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United States v. Speqtrum, Inc.

United States District Court, D. Columbia.

June 13, 2014

UNITED STATES OF AMERICA, Plaintiff,
v.
SPEQTRUM, INC., d/b/a Speqtrum Health Care Services, Defendant

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For United States of America, Plaintiff: Darrell C. Valdez, U.S. ATTORNEY'S OFFICE, Civil Division, Washington, DC.

For Speqtrum, Inc., doing business as SPEQTRUM HEALTH CARE SERVICES, Defendant: Patrick J. Christmas, LEAD ATTORNEY, PATRICK J. CHRISTMAS & ASSOCIATES, PC, Silver Spring, MD; Rita Grant Ndirika, LEAD ATTORNEY, GRANT LAW OFFICE, Lanham, MD.

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MEMORANDUM OPINION

JAMES E. BOASBERG, United States District Judge.

Florence Nightingale once said that " nursing is an art." 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.

Defendant Speqtrum, Inc., is a home-healthcare agency that furnishes the elderly and disabled with assistance in the day-to-day activities of living, such as bathing, dressing, and taking needed medications. D.C. Medicaid, which is subsidized by the federal Medicaid program, pays for many of Speqtrum's services for low-income patients. Somewhere along the way, 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. The District's Department of Health Care Finance discovered this massive fraud during a routine audit of Speqtrum's paperwork in May 2009. The federal Government began its own investigation shortly thereafter, and this lawsuit -- alleging violations of the federal False Claims Act, among other laws -- followed.

The Government, presenting ample evidence of intentional fraud, now moves for summary judgment. Speqtrum, adducing

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almost no evidence of its own, opposes and cross-moves for summary judgment. Because the Government has carried its burden in proving at least some of the FCA violations alleged, the Court will enter partial judgment on liability but will require the Government to present additional evidence of liability and proof of specific damages at trial. Speqtrum's cross-motion will be denied in its entirety.

I. Background

The federal Medicaid program is designed to protect the most vulnerable among us. As a jointly funded state-federal effort, it subsidizes healthcare for " low-income persons who are age 65 or over, blind, disabled, or members of families with dependent children," as well as " pregnant women" and " children." 42 C.F.R. § 430.0; see About Us, Medicaid.gov, http://www.medicaid.gov/About-Us/About-Us.html (last visited May 23, 2014). To that end, Medicaid funds may be used to pay for home-healthcare and personal-care services. See Medicaid Long-Term Care Services, LongTermCare.gov, http://goo.gl/VtK8Sp (last visited May 23, 2014). Those at-home services help seniors and others who are struggling to live independently to avoid nursing homes and other forms of expensive, long-term care. Id.; see also D.C. Mun. Regs., tit. 29, § 5000.2 (Personal-care-aide services are designed " (a) To provide necessary hands-on personal care assistance with the activities of daily living" ; and " (b) To encourage home-based care as a preferred and cost-effective alternative to institutional care." ).[1]

Needless to say, budgets for these programs are not unlimited. As a result, states and the federal government tightly regulate Medicaid and have devised stiff penalties for defrauding the program. States are the primary drivers of Medicaid regulation. The District of Columbia, for example, has set guidelines that Medicaid providers must meet to be reimbursed for certain services.

In terms of personal-care-aide (PCA) services, providers and their PCA patients must clear several hurdles to qualify for D.C. Medicaid funding. To begin with, patients must have a prescription for PCA services from their medical professional, see D.C. Mun. Regs., tit. 29, § 5004.1, based on a finding that they " have functional limitations in one or more activities of daily living" -- such as bathing, dressing, or administering vital medications -- " for which personal care services are needed." Id. § 5005.1. After the doctor writes a PCA prescription and the patient receives a referral, the provider must assess " the patient's functional status and needs" within 48 hours. Id. § 5006.1. Seventy-two hours after that, it must draw up a plan of care for delivering services per the doctors' orders and patient's needs. Id. § 5006.2. Those plans must " specify the frequency, duration[,] and expected outcome of the services rendered," and they must be approved and " signed by the physician within thirty (30) days of prescription." Id. § § 5006.3, 5006.6. A registered nurse must review the plan every 62 days, and any " update[] or modifi[cation]" must be signed by the physician. Id. § 5006.6. Services must be reauthorized by a physician or advanced-practice registered nurse every six months. Id. § 5006.4.

In addition, all licensed PCA-service providers are required to " maintain accurate records reflecting the specific personal care services provided to each patient."

