SETTLEMENT AGREEMENT

This Settlement Agreement (“Agreement”) is entered into among the United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General (“OIG-HHS”) of the Department of Health and Human Services (“HHS”), the TRICARE Management Activity (“TMA”), through its general counsel, and the Office of Personnel Management (“OPM”) (collectively the "United States"), LHC Group, Inc. (hereafter referred to as “LHC”), and Judy Master (hereafter collectively referred to as "the Parties"), through their authorized representatives.

 

 

A.           LHC is one of the largest national providers of home health and hospice services, and is thus a recipient of Medicare, TRICARE, Federal Employees Health Benefits Program (FEHBP) and other government reimbursements.

 

B.           On June 3, 2007, Judy Master filed her  qui tam Complaint  in the United States District Court for the Western District of Louisiana captioned United States ex rel. Master v. LHC Group, Inc., Civil Action No. 07-1117 (Under Seal), pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. § 3730(b) (“the Civil Action”).  Relator alleged, among the allegations identified in the Civil Action, that LHC violated the False Claims Act by (1) billing for services without a valid plan of care, (2) resequencing and upcoding ICD-9-CM diagnosis codes, (3) billing for services not rendered or not supported by the required documentation, (4) billing for services without physician orders, or for more services than ordered by the physician, (5) billing for services that were not medically necessary, and (6) billing for services rendered to patients who were not homebound.

 

C.           The United States contends that LHC submitted or caused to be submitted claims for payment to the Medicare Program (Medicare), Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395-1395kkk-1, the TRICARE Program, 10 U.S.C. §§ 1071-1110a, and the FEHBP, 5 U.S.C. §§ 8901-8914.

 

D.         The United States contends that it has certain civil claims against LHC for submitting or causing to be submitted claims for payment to Medicare, TRICARE and FEHBP during the period January 1, 2006 through December 31, 2008 for home health services by the facilities on Attachment A that were not reimbursable because: (1) the services were not medically necessary, and/or (2) the patients were not homebound.  This conduct is referred to below as the Covered Conduct.

 

E.           This Settlement Agreement is neither an admission of liability by LHC nor a concession by the United States that its claims are not well-founded.  LHC denies the allegations in the Civil Action, including the Covered Conduct, as defined herein.

 

F.           Relator claims entitlement under 31 U.S.C. § 3730(d) to a share of the proceeds of this Settlement Agreement and to Relator’s reasonable expenses, attorneys’ fees and costs.

 

G.           To avoid the delay, uncertainty, inconvenience, and expense of protracted litigation of the above claims, and in consideration of the mutual promises and obligations of this Settlement Agreement, the Parties agree and covenant as follows:

 

 

1.           LHC shall pay to the United States sixty-five million dollars ($65 million) (Settlement Amount), plus interest on the Settlement Amount at a rate of 2.5 % per annum from September 8, 2011 by electronic funds transfer pursuant to written instructions to be provided by

 

2.           Contingent upon the United States receiving the Settlement Amount from LHC and as soon as feasible after receipt, the United States agrees to pay 19% of the $65 million Settlement Amount , plus 19% of the interest paid on the Settlement Amount to Relator by electronic funds transfer to Keating, Muething & Klekamp PLL.

 

3.           No more than seven days after the Effective Date of this Agreement, LHC agrees to pay Relator $1,000,227.00 in reasonable attorneys’ fees, costs and expenses.    This payment shall be made by electronic funds transfer pursuant to written instructions from Keating, Muething & Klekamp PLL.

 

4.           Subject to the exceptions in Paragraph 9 (concerning excluded claims) below, and conditioned upon LHC’s full payment of the Settlement Amount, the United States releases LHC, together with its current and former parent corporations, its direct and indirect subsidiaries, divisions, current or former owners, and officers, administrators, employees, agents, directors, and affiliates, as well as any successors and assigns, from any civil or administrative monetary claim the United States has for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the Civil Monetary Penalties Law, 42 U.S.C. § 1320a-7a(b)(7); the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; or the common law theories of payment by mistake, unjust enrichment, and fraud.

 

5.           Subject to the exceptions in Paragraph 9, 10, and 11 below, and conditioned upon LHC’s full payment of the Settlement Amount, Relator, for herself and for her heirs, successors, attorneys, agents, and assigns, releases LHC from any civil monetary claim the Relator has or

 

may have on behalf of the United States for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733.

