Nursing home companies accused of misusing federal money received hundreds of millions of dollars in pandemic relief

Nursing home companies sued for Medicare fraud in recent years received more than $300 million in coronavirus relief payments. The allegations include putting elderly residents into unnecessary therapy services and delaying patients' release to reap higher Medicare payments. (N/A/Getty Images)

By Debbie Cenziper

For-profit nursing home providers that have faced accusations of Medicare fraud and kickbacks, labor violations or widespread failures in patient care received hundreds of millions of dollars in “no strings attached” coronavirus relief aid meant to cover shortfalls and expenses during the pandemic, a Washington Post analysis of federal spending found.

More than a dozen companies that received federal funding have settled civil lawsuits in recent years with the Justice Department, which alleged improper Medicare billing, forged documents, substandard care and other abuses.

The companies repaid the government a total of more than $260 million and nearly all are under active corporate integrity agreements with the inspector general of the U.S. Department of Health and Human Services — the same department that distributed the payments under the Coronavirus Aid, Relief, and Economic Security Act, or Cares Act. The five-year agreements require independent audits, employee training and other enhanced reporting protocols.

One nursing home provider is still embroiled in active litigation with the government, which has accused the company in federal court in Tennessee of putting elderly residents into unnecessary therapy services and delaying the release of patients to reap higher Medicare payments. SavaSeniorCare, whose homes received more than $65 million in pandemic relief aid, has denied wrongdoing.

All told, nursing home companies sued for Medicare fraud in recent years received more than $300 million in relief payments.

Millions more went to nursing homes with widely publicized breakdowns during the pandemic. Among them: a facility in Pennsylvania cited by the state for giving more than 200 residents the experimental anti-malarial drug touted by President Trump and a home in New Jersey under investigation by the state attorney general for lapses in infection control and patient care during a lethal coronavirus outbreak earlier this spring. After an anonymous tip, police found the bodies of 17 residents in a makeshift morgue; another had been stored in a shed.

The money was distributed through the $175 billion Provider Relief Fund, which since April has directed federal stimulus payments to hospitals, nursing homes and other health-care providers. In May, HHS announced a targeted nursing home distribution of $4.9 billion.

The payments, for expenses or lost revenue related to covid-19 — the disease caused by the novel coronavirus — came with few spending restrictions. Agreements between the providers and HHS include language prohibiting nursing homes from using the federal money for abortions, gun-control lobbying and the purchase of chimpanzees, but do not require homes to spend on such things as personal protective equipment or hazard pay for nurses and aides caring for covid-19 patients.

Seema Verma, administrator of the Centers for Medicare and Medicaid Services, told nursing home companies and other health-care providers in April that coronavirus relief payments came with “no strings attached.” (Drew Angerer/Getty Images)

“The president wants us to accelerate getting those dollars out,” Seema Verma, administrator for the Centers for Medicare and Medicaid Services (CMS), announced in April during a news briefing with the White House coronavirus task force. “There are no strings attached, so the health-care providers that are receiving these dollars can essentially spend that in any way they see fit.”

Watchdog groups and some independent experts say the government should have assessed the financial needs of the nursing home industry, scrutinized the track records of providers and attached some spending restrictions before distributing the payments. They say they are most concerned about for-profit companies, some owned by private equity and other investment firms, that in the past have slashed costs and cut staff to boost profit.

Two publicly traded nursing home companies that regularly pay dividends to shareholders announced they continued to do so in the first two quarters of this year, The Post found.

Rep. James E. Clyburn (D-S.C.), who chairs the House select subcommittee on the coronavirus crisis, launched a congressional investigation in June focused in part on grant spending by five nursing home chains.

Rep. James E. Clyburn (D-S.C.), chairman of the
House select subcommittee on the coronavirus
 crisis, said that the panel will conduct oversight
 to make sure nursing home companies are spending
 funds as Congress intended. (Salwan Georges/The
Washington Post)

“Our committee intends to conduct rigorous oversight to ensure that nursing home companies that received funds in order to deal with the crisis spend those funds as Congress intended,” he said in a statement to The Post. “Nursing home companies that received funds after committing fraud warrant particularly close scrutiny.”

