Metropolitan News-Enterprise


Friday, September 14, 2001


Page 3


Eldercare Group May Sue Nursing Homes for Medicare Fraud—Court


By KENNETH OFGANG, Staff Writer/Appellate Courts


A Sacramento-based group that targets alleged eldercare abuses can sue nursing home operators the group claims have received Medicare funds for services they didn’t provide, the Ninth U.S. Circuit Court of Appeals ruled yesterday.

 The panel reinstated a qui tam suit brought by Foundation Aiding the Elderly under the False Claims Act against Horizon West, Inc., and dozens of its officials and subsidiaries.

That act, which was originally aimed at Civil War profiteers, was amended in 1986 to encourage employees and others having direct, personal knowledge of fraud by government contractors to bring suit on the government’s behalf. Qui tam suits must be filed under seal, removable by order of the court, and the government is entitled to intervene.

If the suit is successful, the private plaintiff receives a share of the award.

The foundation, which was created in the 1980s by Sacramento activist Carole Herman after her aunt died in a nursing home, appealed after Senior U.S. District Lawrence Karlton of the Eastern District of California dismissed its suit.

Karlton cited provisions barring qui tam suits where the “allegations or transactions” have already been made public by certain means, including media reports and various governmental activities, unless the plaintiff was the original source of the information.

But Judge A. Wallace Tashima, writing for the appellate panel, said Karlton erred in concluding that disclosure—prior to suit being filed—of certain surveys undertaken by government regulators barred the suit. Karlton ruled that the surveys were “criminal, civil, or administrative hearings.”

Even if the surveys were “hearings,” Tashima reasoned, they did not disclose the “allegations and transactions” which were the subject of the suit. The suit specifically deals with “allegations that the named defendants misrepresented the level of care to the government and received payment for that alleged substandard care,” the jurist explained, while the surveys dealt with more general matters.

Judges Stephen Reinhardt and Marsha S. Berzon joined in the opinion.

The case is United States ex rel. Foundation for the Elderly v. Horizon West, Inc., 99-17539.


Copyright 2001, Metropolitan News Company