# JACKSON v. DEPAUL HEALTH SYSTEM

> District Court, E.D. Pennsylvania · April 15, 2020

URL: https://www.frixlaw.com/law-library/cases/10398765

## Case

- **Court:** District Court, E.D. Pennsylvania
- **Decided:** April 15, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

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- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10398765

## How later opinions describe it (automated extraction)

- noting the impropriety of conflating elements

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

United States of America, : CIVIL ACTION
ex rel. Terry Jackson : NO. 15-020
:
Plaintiff, :
v. :
:
DePaul Health System, et al., :
:
Defendants. :

M E M O R A N D U M

EDUARDO C. ROBRENO, J. April 15, 2020
I. INTRODUCTION
Terry Jackson brings a qui tam action against Baker’s Bay
Nursing Home Associates, LP, and DePaul Healthcare, LP, for
violating the False Claims Act by allegedly providing worthless
services to its nursing home residents and submitting falsified
forms to the government. Before the Court are Defendants’
motion in limine and motion for summary judgment.
Jackson’s evidence of regulatory noncompliance does not
show the level of malfeasance required to prove a factually
false claim based on a worthless services theory. On the other
hand, Jackson does point to enough evidence of the submission of
inaccurate forms to raise a genuine issue of material fact about
the submission of a legally false claim based on an express
certification theory.
1
Therefore, for the reasons set forth below, the motions
will be granted in part and denied in part.

II. FACTUAL BACKGROUND
Defendants operate River’s Edge, a 120-bed nursing facility
that provides short- and long-term care to between 60 and 120
residents. To provide care to these residents, it employs
Certified Nursing Assistants (“CNA”), Licensed Practical Nurses
(“LPN”), Registered Nurses (“RN”), and Primary Care Physicians.
Patient care and regulatory compliance is overseen by a Director
of Nursing (“Director”). River’s Edge receives payment for the
services it provides to its residents through private pay,
commercial insurance, and Medicaid and Medicare.

A. River’s Edge’s Regulatory Compliance
As a recipient of Medicare and Medicaid funds, River’s Edge
is required to submit to the federal government Minimum Data Set
(“MDS”) forms for each resident annually, quarterly, and if
there is a significant change in a resident’s condition.1 MDS
forms contain resident information, such as whether a resident
fell or experienced excess weight loss. But the MDS forms do
not contain all the data from a resident’s file. Instead, the

1 This information is collected by Centers for Medicare & Medicaid
Services (“CMS”), which is an agency in the Department of Health and Human
Services. See 42 C.F.R. §§ 483.20, 483.315.
2
Director collects data from Activities of Daily Living (“ADL”)
forms, which are filled out by CNAs, and translates this
information into the MDS forms. MDS forms also include a
certification that the information contained in the form is
accurate and that the payment of federal funds is conditioned on

the accuracy of the form. River’s Edge is then paid per
resident per day based on the information contained in each
resident’s MDS form.
River’s Edge is also required to comply with a Pennsylvania
regulation requiring a minimum of 2.7 hours of care per patient
per day (“PPD”). 28 Pa. Code § 211.12. Compliance with this
regulation is based on the total actual hours worked by staff in
a 24-hour day divided by the number of residents. And
compliance is tracked by a staffing coordinator and monitored by
the Director. River’s Edge creates a four-to-six-week schedule
and a projected PPD based on this schedule. Then, it creates a
daily staff assignment sheet based on the schedule and the

number of residents for each day. Last, the actual PPD is
calculated by looking at the payroll records and the daily
assignments.
River’s Edge’s operations are audited by the Pennsylvania
Department of Health through unannounced visits. At these
visits, which last several days, the Department of Health
3
announces to the residents that they should share with the
Department their complaints about the facility. Despite these
unannounced visits, between 2012 and 2017 the Department of
Health did not find any aspect of River’s Edge operation to be
“immediate jeopardy” deficient,2 and River’s Edge was never

ordered to shut down. That said, the Department of Health
issued two statements of deficiencies for River’s Edge in 2015:
(1) failure to accurately complete seven MDS forms and (2)
failure to properly submit Electronic Event Reports3 for a
scabies outbreak for twelve residents.
In addition to the unannounced regulatory audits, River’s
Edge independently ensures regulatory compliance. To ensure
compliance with standard of care regulations, the Director
performs daily rounds and conducts monthly resident council
meetings. And to ensure compliance with the PPD regulations,
River’s Edge schedules its staff to work more than the minimum
required hours, such that there is a surplus in excess of the

required 2.7 PPD, to account for staff call outs and no shows.

2 The Department of Health inspects various departments, e.g., nursing,
and provides the facility with a list of deficiencies ranging from D, which
is paper noncompliance, to IJ or immediate jeopardy, which is widespread
danger.
3 Under Pennsylvania regulations, nursing homes are required to report
various events, e.g., a scabies outbreak, through Electronic Event Reports.
28 Pa. Code § 211.1.
4
B. Terry Jackson
Terry Jackson, the plaintiff or relator in this case,
worked at River’s Edge part-time as a CNA from 1999 to 2014. As
a CNA, her job was to assist nurses in caring for patients and
to fill out ADL forms. Jackson was never involved with (1)
billing Medicaid or Medicare, (2) scheduling or calculating PPD,
(3) procurement of supplies, or (4) Department of Health
inspections. Nonetheless, Jackson alleges that during her time
at River’s Edge, the facility was understaffed, provided

substandard care to its residents, and must have submitted
fraudulent compliance forms to the federal government.
Jackson alleges that River’s Edge was so understaffed that
nurses could not respond to residents’ call-bells and could not
provide adequate care. According to Jackson, while each nursing
staff member should have been assigned 12 residents to comply
with the PPD regulation, they were typically each assigned
between 14 and 16 residents. She was present for three
Department of Health inspections in her 15 years at River’s
Edge, and she claims that the facility changed staff schedules
during inspections to ensure that there was enough staff during

the inspections. She also alleges that bed-ridden residents
were left in unsanitary conditions, including being left in
soiled sheets without being bathed, due to staffing shortages.
5
And she alleges that LPNs performed tasks that only RNs were
certified to perform. Further, Jackson describes a lack of
proper equipment, such as clean towels and linens. But at the
same time as she makes all of these allegations, she
acknowledges that the care she provided was fair, good, or

excellent.
Jackson claims there were fraudulent representations in the
MDS forms submitted for Medicare and Medicaid reimbursement
because the ADL forms that she completed contained errors.
Jackson completed ADL forms weeks after giving the care being
documented due to her having insufficient time to complete the
forms at the same time as rendering the care. So, although she
was never told to falsify ADL forms, she asserts that the delay
in completing the forms inevitably led to errors, which in turn
necessarily caused false representations in the MDS forms
because the MDS forms are prepared based on information in the
ADL forms. Jackson also alleges that some services recorded in