HHS said that providers will be required to undergo audits and submit spending documents, and those unable to show that money went to expenses or lost revenue attributed to the coronavirus could be forced to return some or all of the funds.

“HHS will have significant anti-fraud monitoring of the funds distributed, and the Office of Inspector General will provide oversight as required in the CARES Act to ensure that federal dollars are used appropriately,” according to HHS.

The American Health Care Association (AHCA) and National Center for Assisted Living, which represents 14,000 long-term-care providers, said the federal money was badly needed. The group has reported that both nonprofit and for-profit nursing homes had been “on the verge of collapse” during a deepening health crisis, faced with the increasing costs of supplies and personnel expenses and the loss of existing and potential residents.

The industry group said it expects reporting and tracking protocols.

“For several months, all health care providers have been waiting for guidance on reporting and HHS’ approach to auditing and are anticipating significant oversight in the coming months,” Mike Cheek, AHCA senior vice president of reimbursement policy, said in a statement to The Post. “We support reasonable efforts to ensure this federal aid has been properly directed to providers to cover costs associated with addressing COVID-19 and potential losses."

Whether that oversight prompts the government to flag irregular spending — or demand the return of stimulus money — is not yet known.

As the money became available, LeadingAge, an industry group that represents nonprofit providers, put out a primer for providers with detailed instructions about how to access and use the payments.

“HHS or Congress could clawback some portion of the relief funds from non-COVID areas,” the document says. “But in an election year, there is low probability of this occurring.”

Those familiar with the industry say they fear some companies will simply absorb the money without investing in patient care or compensation for front-line workers.

“This has been one of my concerns from the moment the government passed the Cares Act — the money is not ending up where it needs to be,” said Michael Wasserman, medical director of a Los Angeles nursing home and president of the California Association of Long Term Care Medicine. “The help has to go specifically to the front line.”

To better understand where stimulus money was distributed, The Post used public records and provider websites to untangle the ownership structure of individual homes and then determine the total funding for homes within the same parent company. The calculations may be low. In some cases, The Post was unable to link the names of individual nursing homes with ownership records maintained by HHS or CMS.

The analysis captured more than 2,000 homes within some of the largest chains in the United States. The Post also looked at several publicly traded nursing home companies as well as smaller companies and individual facilities scrutinized for improper business practices or patient care before or during the pandemic. The Post could not independently verify how the relief payments, only recently distributed, were spent.

More than $35 million went to homes operated by the for-profit Brius, with dozens of nursing homes in California, federal data shows.

In 2016, officials at four Brius homes acknowledged in federal court that employees used corporate credit cards to buy massages, tickets to sporting events and excursions on the 222-foot mega yacht Inspiration Hornblower for hospital planners who provided patient referrals. The officials, who struck deferred prosecution agreements with the government, said at the time that Brius management was unaware of the scheme to maximize Medicare revenue.

The four homes repaid $6.9 million through a settlement.

Last year, the state threatened to fine one Brius home $156,000 after inspectors noted that a resident who had trouble swallowing choked on a honey bun and died, and another resident needed two surgeries after she fell out of her wheelchair while unattended. The home’s administration withheld records and instructed staff not to cooperate, according to the state inspection report.

In 2014, then-California Attorney General Kamala D. Harris called the company’s owner, Shlomo Rechnitz, a “serial violator of rules within the skilled nursing industry” in an emergency court motion to stop Brius from buying homes through a bankruptcy sale.

Shlomo Rechnitz, right, with Steve Rechnitz and their wives at a 2012 event in Beverly Hills, Calif., is the owner of Brius Healthcare, the largest nursing home provider in California. In 2014, then-California Attorney General Kamala D. Harris called Shlomo Rechnitz a “serial violator of rules within the skilled nursing industry.” (David Livingston/Getty Images)

Speaking for Rechnitz, company attorney Mark Johnson said Rechnitz does not have any role in the day-to-day operations of Brius homes. Johnson said the Justice Department settlement stemmed from allegations from 2006 to 2012 and “clearly has nothing to do with the CARES Act or the current pandemic.” The company, he said, cooperated with investigators and terminated the individuals involved.

