In March 2020, the Department of Justice launched the National Nursing Home Initiative (the “Initiative”) to coordinate and step up civil and criminal efforts to prosecute nursing homes that allegedly provide substandard care to their residents. The Ministry of Justice noted in its ad Initiatives that she has already launched an investigation in about 30 medical institutions in nine states. However, following this announcement, the activities of the Department of Justice FCA under this project were limited. But earlier this week, the Justice Department announced filing one of the first FCA complaints as a result of an investigation launched under the Initiative. This case is also linked to the White House investigation. ad earlier this year on new CMS initiatives to improve the quality of care in nursing homes. In light of the Justice Department’s and the White House’s priorities in this area, this complaint may reflect the Justice Department’s intent to increase the use of the FCA to monitor the quality of care in nursing homes.

The Justice Department complaint alleges that the American Health Foundation (“AHF”), its subsidiary AHF Management Corporation, and three nursing home subsidiaries provided substandard skilled nursing care in the form of “lack of general care”, dirty physical facilities, inability to contaminate control or provide sufficient mental health services, inadequate staffing, and provision of unnecessary medications.

This complaint serves as another warning to service providers that the Department of Justice will continue to use the data both to determine the objectives of the investigation and to support its theories of liability under the FCA (as discussed below). here). Especially:

  • General Disadvantages of Care: The complaint alleges that one of the institutions was “an outlier on several CMS quality metrics, which are metrics that CMS has identified as potentially useful in evaluating the performance of a nursing home.” According to the Department of Justice, the institution had access to its quality scores through CMS reports and could determine that it was an outlier.
  • Staffing: Complaint alleges widespread staff shortages and deficiencies at three sites. While federal regulations do not currently set any specific minimum staffing requirements, the White House earlier this year called on CMS to develop and implement such standards. Unable to point to any specific staffing ratios that were broken, the DOJ focused on circumstantial evidence of inadequate staffing, such as internal emails complaining about understaffing and low CMS star ratings associated with facility staffing.
  • prescription drugs: The complaint describes how one facility allegedly prescribed unnecessary prescription drugs to residents, especially neuroleptics, anxiolytics, and sleeping pills. The Justice Department criticized the institution because it allegedly received reports from an outside pharmacist-consultant indicating that the institution was administering these drugs at two to three times the state average, but did not significantly change its practices. The Justice Department’s emphasis on proper prescribing also aligns with the White House Nursing Home announcement stating that “CMS will launch new efforts to identify problematic diagnoses and refocus efforts to continue to reduce inappropriate use of antipsychotics.”

The Department of Justice also argued that the extremely poor quality of care provided by nursing facilities was a consequence of the corporate environment created by the management company. According to the complaint, AHF, acting through AHF management, exercised extensive control over the skilled nursing facility, as it made budgetary decisions, selected facility management, certified financial statements, maintained the facility’s financial records, signed tax returns, and set care rules and protocols. set compensation rates, oversaw trade union negotiations, and approved plans to correct care deficiencies. Moreover, the management company allegedly knew about at least some problems with the quality of service, but could not fix them. Specifically, the DOJ alleges that “Problems were reported by facility personnel to facility managers, who in turn often alerted managers and key individuals within the AHF and AHF leadership. In addition, AHF Management staff periodically visited the sites to conduct their own inspections and communicate the results to site managers and the heads of AHF and AHF Management.” Thus, the Department of Justice argues that the AHF and the leadership of the AHF should also be responsible for nursing home institutions.

A copy of the Department of Justice complaint is available here.


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