New Jersey Man to Pay $656,000 for Illegally Operating Ballston Spa Nursing Home

For Immediate Release

U.S. Attorney's Office, Northern District of New York 

 

Chaim “Mutty” Scheinbaum Performed Management Functions Reserved for Licensed Operators, Provided Sub-Standard Care, and Failed to Make Necessary Repairs

ALBANY, NEW YORK – The Justice Department, together with the New York State Office of the Attorney General, announced today that Chaim “Mutty” Scheinbaum has agreed to pay $656,000 to resolve allegations that he violated the False Claims Act by causing the submission of false claims to the Medicaid program for worthless services provided to residents at Saratoga Center for Rehabilitation and Skilled Nursing Care (Saratoga Center). Saratoga Center closed in February 2021, after this investigation was initiated.  The United States and the State of New York previously settled with other individuals who agreed to pay a total sum of $7,168,000 to resolve similar allegations arising from misconduct at Saratoga Center. 

“Nursing homes should protect the health and well-being of every resident,” said U.S. Attorney Carla Freedman for the Northern District of New York. “That did not happen at Saratoga Center. An individual with no lawful authority controlled the finances and failed to pay vendors. This unlawful arrangement resulted in false claims to Medicaid for worthless services. We will continue to hold responsible people accountable when they receive federal funds while providing substandard care.  Thank you to Attorney General James and her office for collaborating on this case.”

“Ensuring nursing homes are safe and deliver quality care is a top priority for HHS-OIG,” said Naomi Gruchacz, Special Agent in Charge, of the U.S. Department of Health and Human Services, Office of Inspector General’s New York Regional Office.  “As alleged this individual had no legal authority to operate Saratoga Center and mismanaged their control, resulting in residents suffering the consequences of unacceptable living conditions. Together with our law enforcement partners we will continue to relentlessly pursue owners and operators of nursing homes that egregiously disregard resident safety and quality-of-care.” 

“Every resident of New York’s nursing homes deserves high-quality care and proper staffing to meet their needs. Rather than ensure vulnerable residents got the care they deserved, this individual mismanaged Saratoga Center’s finances and failed to adequately staff the facility, causing residents to suffer the consequences of neglect and unsanitary conditions. I want to thank United States Attorney Carla Freedman and our partners in law enforcement for their assistance in bringing this unacceptable situation to light and to justice. My office will continue to ensure nursing home residents are protected, and I encourage anyone who has witnessed alarming conditions, resident neglect, or abuse at a nursing home to contact my office.”

Scheinbaum acknowledged in the settlement agreement that, despite never obtaining a license that would have allowed him to legally operate Saratoga Center, beginning around April 2018, he controlled Saratoga Center’s finances, determined which vendor bills would be paid, maintained the financial books and records, and had the authority to hire and fire high level employees.  Under New York State law, these responsibilities were vested exclusively in the licensed operators, who had previously relinquished control of Saratoga Center.  While Scheinbaum was operating Saratoga Center, certain vendor bills went unpaid and some vendors refused to deliver goods and/or services, including making necessary repairs.  Further, Saratoga Center failed to ensure that:

• residents had access at all times to hot water;
• the fire alarm system was properly maintained;
• the kitchen was clean and staff were able to serve hot food;
• there was a supply of linens to bathe and care for residents;
• garbage was collected;
• there was effective pest control; and
• water leaks were timely repaired.

This settlement resolves allegations that Scheinbaum submitted or caused the submission of false claims by (1) illegally operating Saratoga Center and (2) overseeing the provision of worthless services provided to residents of Saratoga Center.

The resolution obtained in this matter was the result of a coordinated effort among the U.S. Attorney’s Office for the Northern District of New York, the Justice Department’s Civil Division Commercial Litigation Branch, Fraud Section, the New York State Office of the Attorney General’s Medicaid Fraud Control Unit, and the United States Department of Health and Human Services, Office of Inspector General.