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Id. § 5007.2. Those records must include " past and current [medical] findings, the initial and subsequent plans of care, and the ongoing progress of each patient," as well as a " [d]escription and dates of services rendered, including the name of the personal care aide performing the service." Id. § § 5007.1, 5007.8(c).

If a provider " [k]nowingly and willfully ma[kes] or cause[s] to be made any false statement or misrepresentation of material fact in claiming, or in determining the right to, payment under Medicaid," then the District may refuse to reimburse that provider for its services. Id. § 1301.2(a). The provider's agreement with the District, allowing it to render PCA services, may also be terminated. Id. § § 1301.3, 1302.1.

On top of those penalties, because the federal government funds roughly 70 percent of D.C. Medicaid, see Alison Mitchell et al., Cong. Research Serv., R43357, Medicaid: An Overview 35 (2014), the United States may also seek to recover funds fraudulently obtained. Under the False Claims Act, a provider may be liable if it " knowingly presents, or causes to be presented, to an officer or employee of the United States Government . . . a false or fraudulent claim for payment or approval" or " knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government." 31 U.S.C. § 3729(a)(1)-(2).[2] Providers that violate the FCA may be " liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person." Id.

In this FCA case, the federal Government alleges that Speqtrum, a home-healthcare and PCA-service provider, defrauded Medicaid of over a million dollars. The Government charges Speqtrum with a pattern of fraud encompassing both (i) charging the Government for services not rendered -- e.g., services allegedly provided to dead or hospitalized patients -- and (ii) charging the Government for unauthorized services -- e.g., services that were rendered without an operative plan of care.

At this juncture, the Court views the evidence in the light most favorable to the non-moving party, and when facts are in dispute, the non-movant's version governs. In this case, however, because Speqtrum did not produce any affidavits, declarations, or deposition transcripts -- or much of any other evidence that the Court could consider at this stage -- the Court must treat the vast majority of the facts offered by the Government as conceded. The picture that evidence paints, along with Speqtrum's meager evidentiary contributions, is quite grim.

In late May and early June of 2009, DHCF -- which is responsible for D.C. Medicaid compliance -- conducted an audit of Speqtrum's D.C. office. See Mot., Attach. 2 (Declaration of Gregg C. Domroe), ¶ 6; Exh. 10 (DHCF Notice of Overpayment Recovery) at 1; Exh. 11 (DHCF Notice of Termination of Provider Agreement) at 2. Such audits are routine and

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are provided for by D.C. law. See D.C. Mun. Regs., tit. 29, § 5010. During DHCF's visit, its employees randomly reviewed the records of 220 Medicaid beneficiaries. Domroe Decl., ¶ 6; DHCF Notice of Termination of Provider Agreement at 2. Of those records, 208 lacked the documentation required to legitimize the services allegedly rendered. Domroe Decl., ¶ 7. Some files had no plan of care, or the plan of care had gone unsigned. Id., ¶ ¶ 8, 12. Other plans of care contained forged signatures, as multiple doctors later confirmed after examining the fabricated records. Id., ¶ ¶ 15-16; Mot., Exh. 3A-E (FBI Doctor Interviews). Other files lacked records to substantiate the amount of time PCAs had supposedly spent with patients. Domroe Decl., ¶ 9. Still other files revealed overbilling for services not rendered, id., ¶ 10, or that the patient was not even receiving services from Speqtrum. Id., ¶ 13. One patient's file could not be located, and DHCF soon discovered that the patient had died prior to the dates on which Speqtrum purported to render its services. See DHCF Notice of Termination of Provider Agreement at 2.

Later that year, the FBI and other government agencies pulled twenty random files belonging to patients who had supposedly received care from Speqtrum seven days a week for eight hours per day. Domroe Decl., ¶ 18. Fifteen of those twenty files contained fraudulent claims, according to interviews with the patients themselves. Id. One of the beneficiaries, for example, received care only from 10 a.m. to 4 p.m. five days a week. Id., ¶ 20. Other patients similarly received services from Speqtrum, but for a lesser number of hours or days per week. Id., ¶ ¶ 24-27. Another patient claimed she had been receiving services through Ultra Home Health Agency -- and only through Ultra -- for about four years. Id., ¶ ¶ 22-23. An FBI agent confirmed that Ultra had been billing Medicaid for PCA services during the same period that Speqtrum claimed it had rendered services. Id. 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. Id. Yet another purported patient never received any home-healthcare services whatsoever - and had no need for them. Id., ¶ ¶ 29-30. Speqtrum had nevertheless billed Medicaid for almost $14,000 in services on his behalf. Id.