River’s Edge’s MDS forms never actually occurred. But she does
not point to any specific error in an ADL form or
misrepresentation in an MDS form.
C. D.F., W.M., and C.D.
Jackson provides four examples—three specific and one non-
specific—of low-quality care at River’s Edge. Most of Jackson’s
6
allegations of substandard care are devoid of specifics. Her
assertion that a resident had a maggot-infested wound does not
include the resident’s name or the time frame of this incident.
But Jackson does point to, as representative examples of poor
care, circumstances allegedly constituting substandard care to

three residents.
First, D.F. had scabies, a highly contagious skin
condition, which was treated for two weeks with a cream to
relieve symptoms. Jackson contends that D.F.’s treatment should
have been more than just application of symptom-relief cream.
But she does not present evidence of a more appropriate
treatment, and River’s Edge contends that the treatment provided
was adequate. D.F. was also not quarantined, which led to an
outbreak of scabies. River’s Edge did not report the outbreak,
but it has subsequently implemented procedures to ensure the
reporting of infection outbreaks in the future.
Second, W.M. suffered from bedsores and was not always

turned every two hours, as required for bedsore treatment,
because of a lack of staffing. According to Jackson, the extent
of the substandard care was that she sometimes failed to turn
W.M. every two hours. And W.M. was treated by a wound care
specialist.

7
Last, C.D., a ninety-year-old resident in a wheelchair, was
left unattended and suffered a fall that resulted in severe
injuries. C.D. was on the ground for twenty minutes after the
fall because River’s Edge staff chose not to move her given the
extent of the injuries and the risk of exacerbating the

injuries. They called an ambulance instead. As a result of the
fall, C.D. lost the mobility that she had prior to the fall.
D. Procedural History
Jackson’s complaint consists of two counts: (1) False
Claims Act and (2) retaliation. Upon investigation of Jackson’s
allegations, the United States declined to intervene in the
action. Defendants moved to dismiss for failure to state a
claim. And the Court granted Defendants’ motion in part,
dismissing Jackson’s retaliation count but allowing her False
Claims Act count to proceed on both a worthless services theory

and a false certification theory.
Now, Defendants move for summary judgment, arguing that the
record shows the services provided were not worthless and that
Jackson fails to point to evidence of a false material
certification. Together with the motion for summary judgment,
Defendants move to exclude the testimony of Jackson’s expert.

8
III. LEGAL STANDARD
Summary judgment is appropriate if there is no genuine
dispute as to any material fact and the moving party is entitled
to judgment as a matter of law. Fed. R. Civ. P. 56(a). “A
motion for summary judgment will not be defeated by ‘the mere
existence’ of some disputed facts, but will be denied when there
is a genuine issue of material fact.” Am. Eagle Outfitters v.
Lyle & Scott Ltd., 584 F.3d 575, 581 (3d Cir. 2009) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986)). A

fact is “material” if proof of its existence or nonexistence
might affect the outcome of the litigation, and a dispute is
“genuine” if “the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson, 477 U.S.
at 248.
The Court views the facts in the light most favorable to
the nonmoving party. “After making all reasonable inferences in
the nonmoving party’s favor, there is a genuine issue of
material fact if a reasonable jury could find for the nonmoving
party.” Pignataro v. Port Auth., 593 F.3d 265, 268 (3d Cir.
2010). While the moving party bears the initial burden of

showing the absence of a genuine issue of material fact, meeting
this obligation shifts the burden to the nonmoving party who
must “set forth specific facts showing that there is a genuine
9
issue for trial.” Anderson, 477 U.S. at 250 (quoting Fed. R.
Civ. P. 56).

IV. DISCUSSION
The motions before the Court will both be granted in part.
Defendants’ motion in limine will be granted in part and denied
in part because Jackson’s expert only uses reliable methods for
one of his conclusions. Defendants’ motion for summary judgment
will be granted in part and denied in part because Jackson only
presents sufficient evidence of a genuine dispute of material
fact about River’s Edge’s submission of a legally false claim in
its submission of inaccurate forms.

A. Motion in Limine
Defendants’ motion in limine will be granted except to the
extent it seeks to exclude testimony that River’s Edge’s
submission of inaccurate MDS forms constitutes a false claim.
Jackson offers an expert report by Craig Ratner, Esq., who holds
a J.D., is certified in healthcare compliance, and was a
compliance officer for Abington Jefferson Health. He spent
three hours reviewing the thousands of pages of materials in
this case before forming his opinions contained in the expert
report.
Ratner opines that River’s Edge submitted false claims to
the government by (1) providing worthless services through
10
substandard care and (2) submitting false and inaccurate forms
to the government. Ratner concludes that River’s Edge provided
worthless services because it failed to maintain adequate
staffing, keep adequate supplies, and refer residents to
specialists. And he concludes that River’s Edge submitted false

forms because the Pennsylvania Department of Health found
River’s Edge failed to submit accurate MDS forms and Jackson
testified about errors in the ADL forms.
An expert’s opinion is admissible if the expert’s knowledge
will help the jury understand evidence or determine a fact, the
opinion is based on sufficient facts, the opinion is based on
reliable principles and methods, and the principles and methods
were reliably applied to the facts. Fed. R. Evid. 702. Ratner
is qualified to testify as an expert on healthcare regulation
compliance due to his experience and credentials in healthcare
regulation compliance. His opinion will help the jury determine
whether River’s Edge complied with regulations, and his methods

