In Conte v. Kingston NH Operations LLC, 2022 U.S. Dist. LEXIS 21686, *1, 2022 WL 356753, a New York District court granted a defendant’s motion to dismiss an employee’s false claims allegations under the False Claims Act (the “FCA”) and the New York False Claims Act (the “NYFCA”). The case stemmed from allegedly improper patient care and workspace safety during the COVID-19 pandemic, which the plaintiff brought against a New York nursing home operator under both the FCA and NYFCA. Despite multiple alleged COVID-related deaths and demonstrated care issues that the court acknowledged were present, the court dismissed the case as such allegations were not actionable under these fraud and abuse statutes.
Nicole Conte brought the case against Kingston NH Operations, LLC (“Kingston”), which operates Ten Broeck Center (“TBC”), a nursing home that employed Conte as a Talent Acquisition and Onboarding Coordinator. Conte alleged Kingston engaged several practices that allegedly violated the FCA. Specifically, Conte alleged that Kingston mishandled COVID-19 protocols required by New York that: (1) amounted to improper quality of patient care and improper quality of workspace safety, and (2) thus materially violated the FCA and NYFCA. Conte alleged that Kingston’s failure to provide employees with proper personal protective equipment, failure to instruct its employees how to use the protective equipment, and the lack of enforcement of state-issued mask mandates and social distancing resulted in several COVID-19 cases and deaths among TBC residents and staff. Conte further alleged that her employment was terminated after drawing attention to the failed policies and procedures and expressing concern for the residents and staff of TBC.
Here, the court granted Kingston’s motion to dismiss as Conte failed to allege facts that Kingston violated FCA and NYFCA. As both the FCA and NYFCA are anti-fraud statutes, the court required a heightened pleading standard to Conte’s claims requiring her to give details of the alleged false claims by (1) specifying the statement that she contends were fraudulent, (2) identifying the speaker, (3) stating where and when such statements were made, and (4) explaining why the statements were fraudulent, i.e., tie the specific false statement to the submission of a claim.
The court determined that Conte did not meet this heightened standard as she failed to allege facts suggesting that Kingston presented a false or fraudulent claim. While the court noted that “Plaintiff  thoroughly provided examples of TBC employees and residents not complying with state-issued regulations,” these were not allegations of a fraudulent or false claim. The court could not “assess materiality of any submitted claim because Plaintiff has not given any insight as to what those claims looked like.” Alleging regulatory violations without specifically (1) identifying the employees who allegedly submitted fraudulent claims, (2) the number of fraudulent claim and dollar amounts, and (3) any personal knowledge as to the existence of prior or future fraudulent billing practices, was not enough. Without evidence that Medicaid claims were being denied by the state in other circumstances “solely because a medical professional failed to abide by state-issued mask mandates or social-distancing guidance,” the main allegations, the court was not willing to let the case proceed as there was not a tie between the regulatory violations and the submitted billed Medicaid claims.
For similar reasons, Conte’s retaliation claim was dismissed as she could not show she was engaged in protected activity. As we have discussed before, a FCA plaintiff needs to show that (1) the employee in good faith believes, and (2) a reasonable employee in the same or similar circumstances might believe, that the employer is committing fraud against the government. Although Conte collected text messages showing her concern for the health and safety of the facility’s residents and staff, the court did not believe a reasonable employee would believe that the employer was committing fraud against the government, which is the required content of an FCA or NYFCA case (not simply concern of the health and safety of patients).
The case highlights that while we expect more COVID-19 related investigations, courts are not simply going to find for plaintiffs due to COVID-19 being cited, particularly under the FCA. The touchstone should remain whether there was a false statement that was material to the government’s payment decision, not merely poor conduct considering changing circumstances. Defendants in future FCA cases involving COVID-19-related conduct will welcome such decisions.