Judge Sees No Florence Nightingale in D.C.

(CN) - A medical staffing provider accused of submitting more than $1 million in fraudulent Medicaid claims to the District of Columbia will have to defend itself at trial, a federal judge ruled.

"Florence Nightingale once said that 'nursing is an art,'" U.S. District Judge James E. Boasberg wrote in beginning his 27-page ruling. "In this case, the government contends that employees of one D.C. healthcare provider were better schooled in the art of fraud than the art of nursing. ...

"This is the classic case of false claims being presented to acquire undeserved funds," Boasberg wrote in an opinion flatly rejecting Speqtrum Health Care Services' motion for summary judgment, and partially granting the government's request for the same.

However, to prevail completely, Boasberg said, the government must establish that it might not have paid Speqtrum had it known the provider of assistance to the elderly and disabled submitted questionable claims.

The United States sued Speqtrum on Dec. 13, 2010, after a routine audit by the District of Columbia's Department of Health Care Finance, which pays for many of Speqtrum's services for low-income patients, allegedly uncovered massive fraud in the company's paperwork.

On the heels of that discovery, the FBI and other government agencies pulled 20 random files belonging to patients who had supposedly received care from Speqtrum seven days a week for eight hours per day.

Of those, Judge Boasberg wrote, 15 were found to contain fraudulent claims, according to interviews with the patients themselves. In one case, the patient told investigators she had received services from another provider.

"It thus appeared that Speqtrum had never, in fact, provided the patient with any of the $19,714.59 worth of services that it had billed for," Boasberg wrote. "Yet another purported patient never received any home-healthcare services whatsoever - and had no need for them. ... Speqtrum had nevertheless billed Medicaid for almost $14,000 in services on his behalf."

"Somewhere along the way," the judge wrote, "Speqtrum developed a habit of cooking the books: overbilling for hours not worked, charging the District for clients it did not service, and forging physician signatures on its paperwork. In addition, many of Speqtrum's patient files omitted required treatment-related documents altogether.

"Because Speqtrum presents no evidence to contradict any of the government's assertions regarding the falsity of the specified claims, the Court must take it as given that defendant did, in fact, submit the fraudulent claims outlined above," Boasberg wrote in granting summary judgment on the question of Speqtrum's liability.

The judge then moved on a more difficult question: Whether Speqtrum's implicitly certifying that its claims complied with all relevant statutes and regulations was material to Medicaid's decision to pay.

"Plaintiff does not assert that defendant expressly certified compliance with the relevant regulations in its various reimbursement requests," Boasberg wrote. "That is, no one claims that the bills or invoices submitted to D.C. contained explicit statements that Speqtrum was in compliance with all the relevant regulations. The government, accordingly, must be proceeding under an 'implied' certification theory, which does not require defendant to submit factually or expressly false claims to the government.

"Again, Speqtrum has adduced no evidence to contradict any of these allegations, so the Court takes the facts as conceded. The government, however, cannot win the day simply by claiming that Speqtrum violated any of the many regulatory obligations placed on it by D.C. law. Rather, the requirement violated must be material to the government's decision to pay. That is, plaintiff must show that, had the government known about Speqtrum's non-compliance, it might not have paid Speqtrum for its services.

"This is particularly important in the Medicaid and Medicare context, where providers face an abundance of regulations, some of which may be more vital to the government's payment decision than others."

The judge concluded: "The government has not ... submitted sufficient evidence to merit summary judgment on its implied-certification claims regarding faulty paperwork. It has, though, mustered enough evidence to overcome Speqtrum's cross-motion and to go to trial on those claims."

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