are reliably applied to the facts when he uses reliable methods.
Although the three hours he spent reviewing materials appear to
be barely adequate to review the voluminous record, he did
collect sufficient data, and where his methodology is reliable,
the opinion is based on sufficient facts. Thus, the analysis
focuses on the reliability of his methodologies.
11
Whether an opinion is based on reliable principles and
methods depends on a flexible inquiry into the principles and
methods utilized. In re Paoli R.R. Yard PCB Litig., 35 F.3d
717, 742 (3d Cir. 1994). To determine the reliability of
methods the Court “consider[s] multiple factors, including the

testability of the hypothesis, whether it has been peer reviewed
or published, the error rate, whether standards controlling the
technique’s operation exist, and whether the methodology is
generally accepted.” In re Zoloft (Sertraline Hydrochloride)
Prods. Liab. Litig., 858 F.3d 787, 792 (3d Cir. 2017).4 These
factors must show good grounds for the opinion; an opinion based
on speculation or an educated guess is inadmissible. Ruggiero
v. Yamaha Motor Corp., 778 F. App'x 88, 93 (3d Cir. 2019)
(nonprecedential). And a failure to attempt a calculation that
can be performed to verify the conclusion is sufficient to find
that the opinion is merely speculation. See Oddi v. Ford Motor
Co., 234 F.3d 136, 158 (3d Cir. 2000) (excluding an expert

opinion where “[n]ot only did [the expert] not test his

4 See also In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 742 n.8 (3d
Cir. 1994) (“[The relevant factors include](1) whether a method consists of a
testable hypothesis; (2) whether the method has been subject to peer review;
(3) the known or potential rate of error; (4) the existence and maintenance
of standards controlling the technique's operation; (5) whether the method is
generally accepted; (6) the relationship of the technique to methods which
have been established to be reliable; (7) the qualifications of the expert
witness testifying based on the methodology; and (8) the non-judicial uses to
which the method has been put.”).
12
hypotheses, he did not even attempt to calculate” the relevant
measurements to support his conclusions).

1. Substandard and Worthless Services
Ratner’s opinion that River’s Edge provided substandard
care and worthless services in that it did not comply with the
2.7 hours PPD regulation will be excluded because his
methodology is unreliable. In reaching the conclusion that
River’s Edge failed to comply with the PPD regulation, Ratner
relies on the disparity between scheduled hours and payroll
hours for one employee over a two-week period.5 Between January
6, 2013, and January 20, 2013, one CNA was scheduled to work 90
hours, but the payroll reflected that she worked 77.5 hours.
Based on this data, Ratner concludes that River’s Edge could not
have complied with the PPD regulation. Jackson fails to show
how reviewing evidence that one employee did not work 12.5 hours

scheduled over a two-week period is a reliable method to
determine facility-wide compliance with PPD regulations.
This conclusion is inadmissible because Ratner did not make
any calculation of the actual hours per patient based on the
payroll records. Compliance with the PPD regulation is

5 Although Ratner testifies that he reviewed materials for three
employees, at his deposition he could only recall the details pertaining to
one.
13
determined based on a calculation of actual hours worked as
reflected in the payroll. Thus, the method of comparing the
schedule to the payroll for a few employees over a short time is
not reliable. Ratner needed to calculate the actual PPD based
on the payroll for at least some period of time for his opinion
to be reliable.6 Ratner’s opinion is based merely on speculation

that because some workers sometimes called out or did not show
up to work the facility was not in compliance with the PPD
regulation. Thus, Ratner’s opinion regarding worthless services
is inadmissible.
2. Submission of Falsified and Fraudulent Documents
Ratner’s opinion that River’s Edge submitted falsified
forms to the government is admissible because Pennsylvania
Department of Health documents show that River’s Edge submitted
seven MDS forms with inaccuracies to the government. In forming

this opinion, Ratner considered Jackson’s testimony and
Pennsylvania state records showing that River’s Edge submitted
seven MDS forms with inaccuracies to the government.7 Given his

6 Cf. Total Control, Inc. v. Danaher Corp., 338 F. Supp. 2d 566, 570
(E.D. Pa. 2004) (“Multiplication, of course, cannot be considered an
unreliable method.”).
7 The Pennsylvania Department of Health documents also show that there
were 12 cases of scabies not reported through the Electronic Event Reports
required by Pennsylvania regulations. But because, as discussed below, there
is no evidence that the accurate submission of these reports is material,
these inaccurate submissions are irrelevant to liability such that Ratner’s
14
expertise in healthcare compliance, Ratner’s review of the
documents showing the submission of inaccurate forms
sufficiently supports his conclusion that the submissions of
these forms constitute fraudulent or falsified submissions.8
But an opinion quantifying the number of inaccurate forms

submitted is inadmissible to support a conclusion that the
Defendants submitted other inaccurate forms beyond the seven
forms identified by the Department of Health. Jackson testified
that the ADL forms, which were used to create the MDS forms that
went to the government, sometimes contained inaccuracies. From
his review of this evidence, Ratner opines that Defendants
submitted additional false and fraudulent forms to the
government. But Ratner does not identify the methodology used
to determine how many or whether there were any false MDS forms
submitted as a result of ADL inaccuracies. Again, Ratner fails
to perform any calculations, such as sampling or other
statistical techniques, from which he could reliably extrapolate

that the seven inaccurate forms reflected a greater number of

testimony regarding these submissions would not be helpful to the jury. See
infra Section IV.B.2.b.
8 See In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 741 (3d Cir. 1994)
(“[T]he level of expertise may affect the reliability of the expert's
opinion.”).
15
inaccurate forms from the larger universe of forms submitted.9
Thus, to the extent Ratner opines that there were more than
seven false forms submitted, his opinion is inadmissible because
he provides no reliable method used to reach this conclusion.

B. Motion for Summary Judgment
Defendants’ motion for summary judgment will be granted
except to the extent Jackson claims the submission of inaccurate
forms constitutes the submission of a false claim. There is no
genuine dispute that the services provided by River’s Edge are
not sufficiently substandard to constitute a factually false
claim. But there is a genuine dispute about whether the
inaccurate forms submitted to the government constitute a
legally false claim.
The False Claims Act (FCA) allows suits by individuals,
called relators, for frauds perpetuated on the United States.

