On January 11, 2018, the Chief Judge in the Middle District of Florida overturned a large jury verdict against a nursing home system operating in Florida. Overturning a jury verdict is relatively rare and the decision is getting a lot of attention.

Briefly, in United States ex rel. Ruckh v. Salus Rehabilitation Services, LLC, the United States District Court of the Middle District of Florida vacated an almost $350 million verdict against the owners and operators of fifty-three specialized nursing facilities due to the relators’ failure to satisfy the “rigorous and demanding” materiality requirement established by the landmark Supreme Court case, Universal Health Services v. Escobar, 136 S.Ct. 1989 (2016).

The relator asserted that the nursing facilities’ failure to maintain comprehensive care plans coupled with “a handful of paperwork defects” when filing the Medicaid and Medicare claims made the claims false. However, the relator offered no meaningful or competent proof that the government would have regarded these practices as material to the government’s decision to pay the defendants or lead to the government’s refusal to pay.

The Court concluded that through continued full payment for these services despite knowledge of disputed practices, non-compliance, or a claimed defect, the government had “work[ed] itself into a steadily tightening bind . . . of prov[ing] that the government would not do exactly what history demonstrates the government in fact did.” The Court ultimately found the “relator’s claims [to be] fatally ensnarled in that intractable bind.” As a result, the Court granted the nursing facilities’ judgment as a matter of law, vacating the jury rendered judgment.

Based on the Salus decision, relators and their counsel will now need to evaluate whether a provider’s non-compliance would be “material” enough to consider the claim “false” and subject to civil claims liability. For instance, if a provider does not fully comply with HIPAA, but provided the services, is this non-compliance “material” to payment?

A more detailed analysis of Salus, together with a guideline for prioritizing compliance functions, will be forthcoming from the Smith Hulsey & Busey Practice Team. In the meantime, please contact Kristen Murphy or Jeanne Helton with any questions.