In August the Seventh Circuit expressed its view that so-called “worthless services” cases don’t state a claim under the False Claims Act.  Last Friday the court reaffirmed its view by refusing to rehear the case en banc.

The theory of a worthless services case is that a nursing home or other provider has defrauded Medicare or Medicaid—that is, has filed false claims—if its health care services are below appropriate standards.   In the Seventh Circuit case the trial court had accepted the theory and instructed the jury that if the nursing home billed Medicare $200 for services worth only $120, that was a false claim.  The jury returned a $29 million verdict for the whistleblowers, which the trial court reduced to $9 million.

The nursing home appealed, and last August the Seventh Circuit roundly rejected the theory of the plaintiffs, memorably stating, “Services that are ‘worth less’ are not worthless.”  That decision disappointed the Obama administration, which had supported the plaintiffs’ position.  The plaintiffs, supported by AARP, petitioned the court to hear the case en banc.  That’s the petition the court denied last Friday.

The cases are U.S. ex rel. Absher et al. v. Momence Nursing Center, Case Nos. 13-1886 and 13-1936.