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United States v. Speqtrum, Inc.

United States District Court, D. Columbia.

July 8, 2015

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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JAMES E. BOASBERG, United States District Judge.

Defendant Speqtrum, Inc., is a home-healthcare agency that furnishes the elderly and disabled with assistance in their day-to-day activities. From 2004 to 2009, D.C. Medicaid, which is subsidized by the federal Medicaid program, reimbursed many of the agency's services for low-income patients. Over the years, unfortunately, Speqtrum began playing fast and loose with Government funds: overbilling for hours not worked, charging the District for clients it did not service, forging physician signatures on its paperwork, and failing to obtain medical authorization prior to rendering services. The District uncovered this massive fraud during a routine audit in early 2009. The federal Government began its own investigation shortly thereafter, and this lawsuit -- alleging violations of the federal False Claims Act -- followed.

After the parties cross-moved for summary judgment, this Court issued a lengthy Opinion granting the Government's Motion in part and denying Speqtrum's in full. See United States v. Speqtrum, Inc. (Speqtrum I), 47 F.Supp.3d 81 (D.D.C. 2014). More specifically, it held Defendant liable insofar as it had billed Medicaid for services never rendered, but reserved judgment on the other species of fraud alleged by Plaintiff. See id. at 97. Indicating the need for additional evidence, it also refrained from resolving the question of damages. See id.

The Government has now augmented its submissions and renewed its request for summary judgment on the remaining issues. Finding judgment warranted as to liability but not damages, the Court will grant its Motion in part and deny it in part.

I. Background

The Court has already described much of the relevant background of this case in its prior Opinion. See id. at 84-88. It therefore recites only the basic underlying facts here and sets out more detail where relevant in the subsequent analysis. See Section III, infra. In so doing, the Court is aware that, on a motion for summary judgment, it must view the facts in the light most favorable to the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In this case, however, because Speqtrum has failed to produce any affidavits, declarations, or deposition transcripts -- or any other relevant evidence that could be considered at this stage -- the Court, as in its prior Opinion, must treat the vast majority of the facts offered by the Government as conceded. The picture that emerges of Defendant's business is, to say the least, quite unflattering.

A. Medicaid Framework

Established under Title XIX of the Social Security Act, 42 U.S.C. § § 1396 et seq., Medicaid is a joint state-federal program that 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. See 42 C.F.R. § 430.0; About Us,, (last visited June 17, 2015). Each state is responsible for administering its own Medicaid program, with the federal Government chipping in to cover some portion

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of expenditures. See Alison Mitchell et al., Cong. Research Serv., R43357, Medicaid: An Overview 32 (2014). The District of Columbia's Medicaid Program, for instance, receives roughly 70 percent of its funding from the federal Government. See id. at 35.

Among other benefits, D.C. Medicaid covers the provision of personal-care services to eligible recipients. See D.C. Mun. Regs., tit. 29, § 5000; [1] see also Medicaid Long-Term Care Services,, (last visited June 17, 2015). The objective of such services is " [t]o provide necessary hands-on personal care assistance with the activities of daily living" for seniors and others struggling to live independently, and " [t]o encourage home-based care as a preferred and cost-effective alternative to institutional care." D.C. Mun. Regs., tit. 29, § 5000.2.

To qualify for D.C. Medicaid funding, providers of personal-care services and their patients must clear several hurdles. Patients must first obtain a prescription and referral for such services from a medical professional, based on a finding that they " have functional limitations in one or more activities of daily living" -- e.g., bathing, dressing, or administering vital medications -- " for which personal care services are needed." Id. § § 5004.1, 5005.1. Upon receiving a referral for services, the provider must conduct an " initial assessment" of " the patient's functional status and needs," and draw up a " plan of care" for delivery of services. See id. § § 5006.1-5006.2. Those plans must " specify the frequency, duration[,] and expected outcome of the services rendered," and they must be approved and signed by " the patient's physician or advanced practice registered nurse." 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. In addition, all services must be reauthorized by a physician or advanced-practice registered nurse every six months. See id. § 5006.4. All licensed providers, furthermore, are required to " maintain accurate records reflecting the specific personal care services provided to each patient." Id. § 5007.2.

