No AKS Violation Where Relators Fail to Show Compensation for Referrals; United States District Court for the District of South Carolina, Aiken Division, No. 1:17-cv-01493-JMC, U.S. ex rel. Tanja Adams, et al. v. Remain at Home Senior Care LLC, et al.


The district court granted one defendant’s motion to dismiss a qui tam case alleging fraud on Department of Energy-related healthcare compensation programs. The relators alleged the defendants accepted illegal compensation in exchange for referring patients to another co-defendant, which employed his son as a patient recruiter. However, the court found no evidence of any compensation to the doctor for the referral. The court also found no facts alleging the doctor allowed his son to review his patients’ records for sales leads. The relators also alleged the doctor provided disability ratings and letters of medical necessity to one of the co-defendants to support their provision of services, but the court found no allegation that these certifications and ratings were false, much less that they had resulted in the submission of false claims to the government.

Two defendants in a qui tam action alleging healthcare fraud moved to dismiss claims alleging they submitted fraudulent claims to the Department of Labor for home healthcare services.

The relators, all licensed nurses, filed a complaint against Remain at Home Senior Care, LLC; Nuclear Workers Institute of America; Brian Carrigan; Tim Collins; Dawn Blackwell; Dr. Francis Jenkins, II; FHJ PULM LLC; Dr. Peter Frank; A.J. Frank; Twilight Health, LLC; and RAH Holdings, LLC. Former employees of RAH, the relators alleged the defendants submitted fraudulent claims to the Department of Labor under the Energy Employees Occupational Illness Compensation Program Act of 2000. The EEOICPA compensates eligible individuals who were diagnosed with certain conditions while employed at specific Department of Energy facilities or awarded benefits under the Radiation Exposure Compensation Act.

Specifically, the relators alleged the defendants: (1) fraudulently recruited patients; (2) fraudulently provided letters of medical necessity to allow patients to receive unnecessary benefits; (3) forged signatures on renewal letters of medical necessity for benefits; (4) fraudulently induced illegitimate EEOICPA impairment ratings; (5) received kickbacks and paying kickbacks for patient referrals; (6) provided illegal payments and gifts to patients; (7) billed DOL home health care provider services that were actually provided by unqualified patient relatives; (8) billed DOL for registered nurse or licensed practical nurse services that were actually provided by a certified nurse assistant; (9) billed DOL for unnecessary medical services and; (10) billed DOL for services not rendered under the EEOICPA.

Dr. Frank moved to dismiss. The relators alleged Frank was paid to refer eligible patients to RAH, which employed his son as a patient recruiter. They also alleged Frank allowed his son to review confidential patient files to obtain leads on patients who were eligible for EEOICPA benefits and care through RAH. The relators alleged this conduct resulted in the submission of false claims for reimbursement to the government.

The court granted the motion to dismiss, finding the complaint did not adequately plead the allegations. The court found nothing in the complaint to suggest Frank submitted false claims to DOL. While the relators alleged Frank provide disability ratings and letters of medical necessity to RAH patients, the complaint did not allege these were fraudulent. In contrast, the relators alleged other defendants inflated or otherwise falsified the ratings and letters.

The court also found the relators failed to plead the kickback allegations with particularity. While the complaint generally alleged that RAH compensated Dr. Frank in exchange for patient referrals, it did not indicate the value of the kickbacks, allege when the kickbacks occurred, or connect the payments to certain patients or claims submitted to the government. The court found the most detailed claim stated that Frank persuaded a patient to call RAH about receiving services. However, the claim did not assert that Frank was compensated for this referral, and the court noted the AKS does not prohibit a doctor from referring a patient to necessary healthcare services in good faith.

Finally, the court found the complaint did not suggest Frank conspired to present false claims to the government for reimbursement. Again, the court found the allegations failed on the issue of particularity, as the relators did not say with whom Frank conspired or what Frank conspired to do. While the relators alleged Frank allowed his son to view confidential patient records, the complaint failed to support this theory with facts.