complaint, also filed Tuesday, shows Barbara Roberts was an interim nursing home administrator at a Sun facility in Tulsa, OK, for two months in 2010. Fellow plaintiff Luvetta Compton, RN, worked at an Oklahoma City nursing home as a weekend nurse manager for about six months.
The women alleged that MDS coding was not supported by medical need, but also that staffing was not adequate to meet patient acuity levels. They hired a series of experts who argued that the quality and duration of care reportedly delivered by staff was “mathematically and physically impossible” not just in those two buildings, but across 352 Sun and Genesis buildings. They also alleged rampant upcoding for therapy under a previous Medicare payment system.
A Genesis spokeswoman Thursday told McKnight’s Long-Term Care News that Genesis does not comment on pending litigation.
The judge did offer Sun and Genesis some relief. Of 41 documents still sealed, he agreed to unseal 26 with the government’s consent. The government wanted to keep others sealed to hide sensitive investigative information. Goldberg instead gave the government 30 days to offer possible redactions before he releases other items to ensure “(a) public access is preserved and (b) Defendants are given the requisite information to defend themselves against the allegations in this case.”
