The board’s Quality of Care Committee should be made aware of a September 7 Department of Justice complaint against a nursing home system and its director of operations that alleges False Claims Act violations for the provision of services “that were either non-existent or grossly substandard.”

The government has long made known its willingness to pursue enforcement actions under the FCA against health care providers for quality of care-based violations of Medicare and Medicaid law. One government theory of liability under the FCA involves submitting reimbursement claims for the provision of care that is so deficient that it effectively amounts to no care at all (often dubbed “worthless services” liability). Because the FCA is a fraud statute and is not designed to regulate medical standard of care issues, judicial decisions apply a high burden for pleading and proving worthless services claims under the FCA: “[i]t is not enough to offer evidence that the defendant provided services that are worth some amount less than the services paid for.” In other words, these courts hold that even if the care is substandard, that is not enough to support an FCA claim. In any event, the September 7 complaint is a reminder to health system boards and their quality committees that the Department of Justice remains willing to pursue enforcement actions based on significant standard of care violations.

In the Vanguard complaint, the government alleges a litany of non-existent or grossly substandard services, including chronic staffing and critical medical supplies shortages, failure to provide standard infection control, failure to administer medication to residents as prescribed by their physicians, failure to provide wound care as ordered by physicians, failure to adequately manage residents’ pain and providing unnecessary and excessive psychotropic medications to residents and using unnecessary physical restraints on residents. In a Yates connection (see above), the company’s Director of Operations was included in the complaint on the grounds that he was aware of these alleged quality of care failures, yet failed to take any corrective action.

Many governance experts believe that health care board of directors have a fiduciary obligation with respect to the provision of care to patients and/or residents. This perceived obligation is grounded in both duty of care (e.g., operational oversight) and duty of loyalty (corporate mission to provide health care services) principles. For many health care boards, its Quality of Care Committee is responsible for implementing these responsibilities. The Vanguard complaint—including the allegations involving the Director of Operations—underscores for that Committee the important nexus between quality of care and corporate compliance. The Committee may wish to work in consultation with the General Counsel, the Chief Compliance Officer, the Chief Medical Officer and the Compliance Committee to help reduce exposure to “worthless services” complaints that can be so devastating to the corporate reputation. This oversight can focus, in part, on matters of staffing and on the use of an effective quality of care “dashboard” to help the board monitor quality metrics.