Assistant U.S. Attorney Christopher R. Moran and Civil Division Attorneys Carol Wallack and Lyle Gruby handled this matter for the United States.

The United States’ investigation was part of its Elder Justice Initiative, which supports the efforts of state and local prosecutors, law enforcement, and other elder justice professionals to combat elder abuse, neglect, and financial exploitation, with the development of training, resources and information. Learn more about the Justice Department’s Elder Justice Initiative at http://www.justice.gov/elderjustice.

Updated December 21, 2023

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New Jersey Man to Pay $656,000 for Illegally Operating Ballston Spa Nursing Home

Flushing doctor settles health care fraud claims for $1.3 million after over-billing nursing home patients: Feds

By Bill Parry

U.S. Attorney Breon Peace reached a $ 1.3 million settlement agreement with a Flushing doctor after he allegedly over-billed Medicare for services provided to residents of Queens nursing homes.

File photo courtesy of the EDNY

A Flushing-based pulmonologist will have to pay $1.3 million in restitution as part of a settlement agreement with the U.S. Justice Department after he over-billed nursing home residents for years, U.S. Attorney Breon Peace announced last week.

The deal addresses allegations that Dr. Arun Arora violated the federal False Claims Act by billing Medicare for critical care services to residents of nursing homes in Queens when he provided only routine care, such as regular medical checkups.

Critical care services involve imminent life-threatening deterioration of a patient’s condition and Medicare reimburses health care providers at a higher rate for critical care services than for routine care, according to federal prosecutors. By billing for critical care services when he provided only routine care, as the government contends, Dr. Arora received extra payment for care that he did not provide.

Under the terms of the agreement with the U.S., Dr. Arora will pay the $1.3 million for conduct that took place in the years 2019 to 2023. In addition to the payment to resolve the government’s fraud claim, Dr. Arorahas entered into a separate “integrity agreement” with the U.S. Department of Health and Human Services, Office of Inspector General, which imposes a number of obligations meant to ensure he complies with Medicare rules and regulations going forward.

“Our Medicare program, which provides health care services to the elderly, works only if its funds are expended properly,” U.S. Attorney Breon Peace said. “When health care providers over-bill the program, Medicare cannot ensure that services are going to the people who need them most.”

He added that the claims resolved by the settlement are allegations only and there has been no admission of or determination of liability.

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Flushing doctor settles health care fraud claims for $1.3 million after over-billing nursing home patients: Feds

Parent company of Carlisle nursing facility to pay $15.4 million to settle overbilling allegations

Forest Park Healthcare and Rehabilitation Center is located at 700 Walnut Bottom Road, Carlisle.
Jason Malmont, The Sentinel

Guardian Elder Care Holdings, the owner of Forest Park Healthcare and Rehabilitation Center in Carlisle, has agreed to pay $15,466,278 to resolve allegations that it over-billed patients.

The Department of Justice announced the settlement in a news release last week.

Guardian operates more than 50 nursing facilities throughout Pennsylvania, Ohio and West Virginia.

According to the news release, Guardian facilities allegedly billed patients at the highest level of Medicare reimbursement from January 2011 through December 2017. Services at that level were not medically necessary, and were influenced by financial considerations.

“Seniors rely on the Medicare program to provide them with appropriate care, and to ensure that they are treated with dignity and respect,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The department will not tolerate nursing home operators that put their own economic gain ahead of the needs of their residents, and will continue to hold accountable those operators who bill Medicare for unnecessary rehabilitation services.”

The allegations were originally introduced by two former Guardian employees, Phillipa Krause and Julie White, under the whistleblower provisions of the False Claims Act, which allow private parties to sue on behalf of the government for false claims and to share in any recovery. The whistleblowers in this case will receive approximately $2.8 million.

The settlement also resolves allegations voluntarily disclosed by Guardian that it had employed two people who were excluded from federal health care programs. As a result of its employment of those two people, Guardian inappropriately received payment for ineligible services.

