Health Care Fraud Opinion Affirming a Conviction Deserves a Second Look
In a recent Eleventh Circuit opinion, United States v. Houser, No. 12-14302 (11th Cir. June 19, 2014), the Court of Appeals affirmed the health care fraud conviction of George Houser, a graduate of Harvard law school and the owner and operator of several skilled nursing facilities in Rome, Georgia. On appeal, Mr. Houser’s counsel argued that the conviction should be reversed since it was premised on a “worthless services” theory of health care fraud which is more appropriate in the context of civil False Claims Act prosecutions and that, for this reason, the health care fraud statute as applied to Mr. Houser was unconstitutionally vague.
The Court rejected these arguments reasoning, in part, that the “district court’s order of conviction also rested, at least in part, on the facilities’ failure to provide necessary services,”for example, residents never received the medications that they were supposed to have, residents went without diapers and medical care for their wounds,laboratory services were not performed, and residents were not transported for dialysis or provided with physical therapy. So while the government reinforced that George was the modern day equivalent of a skilled nursing home slum lord, cutting corners and providing substandard, essentially “worthless care,” part of the district court’s determination was based on George’s wholesale failure to provide services for which he billed or caused to be billed to government health care programs and private insurance companies.
Thus, the Court properly resisted the temptation to directly address, what arguably was, the most significant issue in this case: whether or not the government could have prosecuted Mr. Houser for a violation of the health care fraud statute under a “worthless services” theory when Mr. Houser billed Medicare and private insurance companies for services that were deficient, inadequate, and otherwise substandard.
So, the question remains: if George Houser (or anyone else) provides services that are simply “worthless” because they are substandard, inadequate, or, in some cases, downright offensive, then can the perceived worthlessness of those services provide the government with the legal basis for prosecuting a provider or supplier for a violation of the health care fraud statute?
Further, the Houser prosecution is only one of several cases nationwide in which the government used a quasi-civil theory of liability related to quality of care as a basis for a criminal health care fraud allegation. Notably, the government in these cases is also relying heavily on 18 U.S.C. Section 1035 (False Statements in Related Health Care Matters).
Thus, Houser is certainly relevant because of the novel “worthless services” defense raised by Mr. Houser, but the other ongoing criminal health care prosecutions directly addressing medical necessity and quality of care issues should be closely monitored.
Author: Andrew Feldman
Mr. Feldman represents professionals, corporations, health care providers, and health care marketers in government investigations and prosecutions throughout the United States. Mr. Feldman works tirelessly for his clients from the time an investigation begins until the time a jury renders a verdict.
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