31 U.S.C. § 3730(b), (d). The FCA holds liable any person who
knowingly submits a false claim to the United States for
payment. 31 U.S.C. §§ 3729–3730. To prevail on a False Claims
Act claim, the plaintiff must establish that the defendant “(A)
knowingly presents, or causes to be presented, a false or

9 See U.S. ex rel. Absher v. Momence Meadows Nursing Ctr., Inc., 764
F.3d 699, 714 (7th Cir. 2014) (noting that statistical evidence may be used
to prove the number of false MDS forms submitted).
16
fraudulent claim for payment or approval; [or] (B) knowingly
makes, uses, or causes to be made or used, a false record or
statement material to a false or fraudulent claim.” United
States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d
89, 94 (3d Cir. 2018) (alteration in original) (quoting 31

U.S.C. § 3729(a)(1)). Accordingly, the plaintiff must prove
causation, falsity, scienter, and—at least where liability is
based on a false certification—materiality. United States ex
rel. Bookwalter v. UPMC, 946 F.3d 162, 175 (3d Cir. 2019);
Greenfield, 880 F.3d at 94.10
The motion for summary judgment only contests two elements:
falsity and materiality.
The falsity element “asks whether the claim submitted to
the government as reimbursable was in fact reimbursable, based
on the conditions for payment set by the government.” United
States ex rel. Druding v. Care Alts., 952 F.3d 89, 97 (3d Cir.
2020). Claims under the False Claims Act may be either

factually false or legally false. United States ex rel. Wilkins
v. United Health Grp., Inc., 659 F.3d 295, 305 (3d Cir. 2011),

10 See also United States ex rel. Petratos v. Genentech Inc., 855 F.3d
481, 487 (3d Cir. 2017) (noting when discussing liability for a false
certification that “[a] False Claims Act violation includes four elements:
falsity, causation, knowledge, and materiality.”); United States ex rel.
Campie v. Gilead Scis., Inc., 862 F.3d 890, 902 (9th Cir. 2017) (noting that
materiality is an element under a “factually false certification” theory).
17
abrogated on other grounds by Universal Health Servs., Inc. v.
United States ex rel. Escobar, 136 S. Ct. 1989 (2016). A
factually false claim “misrepresents what goods or services
[were] provided to the Government,” and a legally false claim
“falsely certifies that [the claimant] has complied with a

statute or regulation the compliance with which is a condition
for Government payment.” Id.
The materiality element asks “whether [the false
certification] affected [the government’s] payment decision.”
United States ex rel. Petratos v. Genentech Inc., 855 F.3d 481,
492 (3d Cir. 2017). Materiality is an element of liability for
a legally false claim. Greenfield, 880 F.3d at 94. And while
materiality may also apply to factually false claims,11 the Court
does not address this issue because there is no genuine dispute
of material fact about falsity for the factually false claims
here.

1. Factually False and Worthless Services
The evidence Jackson has produced does not raise a genuine
issue of fact that the services provided by River’s Edge were

11 See United States ex rel. Morgan v. Champion Fitness, Inc., No. 13-
cv-1593, 2018 WL 5114124, at *8 (C.D. Ill. Oct. 19, 2018) (“The materiality
standard may or may not apply in cases where factually false claims are
alleged.”); United States ex rel. Coffman v. City of Leavenworth, 303 F.
Supp. 3d 1101, 1117 (D. Kan. 2018) (“Materiality is a requisite element for
factually false claims under 31 U.S.C. § 3729(a)(1)(B) and false
certification claims.”), aff'd, 770 F. App'x 417 (10th Cir. 2019).
18
sufficiently substandard to constitute a factually false claim
under the theory of worthless services. A claim is factually
false when the service the government was billed for was not
provided.12 Wilkins, 659 F.3d at 305.13 This includes when the
service billed for was worthless in that it was so substandard

that it was “tantamount to no service at all.” In re Genesis
Health Ventures, Inc., 112 F. App’x 140, 143 (3d Cir. 2004)
(nonprecedential).14 And a claim is factually false due to the
provision of worthless services where a defendant sought
“federal reimbursement for a procedure with no medical value.”
United States ex rel. Mikes v. Straus, 274 F.3d 687, 702 (2d
Cir. 2001), abrogated on other grounds by Universal Health

12 Jackson argues that there is a dispute of fact about whether River’s
Edge submitted claims for services that were not provided at all. This
argument fails because Jackson does not point to a single claim submitted
where the service was not provided at all. It is insufficient to provide
evidence of arguably deficient operations and argue that there must have been
a claim that was submitted where no services were rendered. See U.S. ex rel.
Quinn v. Omnicare Inc., 382 F.3d 432, 440 (3d Cir. 2004) (“[Plaintiff’s]
theory that the claims ‘must have been’ submitted cannot survive a motion for
summary judgment.”).
13 See also United States ex rel. Schimelpfenig v. Dr. Reddy's Labs.
Ltd., No. 11-cv-4607, 2017 WL 1133956, at *3 (E.D. Pa. Mar. 27, 2017) (“In a
run-of-the-mill factually false case . . . [a] relator must generally show
that the [G]overnment payee has submitted an incorrect description of goods
or services provided or a request for reimbursement for goods or services
never provided.” (quoting United States ex rel. Connor v. Salina Reg'l Health
Ctr., Inc., 543 F.3d 1211, 1217 (10th Cir. 2008) (alterations in original)).
14 See also U.S. ex rel. Lee v. SmithKline Beecham, Inc., 245 F.3d 1048,
1053 (9th Cir. 2001) (“In an appropriate case, knowingly billing for
worthless services or recklessly doing so with deliberate ignorance may be
actionable under § 3729, regardless of any false certification conduct.”).
19
Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989
(2016).
It is true that, under certain circumstances, under the
theory of worthless services a claim can be maintained against a
defendant that fails to comply with regulations that are

intended to ensure that the services provided to the government
have value. Under this theory, a defendant may be liable for
noncompliance with a regulation that aims to prevent “Medicare
waste, fraud, and abuse, i.e. paying out on claims that should
not be paid.” United States ex rel. Spay v. CVS Caremark Corp.,
913 F. Supp. 2d 125, 158, 160, 166 (E.D. Pa. 2012). And a
failure to comply with a regulation that informs the quality or
the level of the service at issue can be the basis for a claim
under a worthless services theory because “seriously deficient”
service is akin to “a product that does not work.” United
States ex rel. Scharber v. Golden Gate Nat'l Senior Care LLC,
135 F. Supp. 3d 944, 965 (D. Minn. 2015).15