Contemporaneous with the civil settlement, Guardian agreed to enter into a chainwide Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General. The agreements are intended to promote compliance and protect nursing home residents.

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Parent company of Carlisle nursing facility to pay $15.4 million to settle overbilling allegations

OIG Puts the Pressure On as Hospice Fraud Cases Pile Up

By Robert Holly | June 24, 2018

 

In March 2018, Health and Palliative Services of the Treasure Coast and two of its businesses paid $2.5 million to settle a False Claims Act (FCA) case related to hospice billing.

A month later, Horizons Hospice agreed to pay more than $1.2 million to resolve allegations that the company fraudulently billed Medicare and Medicaid for services to patients who did not have a life expectancy prognosis of six months of less.

Both settlements came more than a year after Chemed Corporation (NYSE: CHE) and various wholly-owned subsidiaries—including Vitas Hospice Services and Vitas Healthcare, the biggest for-profit hospice chain in the country—agreed to pay a whopping $75 million to resolve a government lawsuit with similar allegations.

As utilization has increased and companies have more widely shifted toward high-margin profit models, claims of fraud, waste and abuse in the hospice industry have become increasingly common.  So much so that, in fact, the U.S. Department of Health & Human Services (HHS) Office of Inspector General (OIG) has made hospice investigation a substantial portion of its active work plan.

Since the end of 2016, OIG has announced or revised plans for at least seven different hospice-related audits, evaluations and inspections, a Home Health Care News review found.

“The Medicare hospice program is an important benefit for beneficiaries and their families at the end of life,” the watchdog organization stated. “OIG and others have identified vulnerabilities in payment, compliance and oversight, as well as quality-of-care concerns, which can have significant consequences both for beneficiaries and for the program.”

Patients and taxpayers are at the front lines of those affected by the rise in fraud and improper billing, but scrupulous hospice providers are also being hurt.

For the many businesses that are free of red flags, it’s becoming more difficult to go up against competitors who aren’t exactly playing by the rules, an executive from a West Coast family-owned home health and hospice company with nearly 3,000 patients told HHCN.

“Some of the companies out there kind of just want to come in, see an opportunity to maybe generate a little bit more capital for themselves, and they’re really just rendering services that aren’t within the benefits of hospice,” the exec, who asked for anonymity to avoid backlash, said. “It gives the whole industry a black eye.”

The ‘cost of doing business’

The list of U.S. Department of Justice FCA cases against hospice companies in recent years is long and rapidly growing. Other prominent examples include Genesis HealthCare’s $53.6 million settlement in 2017, Evercare Hospice and Palliative Care’s $18 million settlement in 2016 and Guardian Hospice of Georgia’s $3 million settlement in 2015.

The number of civil cases against hospice providers also appears to be steadily trending upward.

“Right now, as we speak, I’m working on about five hospice fraud cases,” Mark Schlein, an attorney with Los Angeles-based law firm Baum, Hedlund, Aristei & Goldman, told HHCN. “In the past—even just six or seven years ago—that was only one case, at most, at a time. From my perspective, my hospice and fraud practice has grown dramatically, which reflects the problem in the health care fraud arena and is a small example of what’s going on nationwide.”

Mike Bothwell, attorney and founder of Georgia-based Bothwell Law Group, also has a hefty load of FCA cases targeting hospice providers, he told HHCN. Sometimes, identifying a suspect hospice company seems as easy as throwing a dart toward a map of  providers, he said.

“I think that I have filed something along the order of 15 different hospice fraud cases,” Bothwell, who represented whistleblowers in the 2015 Guardian Hospice case, said. “I think that I did my first hospice case in the late 90s or early 2000s—they didn’t really used to come up on my radar.”

The most widespread type of hospice-related fraud or improper billing is providers wrongfully admitting patients who are ineligible for care, according to the attorneys. Currently, to meet Medicare eligibility requirements, patients need to have their hospice doctor and primary care physician certify that they have six months or fewer to live. Patients also need to choose palliative care over curative care, except in certain demonstration programs.