 

6.           In consideration of the obligations of LHC in this Agreement and the Corporate Integrity Agreement (CIA), entered into between OIG-HHS and LHC, conditioned upon LHC’s full payment of the Settlement Amount, the OIG-HHS agrees to release and refrain from instituting, directing, or maintaining any administrative action seeking exclusion from Medicare, Medicaid, and other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) against LHC under 42 U.S.C. § 1320a-7a (Civil Monetary Penalties Law) or 42 U.S.C. § 1320a-7(b)(7) (permissive exclusion for fraud, kickbacks, and other prohibited activities) for the Covered Conduct, except as reserved in Paragraph 9 (concerning excluded claims), below, and as reserved in this Paragraph. The OIG-HHS expressly reserves all rights to comply with any statutory obligations to exclude LHC from Medicare, Medicaid, and other Federal health care programs under 42 U.S.C. § 1320a-7(a) (mandatory exclusion) based upon the Covered Conduct.  Nothing in this Paragraph precludes the OIG-HHS from taking action against entities or persons, or for conduct and practices, for which claims have been reserved in Paragraph 9, below.

 

7.           In consideration of the obligations of LHC set forth in this Agreement, conditioned upon LHC’s full payment of the Settlement Amount, TMA agrees to release and refrain from instituting, directing, or maintaining any administrative action seeking exclusion from the TRICARE Program against LHC under 32 C.F.R. § 199.9 for the Covered Conduct, except as reserved in Paragraph 9 (concerning excluded claims), below, and as reserved in this Paragraph.  TMA expressly reserves authority to exclude LHC from the TRICARE Program under 32 C.F.R. §§ 199.9 (f)(1)(i)(A), (f)(1)(i)(B), and (f)(1)(iii), based upon the Covered

 

8.           In consideration of the obligations of LHC in this Agreement, and conditioned upon LHC’s full payment of the Settlement Amount, OPM agrees to release and refrain from instituting, directing, or maintaining any administrative action against LHC under 5 U.S.C. § 8902a or 5 C.F.R. Part 919 for the Covered Conduct, except as reserved in Paragraph 9 (concerning excluded claims), below and except if excluded by the OIG-HHS pursuant to 42 U.S.C. § 1320a-7(a).  Nothing in this Paragraph precludes OPM from taking action against entities or persons, or for conduct and practices, for which claims have been reserved in Paragraph 9, below.

 

9.           Notwithstanding the releases given in paragraphs 4 through 8, inclusive, of this Agreement, or any other term of this Agreement, the following claims of the United States are specifically reserved and are not released:

 

a.

Any liability arising under Title 26, U.S. Code (Internal Revenue Code);

b.

Any criminal liability;

c.

Except as explicitly stated in this Agreement, any administrative liability, including mandatory exclusion from Federal health care programs;

d.

Any liability to the United States (or its agencies) for any conduct other than the Covered Conduct,, including for: (i)claims submitted before January 1, 2006 or after December 31, 2008; and (ii) claims submitted at any time for services by facilities not listed in Attachment  A.

 

e.

Any liability based upon obligations created by this Agreement;

f.

Any liability for express or implied warranty claims or other claims for defective or deficient products or services, including quality of goods and services;

h.

Any liability for personal injury or property damage or for other consequential damages arising from the Covered Conduct;

 

10.           Relator and her heirs, successors, attorneys, agents, and assigns shall not object to this Agreement but agree and confirm that this Agreement is fair, adequate, and reasonable under all the circumstances, pursuant to 31 U.S.C. § 3730(c)(2)(B).  Conditioned upon Relator’s receipt of the payment described in Paragraph 2, Relator and her heirs, successors, attorneys, agents, and assigns fully and finally release, waive, and forever discharge the United States, its agencies, officers, agents, employees, and servants, from any claims arising from the filing of claims for the Covered Conduct in the Civil Action or under 31 U.S.C. § 3730, and from any claims to a share of the proceeds of this Agreement.   Nothing in this Agreement shall limit Relator’s recovery related to the claims as to which the United States has declined to intervene and neither this Agreement, nor any intervention by the United States in the Civil Action in order to dismiss claims in the Civil Action, shall waive or otherwise affect the ability of the United States to contend that the provisions of the False Claims Act, including 31 U.S.C. § 3730(d)(3) and § 3730(e ), bar Relator from sharing in other proceeds of the Civil Action.

