From Government Ally to Government Target: Repeat Qui Tam Relator Now Faces DOJ’s Own FCA Lawsuit

Earlier in April, the Department of Justice filed a False Claims Act suit against Dr. Thomas Prose and several long-term care entities that he controls, which provide physician and nurse practitioner services to nursing homes and assisted living facilities in 17 states. In a nearly 700-paragraph complaint, DOJ alleges that Dr. Prose and his General Medicine family of companies (GenMed) defrauded Medicare over nearly a decade by submitting millions of dollars in claims for allegedly unperformed, unnecessary, or upcoded nursing home services. United States v. General Medicine, P.C., No. 22-cv-00651 (S.D. Ill.). On one level, the suit is notable simply as evidence of DOJ’s continuing focus on alleged fraud involving nursing facilities, which picked up steam during the Trump Administration and has continued under President Biden. But what most caught our attention is that Prose himself has been a relator in multiple prior FCA matters relating to his work in the long-term care space, including in a case in which the Seventh Circuit recently reversed the dismissal of Prose’s allegations in a split decision featured on this blog. Prose also previously received more than $900,000 in a settlement of another FCA suit.

Prose now finds himself on the opposite side of an FCA matter. Although DOJ has not publicly stated how Prose went from government ally to government target, DOJ’s press release about the lawsuit gave hints of a longstanding investigation of GenMed’s activities. Specifically, DOJ’s announcement flagged that a GenMed nurse practitioner has already pled guilty in 2017 to a single felony fraud count in connection with her work for GenMed, and that one of GenMed’s physicians was also recently indicted.

As to DOJ’s new FCA lawsuit against Prose and GenMed, the alleged misconduct falls into three categories: (1) providing (and billing Medicare for) healthcare services that were not reasonable or necessary; (2) seeking reimbursement for care that was not actually performed; and (3) using higher-cost billing codes than were appropriate for the care actually provided. The government asserts that “much of” the $40 million that Medicare paid to GenMed in the five years ending March 31, 2021 was the result of false claims. In practical terms, the government alleges that the defendants impermissibly relied on internal policies such as visit quotas—rather than patients’ medical needs—to determine when its physicians performed patient visits, what services they performed, and what billing code they assigned to each. For example, Medicare patients (rather than beneficiaries of lower-paying insurance payors) were allegedly singled out for more frequent visits.

The allegations take on new dimensions when viewed in light of the claims Prose made as the relator in cases such as United States ex rel. Prose v. Molina Healthcare of Illinois, Inc., the case recently revived on appeal by the Seventh Circuit (and now the subject of a pending petition for certiorari). There, Prose alleged that Molina did not live up to its Illinois Medicaid contract because it supposedly failed to furnish the full scope of nursing home services that it contracted to provide. Prose’s allegation relied largely on the fact that Molina no longer contracted with Prose’s own company, GenMed, for those services. The district court dismissed that case because Prose failed to allege that Molina made any knowingly material misstatements, but a divided panel of the Seventh Circuit reversed the dismissal.

The parallels between that prior litigation and the government’s suit against Prose are notable. In Molina, Prose essentially alleged that Molina’s claims for payment became materially false because it was providing too few services to patients in skilled nursing facilities. Now, the government effectively alleges the opposite: that GenMed was providing too many services for these patients (or in some cases, not serving them at all).

The initiation of this FCA suit is a reminder that the government’s aggressive oversight of Medicare and other federal healthcare programs can put anyone under the spotlight—even those who seek to participate in that oversight by filing qui tam lawsuits against their competitors. We here at Qui Notes will continue to monitor this matter as it progresses and report on any important developments.

© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.