15 See also Claire M. Sylvia, The False Claims Act: Fraud Against the
Government § 4:34 (“A good or service that does not conform to a material
contractual requirement may also be described as ‘factually false’ because
the good or service delivered is not the product that was purchased.”); cf.
United States ex rel. Polansky v. Exec. Health Res., Inc., 196 F. Supp. 3d
477, 498–99 (E.D. Pa. 2016) (finding that the plaintiff did not adequately
state a factually false claim where the falsity was based on a violation of a
regulation that did not affect “the level, quality or scope of care.”).
20
Under the standard of care provided by federal statutes and
regulations, nursing homes “must care for its residents in such
a manner and in such an environment as will promote maintenance
or enhancement of the quality of life of each resident.” 42
U.S.C. § 1396r(b)(1)(A); accord 42 C.F.R. § 483.10(a)(1). They

are required to “provide the necessary care and services to
attain or maintain the highest practicable physical, mental, and
psychosocial well-being, consistent with the resident's
comprehensive assessment and plan of care.” 42 C.F.R. § 483.24.
So, in general and under certain circumstances, a nursing home
that does not care for its residents in a way that promotes
their quality of life may be liable under a worthless services
theory.
That having been said, more than mere regulatory
noncompliance is required for liability to attach; the
noncompliance must be so great that effectively no services were
provided. It is insufficient “that the defendant provided

services that are worth some amount less than the services paid
for” because “a ‘diminished value’ of services theory” does not
exist. United States ex rel. Absher v. Momence Meadows Nursing
Ctr., Inc., 764 F.3d 699, 710 (7th Cir. 2014). Instead, the
provision of the services must be “so substandard as to be
tantamount to no service at all.” In re Genesis Health
21
Ventures, Inc., 112 F. App’x 140 at 143.16 This heightened
degree of noncompliance is required because the FCA is not “a
vehicle for punishing garden-variety breaches of contract or
regulatory violations.” Escobar, 136 S. Ct. at 2003.17
And a defendant provides effectively no services when it

provides services that are grossly negligent with respect to the
regulatory standard of care. There is a “proverbial line in the
sand for purposes of determining when clearly substandard
services become ‘worthless.’” 18 United States v. Houser, 754
F.3d 1335, 1344 (11th Cir. 2014). And while no court of appeals
has opined on where this line is drawn, the Court agrees with a
number of district courts that have held that the line beyond

16 See Mikes, 274 F.3d at 703 (“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.”).
17 See Wilkins, 659 F.3d at 310 (“[W]e question the wisdom of regarding
every violation of a Medicare regulation as a basis for a qui tam suit.”);
Chesbrough v. VPA, P.C., 655 F.3d 461, 468 (6th Cir. 2011) (“Quality-of-care
issues were better monitored by state and local agencies and medical boards
and societies than qui tam relators and the federal government.”).
18 The level at which services become worthless is a question of
falsity, not scienter or materiality, because the question is not about the
defendant’s state of mind or the government’s payment decision. See United
States ex rel. Petratos v. Genentech Inc., 855 F.3d 481, 491 (3d Cir. 2017)
(noting the impropriety of conflating elements). The level of care deemed
worthless is quintessentially a falsity issue because the inquiry is whether
the service had no value to the government—i.e., the question is whether the
claim was reimbursable. See United States ex rel. Druding v. Care Alts., 952
F.3d 89, 97 (3d Cir. 2020) (“[F]alsity simply asks whether the claim
submitted to the government as reimbursable was in fact reimbursable, based
on the conditions for payment set by the government.”); United States ex rel.
Campie v. Gilead Scis., Inc., 862 F.3d 890, 900 (9th Cir. 2017) (“The value
of the goods at issue is dispositive under the [worthless services
theory.]”).
22
which substandard services become worthless services is defined
by gross negligence19 in complying with standard of care
regulations. See United States ex rel. Spay v. CVS Caremark
Corp., No. 09-cv-4672, 2015 WL 5582553, at *63 (E.D. Pa. Sept.
22, 2015), aff'd on other grounds sub nom. United States ex rel.
Spay v. CVS Caremark Corp., 875 F.3d 746 (3d Cir. 2017).20 In

other words, services provided without ordinary care will have
some value to the government, but services provided without even
slight care will have no value to the government.21

