Brookdale Prevails in $35 Million Medicare Fraud Suit

A federal judge has permanently dismissed a $35 million lawsuit involving the nation’s largest senior housing provider, marking the end of a years-long legal dispute.

The June 22 dismissal lays to rest a whistleblower case brought by former Brookdale Senior Living (NYSE: BKD) employee Marjorie Prather, who was originally hired to review documentation related to clients who had received home health services.

In a 2012 lawsuit, Prather accused the Brentwood, Tennessee-based company of approximately $35 million in Medicare fraud related to home health payments. Though that case was dismissed in 2015 due to lack of evidence, the Sixth Circuit Court of Appeals reversed that dismissal and revived the case last October.


In essence, Prather alleged that Brookdale violated the False Claims Act by billing Medicare for home health services without obtaining the required face-to-face documentation or signatures on certifications at the time the doctor established the patient’s care plan.

Brookdale senior executives also pressured Prather and other employees to expedite the billing process and instructed them to ignore compliance issues that slowed things down, the lawsuit said. Additionally, Brookdale paid doctors for their time spent signing and reviewing documents, Prather claimed.

The provider did all this to help clear a backlog of 7,000 Medicare claims worth approximately $35 million and to avoid a “looming financial crisis,” according to the suit.


But Brookdale defended itself last March by pointing out it had only ever obtained doctor signatures late, as opposed to not at all. If the case truly involved “missing signatures,” it would be much stronger for Prather, the company said at the time.

As long as Brookdale obtained doctors’ signatures before submitting final claims for payment, the timeliness of those signatures does not render the claims false under the False Claims Act, Brookdale said.

Ultimately, U.S. District Judge Aleta A. Trauger ruled in Brookdale’s favor, saying that billing Medicare before obtaining a physician’s signature is not fraudulent because Brookdale is “not material to [the government’s] payment decision.”

A representative for Brookdale declined to comment on the ruling.

Written by Tim Regan

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