The federal prosecutor who pioneered using the federal False Claims Act to sue nursing homes over quality-of-care issues says more hospitals will be seeing that same weapon-as well as others-aimed at them.
Beginning in the late 1990s, David Hoffman, an assistant U.S. attorney in Philadelphia, started invoking that Civil War-era statute to attack a growing problem of healthcare quality in long-term-care institutions. And the repercussions continue to be felt throughout the long-term-care industry, with Hoffman inking 10 settlements to date and U.S. attorneys throughout the country filing dozens more, signifying a renewed commitment to improving care.
"We were seeing patterns of practice that led to grossly negligent care (at nursing homes)," Hoffman recalls. "It wasn't just an isolated incident of medical malpractice, but bad medical judgment in a pattern or practice that put people at risk and even harmed them. It is that consistent thread that would make the leap from nursing homes to hospitals."
Hoffman, who declined to discuss specific cases his office is investigating, says if hospital administrators record repeated medication errors resulting in patient harm or near misses, or bill federal insurance programs for those services but fail to set up systems to identify and address those errors, they're likely to attract government scrutiny.
"My feeling is that the government's interest is not based on the setting of care but the extent of the failure of care," Hoffman says.
"We've been expecting (similar lawsuits) to hit hospitals for years and now it's finally here," says Kathleen McGuan, general counsel for the Washington-based American Health Care Association, a trade and lobbying group representing nursing homes. "It's tough to know what will happen next because there's so little guidance from courts to date. But hospitals have the same kind of structure and directly bill the government for healthcare services. "
McGuan says she's aware of about 40 lawsuits filed against nursing homes over the past seven years alleging the institutions falsely billed federal insurance programs for failure to care for patients. She says that although the cases brought by Hoffman focused on facilities in the Philadelphia area, the same legal arguments were employed by U.S. attorneys in California, Florida, Missouri, Texas and along the East Coast.
But McGuan says there has been little litigation of the lawsuits so far: "By and large, most have settled." Although she says the financial impact on the long-term-care industry so far has been relatively minimal, she notes that because hospitals have significantly larger revenues, "It's a good bet that the settlements on the hospital side will be bigger. Most nursing home settlements have not been high. I'm not aware of a single million-dollar settlement," she says, adding that the agreements have focused on remedies and provider commitments to improve quality of care.
Hoffman agrees that the settlement amounts haven't been huge, saying the largest was about $600,000. He says the 10 nursing home settlements affect thousands of resident beds. "And I'm not stopping," he says. "I think this scenario could play out in hospital settings the same way as it did in nursing home settings."
John Boese, a healthcare defense lawyer with the Washington office of Fried, Frank, Harris, Shriver & Jacobson, disparages the nursing home settlements. "The fact that there are 10 settlements means (government prosecutors) threatened 10 people with Martha Stewart-like sanctions, who then decided it was cheaper to pay a relatively small amount versus closing the institution. The settlements have been amazingly small. They're saying, `Look how successful we are because we're getting all these people to settle.' "
But Boese expects to see real change only when providers begin to litigate cases. He contends that even though Hoffman says he is employing the False Claims Act to improve care in nursing homes, he is paving the way for whistleblowers, whose only aim is to collect huge recoveries by filing lawsuits that could put healthcare providers out of business.
"Once you let loose the False Claims Act on quality-of-care issues, you lose control," he says.
Hoffman disagrees, saying he doesn't think there will be a landslide of whistleblower suits against hospitals. "Failure-to-care cases are very difficult to prove," he says. "Every case must be analyzed on its own merits."