19 Gross negligence in general is the “lack of even slight diligence or
care”; it is carelessness to a greater degree than ordinary negligence.
Gross Negligence, Black's Law Dictionary (11th ed. 2019); see Dan B. Dobbs et
al., The Law of Torts § 140 (2d ed. 2019) (“The term gross negligence can be
used to mean what it says—a high, though unspecified degree of negligence, or
as courts sometimes say, the failure to use even slight care.”).
20 See also United States ex rel. Acad. Health Ctr., Inc. v. Hyperion
Found., Inc., No. 10-cv-552, 2014 WL 3385189, at *45 (S.D. Miss. July 9,
2014) (holding that “grossly deficient care” can form the basis for liability
under the worthless services theory), report and recommendation adopted, 2017
WL 3260134 (S.D. Miss. July 31, 2017); United States ex rel. Spay v. CVS
Caremark Corp., 913 F. Supp. 2d 125, 166 (E.D. Pa. 2012) (“A gross failure to
perform such services, combined with continued collection of funds for such
services from the government through the Part D sponsor, could constitute a
false claim.”); United States ex rel. Davis v. Prince, No. 08–cv–1244, 2011
WL 2749188, at *7 (E.D. Va. July 13, 2011) (explaining that the plaintiff
would need to show that the defendant “‘utterly failed’ to perform [its]
contractual duties” to succeed on a worthless services claim), aff'd sub nom.
U.S. ex rel. Davis v. U.S. Training Ctr. Inc., 498 F. App’x 308 (4th
Cir.2012) (nonprecedential); United States ex rel. Sanchez-Smith v. AHS Tulsa
Reg'l Med. Ctr., 754 F. Supp. 2d 1270, 1287 (N.D. Okla. 2010) (“The Court
holds that, in order to reach a jury on a factual falsity theory [the
plaintiff must point to evidence of at least] the provision of grossly
negligent services with regard to a particular standard of care or regulatory
requirement.” (citation omitted)).
21 Services provided without ordinary care “creat[e] non-cost justified—
wasteful or wealth-reducing—risks.” Richard A. Posner, The Economics of
Justice 84 (1983). It follows that services may be provided with such a lack
of care—i.e., without even slight care—that the wasteful risks eclipse any
benefit that may be conferred by the services. See Archie v. City of Racine,
847 F.2d 1211, 1219 (7th Cir. 1988) (“[G]rossly negligent[] mean[s] that the
23
The Seventh Circuit addressed the worthless services theory
in the nursing home context in Absher, where it reversed a
jury’s verdict that awarded about $9 million to the plaintiffs.
764 F.3d at 705, 716. The plaintiffs presented evidence at
trial that the defendant nursing home failed to prevent

infections, control pests, manage pressure sores, provide
correct medications, prevent accidents, and prevent staff abuse
of residents. Id. at 705. But the defendant was never shut
down despite state oversight, and one of the plaintiffs
testified that a family member at the facility received good
care. Id. at 710. The Seventh Circuit held that the defendant
was entitled to judgment as a matter of law on the worthless
services theory claim. Id. It reasoned that where the facility
was allowed to continue to operate and one of the plaintiffs
testified that a family member received good care, no reasonable
jury could find that the defendant was providing worthless
services. Id.22

In this case there is evidence of insufficient supplies,
staffing shortages, and four negative incidents involving

cost of taking precautions was substantially less than the expected
benefits.”).
22 Cf. Acad. Health Ctr., Inc., 2014 WL 3385189, at *4, *43–45 (finding
a plausible claim was stated under a worthless services theory where the
state Department of Health found various “immediate jeopardy” deficiencies
and the complaint alleged “heinous examples of grossly deficient care
suffered by the seven representative residents”).
24
River’s Edge’s residents. Although River’s Edge received
regular shipments of linens, Jackson claims that the linen
supply was so insufficient that residents needed to be dried
with pillow cases. And despite River’s Edge’s scheduling of
staff to provide surplus hours, Jackson testifies that River’s

Edge was often short staffed such that each patient did not
receive adequate care. She provides anecdotes about incidents
with four residents—D.F., W.M., C.D., and an unidentified
resident—as examples.
But, even in the light most favorable to Jackson, these
incidents do not rise to the grossly negligent or significantly
substandard care required to prove a claim under the worthless
services theory. She claims that the care to each of these four
residents was so poor that it constitutes worthless services.
But no reasonable jury could conclude that the care to each of
these residents was grossly negligent: D.F. was treated for
scabies, W.M. was usually turned every two hours, C.D. was given

emergency room treatment when she fell, and the patient with
maggots in his wound had the maggots cleaned out. This
treatment constitutes at least slight care to the promotion of
quality of life, which precludes a finding of gross negligence.23

23 Cf. Williams v. Terrace, No. 2856 EDA 2012, 2014 WL 10896964, at *7
(Pa. Super. Ct. July 31, 2014) (nonprecedential) (upholding a jury’s finding
25
On an individual basis, each of the incidents described by
Jackson at most rises to the level of negligence, i.e., failure
to exercise ordinary care. Even assuming that the care was
negligently given, this is not sufficient to allow a reasonable
inference that there was a factually false claim through the
provision of worthless services.24 If an FCA claim could proceed

on the basis of care rendered with ordinary negligence amounting
to the provision of substandard care—as opposed to grossly
negligent care amounting to significantly substandard care—the
FCA would turn into a tool for ensuring regulatory compliance.
But the Supreme Court has instructed that the FCA is not such a
tool.25 Therefore, the care which Jackson has identified as
having been provided by River’s Edge cannot form the basis for a
factually false claim under the FCA.
Additionally, even if viewed cumulatively, and assuming
that these incidents are representative of what is a more
widespread problem at River’s Edge regarding inadequate

supplies, infection treatment and control, pressure sore

that a nursing home’s care was beyond grossly negligent where its “facilities
were chronically and continuously understaffed,” its resident suffering from
bedsores was “routinely not repositioned” and died due to the bedsores, and
there was “pervasive and routine[] failure[s] at [its] facilities”).
24 Indeed, Jackson herself describes the care she provided to these
residents as fair, good, or excellent.
25 See Escobar, 136 S. Ct. at 2004 (“We emphasize, however, that the
False Claims Act is not a means of imposing treble damages and other
penalties for insignificant regulatory or contractual violations.”).
26
treatment and control, and accident prevention, River’s Edge’s
conduct does not rise to gross negligence. There is no evidence
that these incidents were so pervasive that a reasonable
inference of significantly substandard care can be drawn.
River’s Edge’s processes for ensuring sufficient staffing,

procuring supplies, and obtaining resident feedback all strongly
point to finding that River’s Edge is not grossly negligent in
the care it provided to its residents. And like in Absher, the
state Department of Health did not find any “immediate jeopardy”
deficiencies that warranted disqualification in this case.26
2. Legally False
Summary judgment is appropriate on the implied
certification theory but not on the express certification theory
because Jackson only presents evidence of certifications in the
form of inaccurate MDS forms. And even if Jackson did present

other false certifications, she only points to evidence
indicating that MDS forms are material.

