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Legal Speak

Worthless Services

Published June 10, 2013 10:21 AM by Tony DeWitt

Suppose you went to the auto mechanic and he told you that you needed your tires rotated and your oil changed. You wait patiently in the waiting room for 20 minutes and then someone brings you out your keys, takes your money, and sends you on your way. But back in the mechanical part of the shop the only service you received was to have the oil that was already in your car topped off, and no one touched your tires. If you learned of this, you'd probably be pretty angry because you had paid for services that were (a) not what you bargained for and (b) were as a practical matter, worthless.

This is the theory that the United States is using to go after nursing homes and skilled nursing facilities that provide substandard care but nevertheless bill Medicaid and Medicare for those services. Billing for worthless services is one of several ways a claim can be false within the meaning of the False Claims Act, the Civil War era statute that penalizes cheating the government. Worthless services cases stand for the proposition that a provider may not knowingly bill the government for goods and services where "the service is so substandard as to be tantamount to no service at all."

It is well-settled that billing the United States for a product or service that is of no value, if done with the requisite guilty knowledge violates the False Claims Act. Courts consistently have upheld liability for billing for deficient products and services. 

Thus there is no question that healthcare providers, including skilled nursing facilities, Hospice providers, and home health care providers who knowingly make claims for payment for worthless services may be liable to the United States

In one notable case, United States v. Cathedral Rock Corp., (Eastern District federal court, Missouri, Nov . 30, 2007) the court said "In a worthless services claim, the performance of the service is so deficient that for all practical purposes it is the equivalent of no performance at all.").  The issue in those cases was patients whose treatment by the nursing home staff had been so bad that they deteriorated and suffered injury as a result.

So, how does a facility prevent a worthless services claim? First, it provides adequate staff and supervises that staff appropriately.  It does not permit patients to go unsupervised.  It prevents elopements. I gives prescribed medications on time, and most importantly of all, it documents all of these things in records that demonstrate an attention to detail.

In most worthless services cases the overwhelming evidence that shows that the facility is liable to the government for collecting payments it should not have received comes from medical records that show ten and twenty day gaps between documented instances of care.  Patients develop bed sores, lose weight, and suffer injury as a result.

One solution for facilities is to employ a chart auditor who is independent of the facility. In other words, hire a nurse, as a consultant, to periodically review random sets of patient records and provide management with an overview of whether the facility is meeting its goal.  Tying performance under an audit system to staff bonuses or incentives is a practical way to ensure that when the facility does well, the staff does well too.

Oversight by non-management RNs or staff who are given authority to review records and make recommendations seldom works because (a) those staff lack authority over management nursing personnel, and (b) those staff tend not to last long in their jobs. Paying an outside consultant ensures accountability from the top down. 

Read more articles on this topic:

Documentation Keeps Nurses Out of the Courtroom

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posted by Tony DeWitt


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About this Blog

    A.L. "Tony" DeWitt, RRT, CRT, JD, FAARC
    Occupation: Attorney
    Setting: Jefferson City, Mo.
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