Federal District Court Denies Nursing Home Chain’s Motion to Dismiss Federal Government’s “Worthless Services” Case

In June 2022, the Department of Justice sued American Health Foundation, Inc., subsidiaries, and three nursing facilities (Cheltenham Nursing and Rehabilitation Center in Pennsylvania, The Sanctuary at Wilmington Place in Ohio, and Samaritan Care Center and Villa in Ohio) in federal district court in Pennsylvania, alleging that, between 2016 and 2018, they provided worthless services to residents, in violation of the False Claims Act and common law claims of unjust enrichment and payment by mistake. United States of America v. American Health Foundation Inc., et al, Civil Action No. 22-02344 (E.D. Pa.).

On March 31, 2023, Federal District Court Judge R. Barclay Surrick denied defendants’ Motion to Dismiss on all claims, holding that the allegations “rise to the level of gross-negligence necessary to deem their services worthless and, regardless, Defendants’ requested reimbursements for these services contained impliedly false certifications.” The Court finds that compliance with the federal Nursing Home Reform Act “was an express condition of payment” and writes, “Whether Medicare and Medicaid recipients were fed, changed, washed, lived in a habitable environment, given proper medical care, and prevented by competent staff from killing themselves is certainly ‘central to the decision about how to spend public funds’ and goes ‘to the very essence of the bargain’ Defendants made with the Government.”

• Full decision available by request from the Center for Medicare Advocacy