Closely related to improperly admitting patients is improperly retaining patients when they are clearly not actively dying, though hospice rules do require hospices to regularly assess patient conditions.

“By improperly admitting and improperly retaining, the corrupt hospice company increases its patient census, which, of course, means more money to the hospice company,” Schlein said. “The more patients you have on hospice, the more that the government pays you.”

Besides accepting and keeping ineligible patients, other common types of hospice wrongdoing include the use of kickbacks to bolster referrals and the tactic of unnecessarily or fraudulently categorizing patients in more intensive care levels with higher reimbursement rates, such as for general inpatient care, typically referred to as GIP.

Routine home care services during a patient’s first 60 days of being on hospice were reimbursed at a rate of $190.55 per day last year, according to the National Hospice and Palliative Care Organization (NHPCO). GIP, meant for pain control and symptom management that can’t be handled in other non-facility settings, was reimbursed at $734.94 per day.

“Sometimes, you see GIP stays that are really extraordinary for certain diagnoses,” the West Coast hospice executive said. “There are certainly individuals who play that game.”

Fraud is inherently deceptive, meaning the total cost of all hospice fraud is almost impossible to calculate and largely unknown at this point.

What is known: Just the act of fraudulently placing patients in higher care categories costs Medicare hundreds of millions of dollars each year. Hospice providers billed about one-third of all GIP stays inappropriately in 2012, costing Medicare $268 million, the most recent OIG report on the issue found.

Overall, the Department of Justice opened 967 new criminal and 948 new civil health care fraud investigations during its 2017 fiscal year, according to a joint annual report with HHS.

“It’s fair to say that most companies engaging in fraud or cheating the government recognize that getting caught and paying a fine has become a cost of doing business,” Schlein said.

NHPCO response, OIG recommendations 

As a demographic group, baby boomers have helped drive attention paid to hospice, seeing value in being able to better control how, where and when they die. The market has seen that value as well, reflected by a string of recent hospice acquisition deals with sky-high valuations.

Fraud and improper billing may exist in the industry, but it isn’t “rampant,” Edo Banach—president and CEO of NHPCO, a not-for-profit hospice and palliative care organization—told HHCN.

“The fact is there are bad players in hospice, as there are in home care and nursing homes, certainly, and hospitals,” Banach said. “Rampant implies it exists across the board, and my experience is [that’s] not the case.

Any instance of improper billing is one instance too many, he said. With that in mind, NHPCO works diligently with Congress, the Centers for Medicare & Medicaid Services (CMS) and its members to make sure hospice providers are providing appropriate care and unlikely to make compliance mistakes.

“A lot of times when I see someone in the news being called out for … defrauding of Medicare, I am both chagrined and somewhat relieved to find out they are not a member of ours, to be honest,” Banach said. “Folks who join associations and take part in educational sessions are less likely to be out and flouting the rules. Where we do see some of our members getting into trouble is because of a difference of opinion about what is medically necessary and what’s not.”

OIG has made several recommendations to CMS to improve hospice oversight.

CMS should reform hospice payments to reduce the incentive for hospices to target beneficiaries with certain diagnoses and those likely to have long stays, OIG recommended. Medicare should also adopt a hospital transfer payment policy to lower hospital reimbursement for beneficiaries who are discharged early to hospice care and seek regulatory changes to establish more specific requirements for the frequency of hospice certification, according to the watchdog.

The FCA is often cited as the most effective means for holding fraudulent providers accountable, Schlein said. Even so, penalties recovered from FCA cases are often far less than the payments improperly received by a hospice, he said.

Treasure Coast hospice, for instance, was accused of defrauding Medicare by up to $72 million, but settled for only $2.5 million without admission of liability, TC Palm reported.

“[Whistleblowers play an incredibly important role in holding providers and companies accountable for committing fraud against the government,” Schlein said. “Still, when fraud is caught, in many cases, they get back only pennies on the dollar.”

