47 F. Supp. 3d 81
D.D.C.2014Background
- Speqtrum, Inc. operated a D.C. home-healthcare/PCA service provider funded in part by Medicaid; the Government alleges widespread fraud over multiple years.
- A May–June 2009 audit by DHCF found 208 of 220 patient files lacked required documentation, with unsigned or forged plans of care and questionable timesheets.
- The FBI and other agencies subsequently reviewed files; numerous instances showed overbilling or services not rendered, including claims for deceased or nonparticipating patients.
- Speqtrum’s leadership, including President Nnawuba and several high-level staff, is alleged to have known about or participated in fraudulent billing practices; some employees were fired for these activities.
- DHCF moved to terminate Speqtrum’s provider agreement and recoup funds; the government later filed a False Claims Act suit seeking more than $1.8 million in damages.
- The Court granted partial summary judgment on overbilling and services not rendered, but left materiality, other implied-certification claims, damages, and some related issues for trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the claims for services not rendered false claims? | Speqtrum knowingly billed for services not provided. | Defendant disputes the breadth of alleged falsities and questions materiality. | Yes; summary judgment for facts showing overbilling and non-rendered services. |
| Does implied certification liability attach where paperwork violated regulations but not all material to payment? | Implied certification arises from noncompliance with regulatory requirements that are material to payment. | Not all regulatory noncompliance is material to payment; some are mere participation requirements. | Partially; government may prove materiality for some implied-certification claims and proceed to trial on remaining ones. |
| Is the Government entitled to summary judgment on scienter for false claims and false records? | High-level Speqtrum employees had actual knowledge or acted with deliberate ignorance/reckless disregard. | Speqtrum’s rogue-employee defense challenges agency-wide agency culpability. | Summary judgment denied on some implied-certification scienter; but overbilling/knowingly false claims show strong scienter; to trial for remaining claims. |
Key Cases Cited
- Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (U.S. 2008) (false-records/false-statement liability antecedent to payment)
- Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001) (distinction between materiality of conditions of payment vs. participation)
- SAIC, Inc. v. United States, 626 F.3d 1257 (D.C. Cir. 2010) (implied certification and materiality in FCA context)
- Lemmon v. Envirocare of Utah, Inc., 614 F.3d 1163 (10th Cir. 2010) (materiality requirement and payment decision under FCA)
- United States v. Rogan, 459 F. Supp. 2d 692 (N.D. Ill. 2006) (Medicaid claims as claims to the federal government when funds are provided)