26 To the extent Jackson argues that the state authorities never found
River’s Edge’s deficiencies because River’s Edge moved staff around to ensure
an adequate number of staff whenever there was a state inspection, this
argument is belied by the Department of Health’s inspections being
unannounced. Further, an increase in staff during inspections does not
account for the opportunity for residents to raise complaints with the
Department of Health as a mechanism for the state agency to detect River’s
Edge’s deficiencies.
27
A legally false claim is based on the defendant’s false
certification; i.e., it is where the defendant “lies about its
compliance with a statutory, regulatory, or contractual
requirement.” United States ex rel. Greenfield v. Medco Health
Sols., Inc., 880 F.3d 89, 94 (3d Cir. 2018). And for liability

to attach, the defendant’s false certification “about its
compliance with a legal requirement [must be] ‘material to the
Government's payment decision.’” Id. (quoting Universal Health
Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989,
1996 (2016)).
a. False Certifications
A plaintiff may show a false certification through either
an express certification or an implied certification. The false
certification may be express in that the claimant affirmatively
represents compliance with a statute or regulation with which it

did not comply. United States ex rel. Wilkins v. United Health
Grp., Inc., 659 F.3d 295, 305 (3d Cir. 2011), abrogated on other
grounds by Universal Health Servs., Inc. v. United States ex
rel. Escobar, 136 S. Ct. 1989 (2016). Or the certification may
be implied in that the claimant seeks payment without disclosing
that it violated statutes or regulations. Id.

28
i. Express Certification
A reasonable jury could find that River’s Edge submitted
seven express false certifications because the Pennsylvania
Department of Health found that River’s Edge submitted seven
inaccurate MDS forms. The submission of a false or inaccurate
MDS form constitutes an express false certification because
nursing home facilities must complete these documents and
certify that they are accurate. United States ex rel. Absher v.
Momence Meadows Nursing Ctr., Inc., 764 F.3d 699, 713 (7th Cir.

2014) (citing 42 C.F.R. § 483.20).
But a plaintiff must come forth with evidence that the
defendant actually submitted a false claim. It is not enough to
allege that, based on the scheme described, “claims requesting
illegal payments must have been submitted, were likely
submitted[,] or should have been submitted to the Government.”
Greenfield, 880 F.3d at 98 (alteration in original) (quoting
United States ex rel. Clausen v. Lab. Corp. of Am., 290 F.3d
1301, 1311 (11th Cir. 2002)). So, while the submission of an
inaccurate MDS form constitutes an express false claim, there
must be evidence that a false MDS form was submitted. See

Absher, 764 F.3d at 714 (“Rather, the relators have failed to
offer evidence establishing that even a roughly approximate
number of forms contained false certifications.”).
29
A plaintiff cannot prevail on an express certification
theory based on inaccurate MDS forms if it cannot show how many
inaccurate MDS forms were submitted. In Absher, the plaintiffs
produced evidence that there was a scabies outbreak and that not
all residents were treated or diagnosed, that there were some

months with no pressure ulcers reported and other months with
many pressure ulcers reported, and that the defendant failed to
track the development of rashes among residents. Id. at 713–14.
They argued that from this evidence a jury could infer that
there were inaccurate MDS forms submitted. Id. The Seventh
Circuit held that this evidence failed as a matter of law
because the plaintiff has the burden of proving how many claims
were false. Id. at 714. It reasoned that a failure to offer
evidence of at least a “roughly approximate” number of MDS forms
containing false certifications constitutes a “fatal lack of
evidence.” Id. at 713-14.
Here, there is evidence of at least seven false claims in

that seven MDS forms were submitted with inaccuracies. This
evidence consists of the Pennsylvania Department of Health’s
conclusion that 7 of 22 MDS forms it reviewed were inaccurate.
Although this evidence is sufficient to support a claim as to
these seven MDS forms, it is insufficient to support an
inference that some (or all) of the other forms submitted were
30
also inaccurate. Following Absher, Jackson’s testimony that ADL
forms were completed sometimes weeks after the care was given is
not sufficient to show false claims were actually submitted.
Therefore, the evidence is sufficient as to the seven inaccurate
forms but not as to any of the other submitted forms. See

Greenfield, 880 F.3d at 99 (“Our sister circuits have applied
the same analysis, holding that plaintiffs must provide evidence
of at least one false claim to prevail on summary judgment.”).27
ii. Implied Certification
No reasonable jury could find that River’s Edge submitted
an implied false certification because Jackson does not point to
any evidence showing that River’s Edge made specific
representations. An implied certification consists of (1)
“specific representations about the goods or services provided”
and (2) “failure to disclose noncompliance with material

statutory, regulatory, or contractual requirements.” United

27 To the extent Jackson argues that Medicare and Medicaid enrollment
forms—specifically CMS Form 855A and CMS Form 1561—contained certifications
that River’s Edge would comply with all regulations, these promises cannot
constitute false certifications unless there is some evidence that River’s
Edge knew it would not comply with the regulations when it made the promises.
See United States ex rel. Absher v. Momence Meadows Nursing Ctr., Inc., 764
F.3d 699, 712 n.14 (7th Cir. 2014) (“A statement about one's present intent
to perform some act in the future can be false. But the mere fact that the
promised act is not subsequently performed does not necessarily mean that the
promisor did not intend to perform the act at the time of making the
promise.”). However, Jackson does not point to evidence of such fraudulent
inducement. Thus, based on the record, no reasonable jury could find that
these certifications were fraudulent when made.
31
States v. Eastwick Coll., 657 F. App'x 89, 94 (3d Cir. 2016)
(nonprecedential) (quoting Universal Health Servs. v. United
States ex rel. Escobar, 136 S. Ct. 1989, 2001 (2016)).
Jackson argues that no specific representations are needed
for an implied certification and that instead a submission for

payment together with noncompliance with regulations constitutes
an implied certification. While it is true that the Supreme
Court in Escobar, 136 S. Ct. at 2000, left open the question of
whether specific representations were always required for an
implied false certification, the Third Circuit in Eastwick
Coll., 657 F. App'x at 94, albeit in a nonprecedential opinion,
suggested that an implied false representation “require[s]
specific representations.” United States ex rel. Schimelpfenig
v. Dr. Reddy's Labs. Ltd., No. 11-cv-4607, 2017 WL 1133956, at
*6 (E.D. Pa. Mar. 27, 2017).28 And to the extent there is some
doubt about the availability of an implied-certification-
without-representation theory, the Third Circuit has found in a