How rampant fraud actually is—and what the most effective ways of combating it are—may be up for debate. Nonetheless, it’s safe to say that hospice providers should plan ahead for increased oversight and new policies in the coming months and years.

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OIG Puts the Pressure On as Hospice Fraud Cases Pile Up

Nursing Home Operators Face Over $115M For Medicare Fraud

By John Kennedy

Law360, New York (February 16, 2017, 10:12 PM EST) -- A Florida federal jury on Wednesday found the operators of 53 skilled nursing facilities liable for more than $115 million in damages stemming from false claims they submitted to Medicare and Medicaid after pretending patients needed and received more care than they did.

The jury ruled on False Claims Act allegations brought by whistleblower Angela Ruckh, who worked at two of the facilities as a nurse, and found that the four defendants — CMC II LLC, Salus Rehabilitation LLC, 207 Marshall Drive Operations LLC and 803 Oak Street Operations LLC — had made varying amounts of false claims, backed up by fraudulent records, to Medicare and Medicaid.

Because the False Claims Act calls for treble damages plus an additional penalty of between $10,000 and $22,000 for each false claim, the defendants will likely have to pay in excess of $345 million, according to Mary Inman and Poppy Alexander of Constantine Cannon LLP, who have been watching the case.

The most affected defendant was CMC II, as successor to Sea Crest Health Care Management, doing business as LaVie Management Services of Florida, which submitted 123 false Medicare claims using more than 130 false statements and should be held liable for $109.8 million in damages, the jury said.

Oak Street, which was doing business as Governor’s Creek Health and Rehabilitation Center, submitted four false claims, backed up by about 50 false records, and is liable for $3.3 million in damages. Marshall Drive, which was doing business as Marshall Health and Rehabilitation Center, followed closely with one false claim backed up by about two dozen false records and should be liable for $2 million in damages, the jury said.

Salus, which was doing business as LaVie Rehab, submitted 44 false claims backed up by an equal number of fraudulent records, but shouldn’t pay anything, the jury said. It wasn't immediately clear why.

The judgment is one of the largest False Claims Act jury verdicts in a while, Alexander said, as Inman noted that such cases, given the punitive nature of the FCA and the pressure it puts on defendants to settle, don’t go to trial often.

“This is what happens when defendants roll the dice and take a case to trial,” Inman, a partner in Constantine’s whistleblower practice, told Law360 Thursday. “They face being hit with treble damages as well as penalties.”

Alexander, an associate in Constantine’s whistleblower practice, said that the case is one of the larger FCA cases dealing with skilled nursing facilities to go to trial. Medicare dollars are increasingly finding their way to skilled nursing facilities, which also makes them a target for fraud, she said.

In the instant case, the defendants were artificially increasing the amount of resources they claimed their patients needed in order to get more money from the federal health care programs. This type of fraud has been repeatedly listed as a top area of concern by the U.S. Department of Health and Human Services’ Office of Inspector General, Inman said.

She added that any skilled nursing provider that sees this verdict should take a look at its own Resource Utilization Group assessment policies and ensure that it’s in compliance with the law and not upcoding.

The verdict could also affect how other courts interpret this type of RUG fraud and how RUG standards are supposed to be interpreted, as well as the use of statistical sampling to determine liability, which was an issue in this case, Alexander said.

Neither party could be reached for comment Thursday.

Ruckh is represented by The Cohen Law Group, Kellogg Huber Hansen Todd Evans & Figel PLLC and Delaney Kester LLP.

The companies are represented by Terence J. Lynam and Robert S. Salcido of Akin Gump Strauss Hauer & Feld LLP and Tina Dunsford of the Florida Health Law Center.

The case is U.S. ex rel. Ruckh v. CMC II LLC et al, case number 8:11-cv-01303, in the U.S. District Court for the Middle District of Florida.

--Additional reporting by Alex Wolf. Editing by Bruce Goldman.

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Nursing Home Operators Face Over $115M For Medicare Fraud