B. Relevant Conduct

Speqtrum, a home-healthcare agency, provided personal-care services to Medicaid-eligible patients located in the District beginning in 2004. See Pl. First MSJ, Exh. 1 (Speqtrum's Medicaid Provider Agreement). In May and June of 2009, the Department of Health Care Finance -- which is responsible for D.C. Medicaid compliance -- conducted a routine audit of Speqtrum's office. See Speqtrum I, 47 F.Supp.3d at 85. The results were staggering: after reviewing the records of 220 randomly selected Medicaid beneficiaries, DHCF discovered that 208 files " lacked the documentation required to legitimatize the services allegedly rendered." Id. at 86. Indeed, " [s]ome files had no plan of care, or the plan of care had gone unsigned," other plans of care bore forged signatures, and still other files lacked adequate timekeeping records. See id. Some files, moreover, revealed billing for aid never rendered -- e.g., invoices for services purportedly provided to long-deceased patients. A follow-up audit by the FBI and other federal agencies uncovered similar irregularities: fifteen of twenty randomly selected files contained fraudulent claims,

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according to interviews with the patients themselves. See id.

On July 15, 2009, the FBI executed a search warrant and seized piles of documents from Speqtrum's D.C. and Maryland offices. See id. The documents collected further confirmed the existence of foul play -- for example, one document appeared to contain various trial runs at forging a doctor's signature. See id. As a result of the audits and investigation, DHCF terminated Speqtrum as a personal-services provider. See id. at 87.

C. Procedural History

In short order, the federal Government filed this suit under the False Claims Act, 31 U.S.C. § 3729, accusing Speqtrum of bilking the United States out of $1,840,724.92. See id.[2] It charged Defendant with a pattern of fraud encompassing both (i) requesting payment for services not rendered ( e.g., services allegedly provided to dead or hospitalized patients) and (ii) withholding information about its noncompliance with key regulatory requirements ( e.g., the plan-of-care deficiencies) while seeking reimbursement. See id. at 85. After some procedural wrangling -- which, thankfully, the Court need not recount at this juncture -- the Government moved for summary judgment on both liability and damages. Speqtrum opposed and cross-moved.

On June 13, 2014, the Court issued an Opinion granting the Government's Motion in part and denying Speqtrum's in its entirety. As to the first type of alleged fraud, the Court found that Plaintiff had submitted " uncontroverted evidence that Speqtrum knowingly requested payment for services it had not, in fact, provided," and that such misconduct constitutes a " paradigmatic" violation of the False Claims Act. See id. at 91, 95 (" This is the classic case of false claims being presented to acquire undeserved funds." ). It thus held the Government " entitled to summary judgment as to its [allegations] of overbilling and billing for services not rendered." Id. at 95.

The Opinion reserved judgment, however, on the second type of fraud asserted -- namely, Speqtrum's withholding of information related to its regulatory noncompliance. Although the Government had " mustered enough evidence to overcome Speqtrum's Cross-Motion and to go to trial on those claims," the Court found that it had not submitted sufficient evidence to merit summary judgment in its favor. See id. It similarly found the Government's request for damages premature. See id.

The Court subsequently stayed the case so that a concurrent administrative proceeding held by DHCF could progress to an evidentiary hearing. See September 25, 2014, Minute Order. Although that hearing was initially scheduled for December 2014, Speqtrum's failure to properly submit its exhibits caused the hearing to be repeatedly postponed, and it was ultimately canceled. See ECF No. 95 (February 26, 2015, Status Report), Exh. 1 (Order of Administrative Court). As a result, the Court lifted the stay and allowed the Government to renew its Motion for Summary

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Judgment on those issues left open after the Court's prior decision. See March 6, 2015, Minute Order. It is to that submission -- and the Government's ...

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