 

11.           Conditioned upon LHC’s full payment of the Settlement Amount and the amount specified in Paragraph 3 above, Relator, for herself, and for her heirs, successors, attorneys,

 

12.           LHC waives and shall not assert any defenses LHC may have to any criminal prosecution or administrative action relating to the Covered Conduct that may be based in whole or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution, this Agreement bars a remedy sought in such criminal prosecution or administrative action.  Nothing in this paragraph or any other provision of this Agreement constitutes an agreement by the United States concerning the characterization of the Settlement Amount for purposes of the Internal Revenue laws, Title 26 of the United States Code.

 

13.           LHC fully and finally releases the United States, its agencies, officers, agents, employees, and servants, from any claims (including attorneys’ fees, costs, and expenses of every kind and however denominated) that LHC has asserted, could have asserted, or may assert in the future against the United States, its agencies, officers, agents, employees, and servants, related to the Covered Conduct and the United States’ investigation and prosecution thereof.\

 

14.           The Settlement Amount shall not be decreased as a result of the denial of claims for payment now being withheld from payment by any Medicare carrier or intermediary, TRICARE, or FEHBP carrier or payer, or any state payer, related to the Covered Conduct; and LHC agrees not to resubmit to any Medicare carrier or intermediary, TRICARE or FEHBP

 

carrier or payer or any state payer any previously denied claims related to the Covered Conduct, and agrees not to appeal any such denials of claims.

 

15.           LHC agrees to the following:

 

a.         Unallowable Costs Defined: All costs (as defined in the Federal Acquisition Regulation, 48 C.F.R. § 31.205-47; and in Titles XVIII and XIX of the Social Security Act, 42 U.S.C. §§ 1395-1395kkk-1 and 1396-1396w-5; and the regulations and official program directives promulgated thereunder) incurred by or on behalf of LHC, its present or former officers, directors, employees, shareholders, and agents in connection with:

 

(2)

the United States’ audit(s) and civil investigation(s) of the matters covered by this Agreement;

(4)

the negotiation and performance of this Agreement;

(5)

the payment LHC makes to the United States pursuant to this Agreement and any payments that LHC may make to Relator, including costs and attorneys’ fees; and

 

(i)

retain an independent review organization to perform annual reviews as described in Section III of the CIA; and

(ii)

prepare and submit reports to the OIG-HHS, are unallowable costs for government contracting purposes and under the Medicare Program, Medicaid Program, TRICARE Program, and FEHBP (hereinafter referred to as Unallowable Costs).  However, nothing in this paragraph 15.a.(6) that may apply to the obligations undertaken pursuant to the CIA affects the status of costs that are not allowable based on any other authority applicable to LHC.

 

b.           Future Treatment of Unallowable Costs:  Unallowable Costs shall be separately determined and accounted for by LHC, and LHC shall not charge such Unallowable Costs directly or indirectly to any contracts with the United States, or seek payment for such Unallowable Costs through any cost report, cost statement, information statement, or payment request submitted by LHC or any of its subsidiaries or affiliates to the Medicare, TRICARE, or FEHBP Programs.

 

c.           Treatment of Unallowable Costs Previously Submitted for Payment:  LHC further agrees that within 90 days of the Effective Date of this Agreement it shall identify to applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and FEHBP fiscal agents, any Unallowable Costs (as defined in this Paragraph) included in payments previously sought from the United States, or any State Medicaid program, including, but not limited to, payments sought in any cost reports, cost statements, information reports, or payment requests already submitted by LHC or any of its subsidiaries or affiliates, and shall request, and

 

agree, that such cost reports, cost statements, information reports, or payment requests, even if already settled, be adjusted to account for the effect of the inclusion of the unallowable costs.  LHC agrees that the United States, at a minimum, shall be entitled to recoup from LHC any overpayment plus applicable interest and penalties as a result of the inclusion of such Unallowable Costs on previously-submitted cost reports, information reports, cost statements, or requests for payment.

 

Any payments due after the adjustments have been made shall be paid to the United States pursuant to the direction of the Department of Justice and/or the affected agencies.  The United States reserves its rights to disagree with any calculations submitted by LHC or any of its subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this Paragraph) on LHC or any of its subsidiaries or affiliates’ cost reports, cost statements, or information reports.

 

d.         Nothing in this Agreement shall constitute a waiver of the rights of the United States to audit, examine, or re-examine LHC’s books and records to determine that no Unallowable Costs have been claimed in accordance with the provisions of this Paragraph.