Johnson denied allegations that facility employees failed to cooperate last year with state inspectors and said the company appealed the state’s findings. He added that Brius has faced rising expenses from increased wages, the cost of supplies and other needs during the coronavirus crisis.

“While we certainly cannot project the end of this pandemic, at present it seems unlikely that the relief funding will be sufficient to meet the increased expenses related to this pandemic,” Johnson said in an email.

In New York, two homes that are part of the for-profit SentosaCare received more than $2 million in pandemic relief payments, federal records show. In October, a federal judge ruled that the owners of the company were liable for violations of human-trafficking laws after Filipino nurses brought to the United States to work in the two homes said they were overworked, improperly paid and threatened with $25,000 fines if they quit before their contracts ended.

Elliot Hahn, a lawyer for SentosaCare, said nurses were not threatened and were paid an hourly rate of $29 or more. The company has appealed the ruling.

“This is not a case where employees were mistreated or ‘trafficked’ in any sense of the word,” Hahn said in an email.

Nursing homes that have drawn significant scrutiny during the pandemic also received relief payments, The Post found.

The Life Care Center of Kirkland in Washington state, the site of the country’s first known coronavirus outbreak, received nearly $320,000 in pandemic relief. After the outbreak, CMS inspectors found the home did not properly care for sick residents or alert authorities to the spread of illness. The state banned the home, linked to more than 40 deaths, from accepting new residents until changes were made.

The Life Care Center of Nashoba Valley outside of Boston drew $300,000 in federal funds. After 17 people died of covid-19, including a nurse at the home, Sens. Elizabeth Warren (D-Mass) and Edward J. Markey (D-Mass.) and Rep. Lori Trahan (D-Mass.) appealed to CMS to provide more oversight of Life Care and other for-profit chains. The Massachusetts Attorney General is investigating the home.

Tim Killian, public information liaison for the Tennessee-based chain, said the company continues to work with government regulators to “provide the best care and to safeguard both residents and staff.”

“We have lost both residents and staff members to this horrible contagion,” he said in an email. “Our staff members engaged in heroic efforts to provide the best care possible at great risk to their own health and well-being."

Life Care, with more than 200 nursing homes, is being monitored by federal authorities for financial compliance with Medicare rules. In 2016, Life Care, without admitting liability and arguing the government did not prove its case, agreed to the oversight and to a $145 million settlement to resolve allegations by the government that the chain and its billionaire owner had engaged in “a systematic scheme” to maximize Medicare billing.

Homes within the Life Care network received more than $48 million in pandemic relief payments, federal data shows.

“I asked Seema Verma to increase oversight of these for-profit chains, not hand out hundreds of millions of dollars with no strings attached,” Warren said in a statement to The Post. “CMS needs to make sure this money goes to responding to the virus and protecting vulnerable residents and staff, not padding profits and bottom lines.”

Billions distributed with few restrictions

The nursing home industry has pressed for financial relief since the start of the pandemic, when hundreds and then thousands of elderly residents fell ill during coronavirus outbreaks that swept homes from New York to California. More than 45,000 residents have died since March, along with several hundred nurses and other caregivers.

For months, the industry has asked Congress and the Trump administration to provide testing supplies, protective gear and money to cover expenses as well as lost revenue from beds left empty by patients who died of covid-19 or potential residents who decided to live elsewhere. Congress complied, allowing nursing homes to use stimulus money to cover shortfalls in revenue or expenses attributed to covid-19.

In May, Health and Human Services Secretary Alex Azar, talking with President Trump, announced $4.9 billion in targeted pandemic relief to nursing homes. Homes were given broad flexibility on use of the money. (Jabin Botsford/The Washington Post)

Nursing homes received about $2.7 million in initial, general distribution payments for hospitals and health-care providers. In May, HHS Secretary Alex Azar announced a targeted $4.9 billion distribution to nursing homes.

