An interesting SDNY settlement agreement resolves some False Claims Act allegations, but leaves others for another day. Visiting Nurse Service of New York (VNS) paid just under $35 million to the United States and New York State to settle allegations that VNS improperly billed Medicaid for 1,740 members whose needs did not qualify for a managed care plan. The government alleged that these members were improperly referred by social adult day care centers (SADCC), or received services primarily from SADCCs, many of which provided substandard and minimal care.
In the settlement agreement, VNS admitted that 1,740 Medicaid long term care program members were referred by SADCCs or used SADCC services, and were not eligible to be members of the plan; and that various SADCCs in the provider network did not provide services that qualified as “personal care services” under the long term care program contract with New York’s Department of Health.
The settlement agreement has a unique “Remaining Investigation” provision. Most FCA settlement agreements are designed to settle all claims against the defendants. The VNS settlement agreement, however, provides that it resolves only part of the United States investigation. Examples of allegations that are part of the “Remaining Investigation” are redacted in the publicly-filed document. In a provision that could lead to interesting questions of interpretation, VNS agrees “to cooperate with the Remaining Investigation,” but without waiving attorney-client or joint defense privileges, work product protections, or factual or legal defenses covering claims the government may bring against VNS. The issue of whether VNS is satisfying its duty of cooperation under the agreement while maintaining assertions of privilege and factual and legal defenses will be difficult to sort out if it is ever litigated. The settlement agreement carves out any potential claims against the president of the corporation that administered the managed health care plan, so that individual could be the focus of the “Remaining Investigation.” In addition, the Court approved keeping the relator’s complaint and the government’s complaint-in-intervention under seal.
During the pendency of the “Remaining Investigation,” VNS agrees to monitor and further revise standards for credentialing SADCCs; only credential SADCCs that have necessary certificates; monitor SADCCs to ensure compliance with credentialing; ensure that SADCCs provide proper personal care services; and prohibit marketing practices directed at enrolling members through SADCCs.