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Federal Appeals Court Fails to Uphold Whistleblower Jury Award

AARP’s brief asked that an appeals court reconsider a judgment that threw out a $9 million jury award against a nursing facility charged with fraud and neglect.

Background

An Illinois jury found that two whistleblower nurses had proven $9 million dollars in damages as a consequence of their false claims act litigation against Momence Meadows Nursing Center, Inc., but that verdict was thrown out when an appeals court ruled that the jury did not have sufficient evidence to conclude as it did.

The nurses argued that nursing facility residents endured a variety of horrifying conditions including medical neglect, filth, bedsores, infections, and scabies and that federal investigators looking into these charges were mislead or deceived by statements, missing or inaccurate paperwork, and deliberate efforts to hide misdeeds by management at Momence Meadows Nursing Center.

While the U.S. Court of Appeals for the Seventh Circuit acknowledged that Momence’s own actions led to the difficulty in substantiating the validity of the 1,729 claims to Medicare and Medicaid that underpinned the nurses’ claims, the three-member panel of appeals court reviewing the matter came to the conclusion that the whistleblowers had insufficient evidence that all of the claims were fraudulent.

Moreover, the appeals court reversed the $262,000 in back pay and damages awarded to one of the nurses whom the jury had found was retaliated against for objecting to conditions. The reversal was based on a technicality of to whom, and when, the nurse had reported her concerns, prior to proceeding with whistleblower actions.

AARP’s friend-of-the-court brief, filed by attorneys with AARP Foundation Litigation, asked the full appeals court to rehear the decision by its panel. The brief pointed out numerous studies that document the tremendous value brought by whistleblowers to both the public health and the public fisc and the important role they play in supplementing the efforts of underfunded and understaffed regulatory agencies to ferret out waste, fraud and abuse in programs as large as Medicaid and Medicare. The brief also noted that the appeals court ruling invites nursing facilities to not only hide misdeeds but to retaliate against those seeking to protect against abuse — even though federal laws specifically protect their efforts.

The full appeals court denied the motion to reconsider so the ruling of the three judge panel stands.

What’s at Stake

Whistleblowers play an invaluable role not only in protecting public dollars, but more importantly in uncovering dangerous abuse, neglect and malfeasance in government programs. This has been particularly true in programs that are funded by Medicaid or Medicare. The consequences of failing to address fraud, waste and abuse are especially dangerous to people in nursing facilities. The court’s decision cripples protections for whistleblowers by condoning retaliation against them. It also requires standards of proof to successfully litigate a false claims act case that whistleblowers generally cannot meet at the outset of litigation. In other words, the ruling rewards management for hiding its misdeeds.

Case Status

U.S. ex rel Absher v. Momence Meadows Nursing Center was decided by the U.S. Court of Appeals for the Seventh Circuit. The whistleblowers have requested additional time during which they can seek review by the Supreme Court.