VNSNY Agrees to $57M Settlement in Whistleblower Suit Related to Physician Care Plans

The Visiting Nurse Service of New York (VNSNY) announced Thursday it will pay $57 million to settle a whistleblower lawsuit filed by a former executive more than five years ago.

On its end, the record-setting settlement allows VNSNY, the nation’s largest nonprofit home- and community-based care services provider, to move on from a long-running legal battle that began in 2014. More broadly, however, the settlement shines a new light on common home health industry operating practices that some view as fraudulent or dangerous.

The suit, brought under state and federal False Claims Act (FCA) statutes, was filed by whistleblower Edward Lacey, who worked as an executive at VNSNY for 16 years, court documents show. In his complaint, Lacey alleged that VNSNY failed to provide its patients with all nursing, therapy and other services ordered in their plans of care.

Lacey, represented by international legal firm Constantine Cannon, additionally alleged that VNSNY billed Medicare and Medicaid for services that were never rendered, while operating under an “accept all referrals” policy regardless of capacity. The former executive’s allegations date back to 2004.

VNSNY — known as a high-quality, mission-driven organization in the home health space — did not admit to any wrongdoing by settling the case.

“For more than five years, we have been forced to defend ourselves against a lawsuit based on allegations that are simply untrue: We did not bill for visits we didn’t deliver, nor did we cause harm to our patients,” Kerry Parker, general counsel and chief risk officer for VNSNY, said in a statement. “By resolving these claims through the present, we can put this distraction behind us and move forward, now stronger and even better, to refocus on caring for New York City’s and state’s most vulnerable patients, particularly in communities that have been ravaged by COVID-19.”

As of May 31, VNSNY had cared for more than 2,000 COVID-19 patients.

Founded more than 125 years ago, VNSNY serves tens of thousands of patients each year, employing nearly 13,000 home health aides, nurses, social workers and other home-focused employees. The average VNSNY patient is 71 years old.

Attorneys for Constantine Cannon said the settlement is the largest non-kickback FCA settlement against a home health company in history. Overall, it’s the second-largest home health fraud settlement ever, according to the firm.

The firm also claims it’s the first case to directly address the issue of not following a physician’s plan of care.

“We think that this case and this settlement have the potential to reverberate throughout the home health industry,” Dan Vitelli, a partner at Constantine Cannon, told Home Health Care News.

Broadly, home health agencies regularly must adapt to circumstances outside of their control when following through on a physician’s plan of care. That’s especially true in the age of COVID-19, with a large portion of home health recipients canceling or declining visits due to exposure concerns.

The National Association for Home Care & Hospice (NAHC) submitted an amicus brief in support of VNSNY’s position, arguing the case was inconsistent with the way Medicare regulates and reimburses home health agencies.

In the brief, the Washington, D.C.-based advocacy organization said the premise of the case threatens the very foundation of the home care industry.

“Home health care caregivers often face circumstances beyond their control when implementing the physician’s plan of care — such as lack of internet access or patient’s refusal to receive care on a given day — which impacts record keeping,” NAHC President William A. Dombi said in a statement. “Contrary to Mr. Lacey’s claims, Medicare has never required strict adherence to a plan of care, and we believe that VNSNY’s procedures are consistent with industry and regulatory standards.”

Vitelli said that view makes the VNSNY settlement all the more important.

“That, I think, exemplifies exactly what we’re talking about,” he said. “This case, it has the potential to impact over 6.6 million claims submitted for Medicare payments of home health services provided to over 3.4 million Medicare beneficiaries annually, by nearly 12,000 Medicare and Medicaid participating home health agencies.”