Memphis Operator of Spring Gate nursing home settles FCA allegations with half a million dollars, integrity deal

February 16, 2018

A concerned nephew turned whistleblower succeeded at helping the residents of a large nursing home in Tennessee address complaints of substandard, unhealthy services. His whistleblower lawsuit also helped the United States and the State of Tennessee investigate and address allegations that the large nursing home allegedly fraudulently billed Medicare.

In 2015, Chris Godwin filed a lawsuit against Spring Gate under the qui tam provisions of the False Claims Act (FCA). It permits persons like him to sue on behalf of the government as a relator to recover the submission of false claims and share in the recovery. The False Claims Act gives the US government a cause of action against any person or entity that knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval. The provisions of the False Claims Act permit a whistleblower to receive an award up to 30% of the amount recovered. The last decade showered record amounts of qui tam awards which aggregated in the billion dollar range.

Based on his filed case, Godwin acted out of concern for his aunt (now deceased). He observed a deterioration in his aunt’s health in 2013 after the nursing home allegedly made her take psychoactive drugs. He subsequently learned more about the substandard nursing services from the experience of his aunt as a resident there, from his talks with the nursing home staff and from his investigation into the situation of other residents.

Combined with the findings of the government, they alleged that from 2012 to 2015, Spring Gate provided substandard and worthless nursing home services to residents. Spring Gate is a large facility with more than 200 beds. It has a for-profit, corporate ownership.

“By relying on psychoactive drugs as a substitute for actual, skilled nursing care, and then billing Medicare for that care, Spring Gate has fraudulently billed the United States for worthless services,” Godwin’s case said.







Under federal and state law, Medicare and Tenncare will not pay for services deemed so deficient that they are essentially worthless.

The whistleblower’s case was captioned United States of America and the State of Tennessee ex rel. Chris Godwin v. Memphis Operator, LLC (d/b/a Spring Gate Rehabilitation and Healthcare Center). Vericare Management, Inc. and PharMerica Corporation, No. 2:15-cv-2090 (W.D.Tenn.). The Justice Department said Spring Gate cooperated to resolve the matter.

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As a result, the Justice Department announced early this month (February 2) that Memphis Operator, LLC, owner of Spring Gate Rehabilitation and Healthcare Center, will pay $500,000 to the United States and the State of Tennessee. The deal resolves the allegations of false claims to Medicare and Tenncare. Although the company will pay, the settlement says it has not been deemed liable for the allegations that provided substandard and worthless services to residents of Spring Gate and violated some requirements expected to be met by skilled nursing facilities.

Whistleblower Attorney Jason T. Brown commented, “This is another positive outcome obtained by the government with the assistance of a whistleblower and private qui tam counsel. These cases are made possible through the integrity of good people who come forward with their qui tam complaints and work with the government to hold entities accountable.”

Aside from the $500,000 settlement, Spring Gate signed a Corporate Integrity Agreement with the Department of Health and Human Services’ Office of Inspector General to prevent future unlawful conduct. Qui tam cases have become increasingly challenging in recent years with some courts ruling that a whistleblower needs to be on the inside, not merely a patient of a medical facility. Still, with specific enough facts a patient or client can proceed with their claim, but under the Qui Tam provisions must use a whistleblower law firm to commence an action.

“Residents of nursing homes are some of our most vulnerable citizens. When nursing homes break the law by defrauding the government for substandard or worthless services we will use our resources to combat this fraud and hold them accountable,” said D. Michael Dunavant, United States Attorney for the Western District of Tennessee.

The United States Department of Health and Human Services Office of the Inspector General, the Tennessee Bureau of Investigation and the Tennessee State Attorney General’s Office conducted the investigation. On behalf of the government, Assistant United States Attorneys Stuart J. Canale and Matt Waldrop and Steve Jobe, Senior Counsel for the Tennessee Attorney General, prosecuted the case.

If you have knowledge of nursing homefraud endangering our vulnerable citizens or other types of Medicare Fraud or Medicaid Fraud, click here for info on what you can do.