Four skilled nursing businesses found liable for Medicare fraud have been hit with a multi-million dollar jury verdict.

Following trial in this whistleblower lawsuit, a Florida jury found that Medicare fraud has been going on at many of the defendants’ 53 locations in Florida. Defendants CMC II LLC, Salus Rehabilitation LLC, 207 Marshall Drive Operations LLC, and 803 Oak Street Operations LLC are now on the hook for a total of $115 million in damages.

The jury found these four businesses collectively had submitted hundreds of false claims to the Medicare and Medicaid programs, using false statements and fraudulent records to back those claims up.

Defendant CMC II did business as LaVie Management Services of Florida and was the corporate successor to Sea Crest Health Care Management. Oak Street operated under the name Governor’s Creek Health and Rehabilitation Center, and Marshall Drive operates under the name Marshall Health and Rehabilitation Center.

Whistleblower Angela R. filed this Medicare fraud lawsuit in 2011. Angela worked as a nurse at two of the four defendants’ facilities.

She claimed that for years, her former employer had used fraudulent practices such as upcoding, the practice of billing Medicare or Medicaid for more expensive treatments and procedures than what was actually provided.

In False Claims Acts like these, the government gets a chance to intervene, essentially taking over as the plaintiff. The government declined to intervene in this case, so Angela continued to prosecute it herself.

Angela’s evidence of Medicare fraud was limited. However, the court allowed her to use a technique called statistical sampling to create a projection of how many false claims had been made across all the defendants’ businesses. Statistical sampling is frequently used by the government when it intervenes in a whistleblower case.

The jury divided up liability among the four defendants. CMC II was assessed the largest penalty, almost $110 in damages based on 123 allegedly false Medicare claims. Far behind CMC II were Oak Street and Marshall Drive, facing $3.3 million and $2 million in damages, respectively.

The jury assessed no damage penalty against Salus – though it did find the company submitted 44 false claims to Medicare.

The amount each defendant ends up paying could end up being even larger. The False Claims Act provides for assessments of treble damages – which can put a defendant on the hook for three times the amount defrauded from the government. Defendants can also be hit with penalties of $10,000 to $22,000 for each false claim submitted.

Once those extra penalties and damages are factored in, the defendants’ total bill could reach over $300 million.

Trials are less common in whistleblower lawsuits like these, as these kinds of cases are usually settled before they go to trial. Penalties in a False Claims Act can be many times greater than the actual amount of money at issue. The threat of such penalties makes going to trial a real gamble for the defendant, so more often than not they see settlement as a safer alternative.

This Medicare Fraud Whistleblower Lawsuit is Case No. 8:11-cv-01303 in the U.S. District Court for the Middle District of Florida.