Johnson v. Golden Gate National Senior Care, L.L.C.

Background

This False Claims Act case was brought by the United States, Ricia Johnson, and Health Dimensions Rehabilitation, Inc. The private plaintiffs are whistleblowers suing on behalf of the Government. They alleged that the defendants submitted false Medicare claims connected to physical and occupational therapy services provided to nursing-home patients at the Golden Living Center—Hillcrest of Wayzata.

The court divided the case into phases. Phase II, addressed in this opinion, was limited to the Hillcrest facility and covered May 2002 through November 2005 and April 2007 through March 2012. The remaining theories concerned whether therapy assistants worked outside their licenses, whether defendants billed for unskilled services as skilled services, whether assistants received required supervision, and whether group therapy was billed as individual therapy. The plaintiffs also pursued claims against certain corporate defendants, a conspiracy claim, and a reverse-false-claims claim alleging that defendants used false records to avoid or reduce a payment obligation to the Government.

Summary-judgment ruling

Summary judgment is granted when the record shows no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law. The court viewed the evidence in the light most favorable to the plaintiffs and concluded that testimony from witnesses who worked during both phases created factual disputes relevant to the remaining theories.

For the scope-of-license theory, the court found evidence that could support a jury’s conclusion that therapy assistants were assigned patients for billing purposes regardless of which assistant had treated them, and that this practice could have continued during the Phase II period. The court therefore found genuine disputes that prevented summary judgment.

For the skilled-services theory, the court rejected defendants’ argument that the plaintiffs had no evidence of unskilled therapy. The court found that the parties’ evidence, including competing expert-related evidence, at least created a factual dispute about whether the services provided were skilled.

For the supervision theory, the court held that factual disputes remained about whether therapists properly supervised therapy assistants, whether defendants knowingly submitted false claims, and whether the alleged violations were material to the Government’s payment decisions. The court declined to treat the Government’s continued payment of claims as automatically disproving materiality. It explained that materiality is a fact-intensive inquiry and that continued payment is only one factor.

For the group-therapy theory, the court found that the evidence could support a conclusion that therapy was provided in group settings but billed as individual therapy. A single contrary declaration did not make the issue undisputed, so summary judgment was denied on this theory as well.

The court did not resolve the arguments concerning Golden Gate National Senior Care, L.L.C. and GGNSC Holdings, L.L.C., or the conspiracy count. It found that the parties had not fully briefed the relationship among the corporate defendants or how that relationship affected the conspiracy claim. The court ordered additional letter briefing on those issues.

The court separately addressed the no-therapy theory. Because that theory was not limited to services provided in the Hillcrest facility Wellness Center, the court dismissed those claims as moot and denied defendants’ summary-judgment motion as moot as to them. The order stated that defendants’ motion was otherwise denied.

Attorney-fee ruling

The defendants sought attorney fees, expenses, and costs related to the plaintiffs’ dropped nationwide claims. Under the False Claims Act standard discussed by the court, a successful defendant may recover fees when the plaintiff’s claim was clearly frivolous, clearly vexatious, or brought primarily to harass.

The court denied the fee motion. It stated that, even assuming defendants were prevailing parties on the nationwide claims, the claims had sufficient support before discovery. The court also found that the plaintiffs’ decision to drop those claims after targeted discovery showed that proving them would require several more years, rather than showing that the claims were improper. The record did not establish that the claims were pursued solely to harass defendants or that the discovery was vexatious or overwhelmingly burdensome.

Disposition

The court denied defendants’ motion for summary judgment, except that the no-therapy claims were dismissed as moot and the motion was denied as moot regarding those claims. The court required additional briefing concerning the corporate defendants’ relationship and the conspiracy count. It also denied defendants’ motion for attorney fees. The court emphasized that surviving summary judgment did not mean the plaintiffs would prevail at trial.