On July 15, 2009, the FBI and other agencies executed a search warrant and seized piles of documents from Speqtrum's D.C. and Maryland offices. Id., ¶ 32. The documents collected tended to confirm that patient files contained forged signatures or falsified timesheets. One document appears to contain various trial runs at forging a doctor's signature -- which later appears in a patient file. See Mot., Exh. 5 (Trial Signatures and File). Another set of documents consists of pre-signed timesheets -- initialed in advance by patients -- which PCAs could then fill in with (potentially) inaccurate hours. See Mot., Exh. 9 (Pre-Filled Timesheets).

Yet another document alerted Speqtrum's President and Founder, Pauline Nnawuba, to the fact that a high-level employee had been defrauding Medicaid on the company's behalf. See Mot., Exh. 6 (Ahouste Memo). Until about 2008, Joahana Tingem, the Director of Nursing, hired family members who were not licensed to provide PCA services. Id. at 1. She was, moreover, billing for services she had not rendered, including services supposedly provided to hospitalized and deceased clients. Id. She even used the identities of other PCAs to collect Medicaid money for herself. Id. In doing so, she forged both doctors' and patients' signatures. Id. Tingem was eventually fired,

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but Nnawuba never alerted DHCF of the fraudulent charges she had made.

As a result of the audit and investigation, yet another high-level employee -- Florence Nguh, Nurse Director of Case Management -- was fired in late 2009 for similarly conducting illegal activities on Spectrum's behalf. Her termination letter, which the FBI acquired, noted that she had " billed D.C. Medicaid for potentially illegal nursing and personal care assistant services and diverted those funds" into her own personal accounts. Mot., Exh. 7 (Florence Nguh Termination Letter). According to Camille Gabriel, Speqtrum's Assistant Quality Assurance Manager, both Nguh and Shola Adebusoye, the new Director of Nursing, knew that many of their patients had no plan of care in place. Mot., Exh. 15 (FBI Interview with Camille A. Gabriel) at 1. When Gabriel would bring it up, Nguh and Adebusoye told her they would " handle getting the approval." Id. The issue was also raised at staff meetings. Id. at 1-2. According to Gabriel, Nnawuba knew about these problems. Id. at 1. Other staff members complained to Nguh that PCAs were billing for hours they had not worked, yet nothing was done. Id. at 2-3. Similarly, Speqtrum was notified that some PCAs were paying off their patients to collude in the fraud. Id. at 3. Another employee testified that Speqtrum generally and Nguh specifically knew that there were problems with the files, but would generally be tipped off and would " clean up" the files before auditors arrived. Mot., Exh. 16 (FBI Interview with Jozanne Browne) at 1-3.

Nnawuba, meanwhile, maintained that she had no idea what was going on in the D.C. office -- or, apparently, within the company she founded and ran in general. When asked if she was " knowledgable [ sic ]" of her " company's Medicaid compliance practices," she responded, " Not [at] all because I hired somebody in charge of that." Nnawuba Depo. at 20:3-6. She also delegated all hiring authority for the D.C. Office to her Director of Nursing, who was Shola Adebusoye at the time of the audit. Id. at 30:17-32:24. The Director of Nursing was also in charge of making sure that the PCAs were showing up for work and turning in accurate timesheets. Id. at 33:1-13. According to Nnawuba, the Director of Nursing essentially " r[a]n the company." Id. at 32:7. The Director of Case Management, who was Florence Nguh at the time of the audit, had a similar level of responsibility over patients enrolled in the Medicare Waiver plan. Id. at 33:13-35:4. When asked about the lack of signed plans of care and the overbilling, Nnawuba claimed that she could not testify about it, but that the FBI would have to ask " [t]he people in charge" -- namely, Nguh or Adebusoye. Id. at 48:8-49:6.

Based on the results of the various audits, DHCF moved to terminate Speqtrum as a PCA provider and to recoup over $8 million dollars in District funds implicated by the fraud. See DHCF Notice of Termination of Provider Agreement at 1; DHCF Notice of Overpayment Recovery at l.

On December 13, 2010, the federal Government filed this case alleging that Defendant had knowingly submitted false invoices to the D.C. Medicaid Program in violation of the False Claims Act, thereby defrauding the United States of $1,840,724.92. 31 U.S.C. § 3729; see Compl. at 11-13.

In connection with its Complaint, the Government moved for preliminary injunctive relief to recover funds improperly paid to Speqtrum. That relief was granted, and the District was ordered to freeze certain Medicaid ...


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