“This funding secured by President Trump will help nursing homes keep the seniors they care for safe during the COVID-19 pandemic,” Azar said at the time.

HHS opted for a simple distribution formula: Nursing homes would receive a $50,000 lump-sum payment, along with an additional allocation of $2,500 per bed. The average distribution was $315,000, with some larger facilities receiving $3 million or more, according to HHS.

The money, HHS said in guidance to the industry, did “not need to be specific to providing care for possible or actual coronavirus patients.” Providers could use the grants for a range of expenses, including health insurance, rent or mortgage payments, and equipment lease payments. Providers would have to comply with unspecified future audits and reporting requirements.

“They should have specified that the money couldn’t just be used for administrative costs and profits,” said Charlene Harrington, a nursing home researcher and professor at the University of California at San Francisco. “There was no reason that CMS couldn’t have put more restrictions on the money."

Some say the government also should have assessed the finances of nursing homes and their parent companies before distributing the payments.

In 2018, nursing homes in the United States received $28.5 billion from Medicare, which covers short-term stays and pays a far higher rate for services than Medicaid.

As the coronavirus crisis spiraled, CMS waived a rule that required patients to spend three consecutive days in a hospital before becoming eligible for skilled nursing care funded by Medicare. The idea was to free up hospital beds for covid-19 patients — and protect the elderly from exposure. But the change also allowed nursing homes to convert existing, long-term-care patients on Medicaid to higher-paying Medicare as long as the homes determined the residents needed skilled care under CMS guidelines.

David Grabowski, a professor of health-care policy at Harvard Medical School, called the change a “huge revenue bump.”

“That’s where all of the high margins are associated with nursing home care,” Grabowski said. “You can quadruple your revenue overnight for those residents.”

CMS also extended the time that patients were eligible for Medicare-funded skilled nursing, doubling the pre-pandemic 100-day limit if patients affected by covid-19 needed more care. At the same time, states including Massachusetts and Connecticut have directed aid to nursing home providers.

Then came the stimulus money.

Homes within the publicly traded Genesis HealthCare, which reported $33 million in net income in the first quarter of this year, received about $180 million in pandemic payments. States provided an additional $27 million.

“It goes back to this issue of whether or not there were shortfalls,” Grabowksi said. “You would want them to be able to make payroll, to buy all the supplies. … But I think there are a lot of concerns, especially with private equity and others, are you making the payments to a private-equity group or are you paying your staff? Greater accountability here on the financial side would be a good thing.”

The American Health Care Association said the money came at a critical time: Medicaid for years has covered only 70 or 80 percent of the cost of care in nursing homes, leaving some companies even before the pandemic with razor-thin margins. Struck by higher costs and lower occupancy rates during the crisis, the industry faced the loss of billions of dollars in revenue, the group has reported.

Money flows to troubled chains

On the front lines of nursing homes, the needs are clear. Last month nearly 3,000 reported shortages of nurses, aides or both, according to CMS data. More than 1,700 reported that they lacked a week’s supply of N95 masks; 1,500 said they lacked surgical gowns.

Hundreds of nursing homes ran short on staff, protective gear as more than 30,000 residents died during pandemic

But lawmakers and watchdog groups worry that with few safeguards, nursing home companies will seek to grow profit rather than direct money to patients and caregivers. Some providers have affiliated entities, such as medical supply companies, that could charge related nursing homes above-market rates for goods and services to justify expenses.

“There are owners in the industry who have related parties,” said Wasserman, the California doctor and industry representative. “Now the facility is paying five to 10 times the amount for PPE. That is not how Cares Act money should be spent.”

Watchdog groups say they are particularly concerned about companies that have faced allegations of Medicare abuse.

Nursing homes within Ohio-based Saber Healthcare, with facilities in seven states, received more than $45 million in pandemic funding only weeks after the company and related entities settled a 2016 government lawsuit, agreeing to five years of compliance monitoring and repaying $10 million to the government, court records show.

