Earlier this week, the qui tam case of United States ex. rel.Louanne Boothe v. Sun Healthcare Group, Inc., No. 06-2156 (10th Circuit August 7, 2007) was remanded by the United States Court of Appeals, Tenth Circuit.
This case involves allegations by former finance and accounting employee, Louanne Boothe against Sun Healthcare Group, a U.S. Healthcare provider, claiming that Sun Healthcare Group over-billed the United States in ten distinct ways. The complaint includes allegations of the following: 1) Sun over-billed the government by abusing the Section 1010 exception in the years 2000-2002; 2) Sun defrauded Medicare by disregarding Medicare’s prudent-buyer guidelines and overcharged for therapy management services for $2.6 million; 3) overstated its temporary nursing staff’s labor hours in 2001 and 2002 by $500,000; 4) overcharged Medicare by $240,000 in 2002 for pharmacy charges 5) improperly billed Medicare in 2001 for $200,000 worth of stolen medical supplies; 6) overcharged Medicare by $540,000 in 2000-02 by funneling costs between Denver Mediplex and an outpatient clinic; 7) filed Medicare reimbursements for $3.6 million worth of mortgage interests payment; 8) released patients earlier than its prior practice from Ballard Rehabilitation Hospital to inflate its Medicare revenue by $2 million; 9) manipulated patient discharges to impose improper costs on Medicare of $500,000; and 10) signed without the knowledge or consent of its patients admission forms for three years ending January 2003 to receive from Medicare $9 million in reimbursements for accident and injury treatments when liability potentially rested with third parties.
These allegations seem pretty specific, however, the primary issue at hand is whether the allegations are “based upon” information already in the public domain or whether Ms. Louanne Boothe is an “original source” of the information.
The district court held that it lacked subject matter jurisdiction under 31 U.S.C.§ 3730(e)(4) of the False Claims Act, 31 U.S.C. § 3729-33, to hear the case.
According to the Tenth Circuit, the district's assessment was accurate that it lacked jurisdiction in three of the claims Ms. Boothe presented. However, jurisdictional analysis of each of Ms. Boothe’s
remaining seven claims of fraud is necessary. Therefore, the United States Court of Appeals Tenth Circuit remanded the cases for further proceedings. The Court included the following language "Three bad apples does not necessarily warrant discarding the barrel". Interesting choice in words.
It is also important to note that Sun Healthcare Group tried to use the following arguments against Ms. Boothe: (1) Ms. Boothe waived her right to pursue a qui tam complaint in a severance agreement she executed upon her departure from Sun; (2) Sun’s intervening bankruptcy, from which it emerged in 2002, discharged Sun’s obligations to satisfy the claims in Ms. Boothe’s qui
tam complaint; and (3) Ms. Boothe failed to plead her qui tam complaint with sufficient particularity.
Citing lack of jurisdiction, the district court declined to address these arguments for dismissal and the Tenth Circuit did not address them either. It will be interesting to see if they come up again as this saga continues.
Let's all hope that Sun Healthcare Group is operating with the integrity and honesty that they are known for in the healthcare community rather than the over-billing of Medicaid and Medicare as was alleged in the qui tam suit of Luanne Boothe. The company has been around since 1993 and is continuously growing, serving more sick and terminally ill patients, and doing lots of business with the government. In the year, 2006, they took in $1.116 Billion in revenue according to their quarterly reports. Currently they operate 216 skilled nursing, long-term care and assisted living and mental health facilities in 25 states with approximately 23,520 operating beds according to their self published reports. The company closed out the second quarter at $446.7 million, up 73 percent compared to $258.5 million second quarter 2006. The stock price closed on the Nasdaq Friday at $15.30 per share.