 

16.       LHC agrees to cooperate fully and truthfully with the United States’ investigation of individuals and entities not released in this Agreement.  Upon reasonable notice, LHC shall encourage, and agrees not to impair, the cooperation of its directors, officers, and employees, and shall use its best efforts to make available, and encourage, the cooperation of former directors, officers, and employees for interviews and testimony, consistent with the rights and privileges of such individuals.  LHC further agrees to furnish to the United States, upon request, complete and unredacted copies of all non-privileged documents, reports, memoranda of interviews, and

 

records in its possession, custody, or control concerning any investigation of the Covered Conduct that it has undertaken, or that has been performed by another on its behalf, except that which has been created at the direction of legal counsel. LHC shall not and does not waive its attorney-client privilege or work-product doctrine protections.

 

17.           This Agreement is intended to be for the benefit of the Parties only.  The Parties do not release any claims against any other person or entity, except to the extent provided for in Paragraph 18 (waiver for beneficiaries paragraph), below.

 

18.           LHC agrees that it waives and shall not seek payment for any of the health care billings covered by this Agreement from any health care beneficiaries or their parents, sponsors, legally responsible individuals, or third party payors based upon the claims defined as Covered Conduct.

 

19.           Upon receipt of the payments described in Paragraphs 1 and 2, above, the United States and Relator shall promptly sign and file in the Civil Action a Joint Stipulation of Dismissal pursuant to Rule 41(a)(1) of the claims for the Covered Conduct with prejudice as to the United States and the Relator.

 

20.           Each Party shall bear its own legal and other costs incurred in connection with this matter, including the preparation and performance of this Agreement.

 

21.           Each party and signatory to this Agreement represents that it freely and voluntarily enters in to this Agreement without any degree of duress or compulsion.

 

22.           This Agreement is governed by the laws of the United States.  The exclusive jurisdiction and venue for any dispute relating to this Agreement is the United States District Court for the Western District of Louisiana.  For purposes of construing this Agreement, this

 

Agreement shall be deemed to have been drafted by all Parties to this Agreement and shall not, therefore, be construed against any Party for that reason in any subsequent dispute.

 

23.           This Agreement constitutes the complete agreement between the Parties.  This Agreement may not be amended except by written consent of the Parties.

 

24.           The undersigned counsel represent and warrant that they are fully authorized to execute this Agreement on behalf of the persons and entities indicated below.

 

25.           This Agreement may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same Agreement.

 

26.           This Agreement is binding on LHC’s successors, transferees, heirs, and assigns.

 

27.           This Agreement is binding on Relator’s successors, transferees, heirs, and assigns.

 

28.           All parties consent to the United States’ disclosure of this Agreement, and information about this Agreement, to the public.

 

29.           This Agreement is effective on the date of signature of the last signatory to the Agreement (Effective Date of this Agreement).  Facsimiles of signatures shall constitute acceptable, binding signatures for purposes of this Agreement.

DATED:                                                      BY: /s/ SUSAN C. LYNCH

SUSAN C. LYNCH

MEREDITH L. TOOLE

Trial Attorneys

Commercial Litigation Branch

Civil Division

United States Department of Justice

DATED:                                                      BY: /s/ KAREN J. KING

KAREN J. KING

Assistant United States  Attorney

Western District of Louisiana

DATED:                                                      BY: /s/ GREGORY E. DEMSKE

GREGORY E. DEMSKE

Assistant Inspector General for Legal Affairs

Office of Counsel to the

   Inspector General

Office of Inspector General

United States Department of

   Health and Human Services

DATED:                                                      BY: /s/ LAUREL C. GILLESPIE

LAUREL C. GILLESPIE

Deputy General Counsel

TRICARE Management Activity

United States Department

  of Defense

DATED:

BY: /s/ SHIRLEY PATTERSON

SHIRLEY PATTERSON

Acting Deputy Associate Director

Insurance Operations

United States Office of

Personnel Management

DATED:                                                      BY: /s/ DAVID COPE

DAVID COPE

Assistant Inspector General

    for Legal Affairs

United States Office of

   Personnel Management

DATED:                                                     BY: /s/ PETER C. NOVEMBER

PETER C. NOVEMBER

General Counsel

LHC Group, Inc.

DATED:                                                     BY: /s/ WILLIAM H. JORDAN

WILLIAM H. JORDAN

  Counsel for LHC Group, Inc.

DATED:                                                     BY: /s/ JUDY MASTER

JUDY MASTER

 
 

DATED:                                                     BY: /s/ GREGORY M. UTTER

GREGORY M. UTTER

JOSEPH M. CALLOW

DANIELLE M. D’ADDESSA

JOEL HESCH

Counsel for Judy Master