28 But see United States ex rel. Wood v. Allergan, Inc., 246 F. Supp. 3d
772, 811 (S.D.N.Y. 2017) (“[F]alsity may arise from the defendant's
submission of a claim for payment that does not include a specific
representation about the goods or services provided, coupled with
noncompliance with a material payment requirement.”), rev'd on other grounds,
899 F.3d 163 (2d Cir. 2018).
32
different situation that expansion of the implied certification
theory is especially not appropriate in the healthcare context.29

b. Materiality
Finally, Jackson must also show that there is a genuine
dispute of material fact that any false certifications were also
material. Even if River’s Edge had made false certifications
regarding compliance with federal or state regulations, Jackson
has not provided sufficient evidence to raise a genuine dispute
of material fact that these certifications are material. On the
other hand, there is a genuine dispute of material fact about
whether a false certification based on an inaccurate MDS form is
material.
Whether a false certification is express or implied, it
must be “material to the Government's payment decision” for
liability to attach. United States ex rel. Greenfield v. Medco

Health Sols., Inc., 880 F.3d 89, 94 (3d Cir. 2018) (quoting
Universal Health Servs., Inc. v. United States ex rel. Escobar,
136 S. Ct. 1989, 1996 (2016)). The materiality “requirement
helps ensure that the False Claims Act does not become ‘an all-

29 See United States ex rel. Wilkins v. United Health Grp., Inc., 659
F.3d 295, 307 (3d Cir. 2011) (“As several courts of appeals have held,
however, the implied certification theory of liability should not be applied
expansively, particularly when advanced on the basis of FCA allegations
arising from the Government's payment of claims under federally funded health
care programs.”), abrogated on other grounds by Universal Health Servs., Inc.
v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016).
33
purpose antifraud statute or a vehicle for punishing garden-
variety breaches of contract.’” United States ex rel. Petratos
v. Genentech Inc., 855 F.3d 481, 489 (3d Cir. 2017) (quoting
Escobar, 136 S. Ct. at 2003).
Under the FCA “the term ‘material’ means having a natural

tendency to influence, or be capable of influencing, the payment
or receipt of money or property.” 31 U.S.C. § 3729(b)(4). A
false certification is material only if (1) “a reasonable man
would attach importance to [it]” or (2) “the defendant knew or
had reason to know that the recipient of the representation
attaches importance to the specific matter ‘in determining his
choice of action,’ even though a reasonable person would not.”
Escobar, 136 S. Ct. at 2002–03 (quoting Restatement (Second) of
Torts § 538 (1976)).
The materiality inquiry is holistic in that it considers
all of the facts to determine “the effect on the likely or
actual behavior of the recipient of the alleged

misrepresentation.” Id. at 2002 (quoting 26 R. Lord, Williston
on Contracts § 69:12 (4th ed. 2003)). Proof of materiality
includes, but is not limited to, (1) evidence that the provision
is expressly labeled a condition of payment and (2) evidence
that the government consistently refuses to pay claims in cases

34
where the claimant did not comply with the provision. Id. at
2003.
Jackson argues that River’s Edge made false certifications
of compliance with four regulations: (1) Pennsylvania’s PPD
regulation, (2) Pennsylvania’s Electronic Event Reports

regulation, (3) federal standard of care regulations, and (4)
federal MDS regulations. Jackson does not advance the
materiality argument for each alleged false certification
independently. Instead of disentangling the four alleged
certifications and pointing to evidence of materiality for each,
Jackson argues that the care provided was so poor and the
regulations at issue so central to the public health program,
that all of the alleged false certifications must be material.
As to the first three, no reasonable jury could find,
looking at the evidence in the light most favorable to Jackson,
that compliance with either Pennsylvania’s PPD regulation,
Pennsylvania’s Electronic Event Reports regulation, or federal

standard of care regulations is material. It is true that “[a]
certificate of compliance with federal health care law is a
prerequisite to eligibility under the Medicare program.” United
States ex rel. Schmidt v. Zimmer, Inc., 386 F.3d 235, 243 (3d

35
Cir. 2004).30 But Jackson has not provided any evidence that
compliance with the federal standard of care or state
regulations is a condition of payment, nor has she provided any
evidence that the government has declined payment for failure to
comply with these regulations.31 And Jackson does not point to

any other evidence indicating that these regulations are
material.
That said, as to the fourth, Jackson does present evidence
that accurate MDS forms are material in that the accuracy of MDS
forms is an express condition of payment. MDS forms
“specifically affirm that reimbursement is ‘conditioned on the
accuracy and truthfulness of [the] information’ contained in the
forms.” U.S. ex rel. Absher v. Momence Meadows Nursing Ctr.,
Inc., 764 F.3d 699, 713 (7th Cir. 2014) (alteration in
original). And payment per patient is based on the information
contained in the MDS forms. So, a reasonable jury could find
that submitting inaccurate MDS forms is material.

30 Indeed, the regulations require an annual certification saying the
following: “I further certify that I am familiar with the laws and
regulations regarding the provision of health care services, and that the
services identified in this cost report were provided in compliance with such
laws and regulations.” 42 C.F.R. § 413.24(f)(4)(iv)(B).
31 It is also relevant that the United States decided not to intervene
in this action after having investigated it; this indicates that the
violations alleged here are not material. Polansky v. Exec. Health Res.,
Inc., 422 F. Supp. 3d 916, 938 (E.D. Pa. 2019) (“Post-Escobar, numerous
federal courts have found insufficient FCA materiality where the government
investigated a relator's allegations but chose not to intervene or otherwise
address the defendant's allegedly improper behavior.”).
36
Thus, except for the MDS forms, Jackson has failed to raise
a genuine dispute of fact that River’s Edge’s lack of compliance
with federal or state requirements was material to the
government’s payment decision.

V. CONCLUSION
For the reasons set forth above, Defendants’ motion in
limine will be granted in part and denied in part and their
motion for summary judgment will be granted in part and denied
in part. An appropriate Order follows.

37

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10398765. Public record. Not legal advice.