Consulate Health Care will not have to pay a $347 million False Claims Act judgment from last March after a federal judge in Florida on Jan. 11 tossed that decision, denying a whistleblower lawsuit that alleged skilled nursing facilities under a previous owner had overcharged the Medicare and Medicaid programs through inflated therapy claims.

The case, Ruckh v. CMC, centered on allegations by former part-time agency employee Angela Ruckh, who claimed that Consulate acted illegally in filing claims for government reimbursement. U.S. District Judge Steven Merryday in rejecting the March judgment not only denied the validity of Ruckh’s allegations, but also relied heavily on the U.S. Supreme Court’s June 2016 ruling in Universal Health Services v. Escobar.

The Supreme Court ruling clarified that a False Claims Act claim is not proven true just because a contractor submits a claim for payment with technical deficiencies in its paperwork.

In his decision, Merryday said the “relator,” or whistleblower Ruckh, “offered no meaningful and competent proof that the federal or the state government” would, even if they had known of the disputed practices, refused to pay the defendants’ reimbursement claims.

“Not only did the relator fail to prove that the governments regarded the disputed practices as material and would have refused to pay, but the relator failed to prove that the defendants submitted claims for payment despite the defendants’ knowing that the governments would refuse to pay the claims if either or both governments had known about the disputed practices,” he said.

The judge said the facts show both the federal and state governments were, and are, aware of the providers’ disputed practices and allegations of wrongdoing, “but neither government has ceased to pay or even threatened to stop paying the defendants for the services provided to patients throughout Florida continuously since long before this action began in 2011. For these and for each of the other reasons argued by the defendants, the judgments cannot stand.”

Consulate, in applauding the court’s decision to throw out the March judgment, stressed that its company didn’t actually own the facilities at the time the billing practices were brought into question. A company called Seacrest Management operated the buildings in which Ruckh made her allegations, and were later folded into Consulate after a merger, according to Daniel Dias, chief corporate counsel for the provider.

In fact, Ruckh hadn’t worked for Consulate, since Consulate did not come into existence until 2012 and the allegations center around the two previous years. Having inherited the issue of Ruckh’s allegations, Dias says the company has fought a long, more than five-year battle to refute the charges and feels vindicated by the Merryday decision.

“This was not about Consulate Health Care. We have been, however, litigating this matter since 2012, so it has been a pretty aggravating process since it is not our claims in question, not our issue, and none of the allegations are about us. We have spent a lot of time, money, and effort to defend the case, and we certainly, nevertheless, have felt very strongly about our arguments all the way through,” he says.

In assessing the Merryday ruling, Dias says the long term and post-acute care profession should be aware of the significance of his words on both the Escobar front and how the court views the actions at the facility level versus the management level of an operation.

Unlike most False Claims Act cases Dias says he has ever heard of, the Ruckh arguments went beyond claims of fraudulent practices resulting from overbilling or the providing of unnecessary services. “This case went further, and got into the technical compliance with the Requirements of Participation,” he says.

Likening the allegations of wrongdoing to that of a police officer failing to sign a ticket properly, Dias says the minute corrections that were cited by Ruckh, if allowed to stand, would “have had a potentially chilling effect on our industry or any industry.”