The federal government has decided to stake a claim in a whistle-blower lawsuit filed by two former employees against Lexington-based Nurses' Registry and Home Health Corporation, a health care company run by businessman Lennie House.
The lawsuit, which alleges Medicare fraud spanning nearly a decade — and retaliation against employees who refused to take part in the fraud — was filed in 2008 by Alisia Robinson-Hill, former vice president of operations, and David Price, a former case manager and office administrator for the company.
The lawsuit was filed "qui tam" — meaning on behalf of the United States — under the Federal False Claims Act. The case remained sealed for more than three years while the FBI investigated.
An order unsealing portions of the lawsuit was filed Friday after the United States chose to "intervene in part" in the lawsuit, meaning it would become a plaintiff in the case. Robinson-Hill and Price would be eligible to receive at least 15 to 30 percent of damages or settlement.
The lawsuit alleges Nurses' Registry submitted "false and fraudulent records, statements and Medicare claims" resulting in overpayment for services from the taxpayer-funded system.
The suit says Nurses' Registry executives encouraged case managers to exaggerate patients' medical conditions in order to bill for more expensive services, provide services to patients with no medical problems, backdate patient records and create a program to waive Medicare cost-sharing requirements.
Thomas D. Bullock, an attorney for Nurses' Registry, noted that those allegations were made by former employees and that the government has yet to file an amended complaint.
"The only claims that have been filed were made by the former employees, and we believe that no one should draw any conclusions based upon the filing of the complaint," Bullock said. "When or if the U.S. Attorney's Office files any claims, we will appropriately address them at that time."
In court filings that refer to Robinson-Hill and Price as "disgruntled" former employees, Nurses' Registry said the offenses alleged in the lawsuit were covered by a $1.6 million settlement between the company and the government in 2006.
Nurses' Registry, which provides nurses for short-staffed doctors and provides in-home care, filed a motion to dismiss the case, saying Robinson-Hill posted hints and comments about the suit on Facebook while the legal proceedings were still under seal by order of a judge.
Suits filed under the False Claims Act generally remain hidden from the public while the federal government decides whether to take part. Once that decision is made, the initial complaint and some filings become public.
Because Robinson-Hill breached that confidentiality, the legal action should be dismissed, the company said.
Nurses' Registry attached nine Facebook postings by Robinson-Hill between April and July, mentioning a countdown to the date of the government's formal intervention and unsealing of the suit but not giving the name of the company. Robinson-Hill also jokes about buying a friend a Porsche, presumably with damages or settlement money, according to the motion to dismiss. In one post, she linked to another story about an unrelated Medicare settlement between a company and the federal government.
"Who's the next company that will be in the hot seat regarding Medicare fraud and abuse?" she wrote. "Those (of you who) know me well already know the answer to this little ditty."
Nurses' Registry settled a complaint by the federal government and the Kentucky attorney general's office in 2006 for $1.6 million stemming from claims made from 1997 through 2003. Robinson-Hill, Price and the federal government allege that Nurses' Registry violated the terms of the settlement by not reporting "substantial overpayments" to Medicare and failing to institute a disclosure program.
The company — which House said in a 2007 interview brought in $40 million annually — draws an estimated 72 to 75 percent of its income from Medicare, the lawsuit says.
The lawsuit does not name House as a defendant, but the file was delivered to House as the agency's registered agent. House is the former owner of the now-defunct Lexington Horseman indoor football team and is involved in real estate and banking.
The former employees claim that Nurses' Registry harassed them and retaliated against them by secretly monitoring email, demoting them and threatening to terminate their employment.
After Price and Robinson-Hill left the company in 2007 and 2008, respectively, Nurses' Registry sued them in Fayette Circuit Court for violating non-compete/non-disclosure agreements even though their new employers were not home health agencies and were not "in competition with Nurses' Registry."
In court filings, Nurses' Registry denied the allegations.
The plaintiffs are seeking an amount of money "equal to three times the amount of damages the United States Government has sustained," plus $5,500 to $10,000 in civil penalties on each violation.