Government lawyers alleged in federal court in Virginia that nine of Saber’s homes submitted false claims to Medicare in recent years for rehabilitation therapy services for residents that were not reasonable, necessary or skilled.

“Our office is committed to investigating and stopping health-care fraud,” U.S. Attorney G. Zachary Terwilliger, of the Eastern District of Virginia, said in April. “Billing Medicare for higher-than-necessary levels of care exploits our senior citizens and undermines trust in the health-care system.”

Saber did not admit liability when settling the case.

“Saber disputes the allegations and has the utmost confidence that its facilities have acted in compliance with applicable laws and regulations in providing the best possible care to each and every patient,” the company said in a statement to The Post. “During this critical time for healthcare providers, our resources are better spent in serving our patients’ needs and supporting our employees rather than continuing to litigate these issues.”

In federal court in Tennessee, the Justice Department is currently pursuing a case against SavaSeniorCare, arguing that the nursing home company, among the largest in the U.S., pressured its homes to meet “unrealistic” financial goals by submitting false claims to Medicare for rehabilitation therapy.

Homes within the Sava network received more than $65 million in pandemic relief, federal spending data shows.

Patte Packey, whose 83-year-old father died of covid-19 at a Sava nursing home in Bethesda, Md., said she worries the money will not be spent on patient care.

“Who’s responsible for the oversight?” she said.

A spokesperson for Sava declined to comment on the government’s case, saying the litigation is ongoing. In court records, the company disputed the allegations, arguing the government failed to prove its case.

“The government hinges its entire case on five patient examples that demonstrate, at most, the government’s subjective clinical disagreement — and even then, a disagreement that wholly ignores the high standard to which [skilled nursing facilities] are held in the delivery of therapy services,” the company said.

Nursing homes flagged by government inspectors for lapses in care during the pandemic also drew millions of dollars, including Andover Subacute and Rehabilitation Center in New Jersey, where 17 bodies were found in a makeshift morgue.

Hundreds of nursing homes with cases of coronavirus have violated federal infection-control rules in recent years

The facility, which along with a sister property received about $3 million, failed to follow infection-control standards or properly screen visitors, according to a state inspection in April. Inspectors also found staff members who did not use proper protective equipment, wash their hands or separate sick patients from healthy ones.

The home, under investigation by the New Jersey attorney general, said every effort was made to keep residents safe.

“Despite all our efforts, the virus made its way into our facility, as it did in the majority of long-term care facilities across New Jersey,” owner Chaim “Mutty” Scheinbaum said in a statement. “We took every possible step to handle this crisis internally while simultaneously making dozens of outreaches to local, state, and federal agencies for help. … The facility has made a strong recovery since the height of the pandemic.”

Industry appeals for more

In recent weeks, state and federal lawmakers have ramped up calls to track the money. Clyburn is investigating Sava, Genesis and Life Care, among other nursing home chains, to determine how the stimulus money was spent.

In Pennsylvania, state Sen. Katie Muth (D) is pushing a measure that would require providers to track and report their spending.

“All these things that we hoped the feds would do, they haven’t,” Muth said.

The nursing home industry, meanwhile, is lobbying for more money. Last month, the Trump administration announced an additional $5 billion in funding for nursing homes and state veterans homes.

The American Health Care Association is asking for $100 billion, much of it directed at nursing homes. In early June, the group announced a $15 million fundraising effort to launch a public awareness campaign.

“Our profession faces its greatest challenge in history,” Mark Parkinson, the former governor of Kansas and AHCA’s president, wrote in a letter to the industry. “This isn’t like the usual fight we have in D.C. over a two percent increase or cut, or over some crazy regulation. Instead, this is a battle for the lives of our residents, our staff, and the very survival of our sector.”

Jacobs and Mulcahy are graduate students in journalism at Northwestern University’s Medill Investigative Lab. Post researcher Alice Crites and staff writer Douglas MacMillan contributed to this report, along with Michael Korsh, Ellie Eimer, Chloe Hilles, Cadence Quaranta, Catherine Buchaniec, Daniel Rosenzweig-Ziff and Alexa Mikhail with the Medill Investigative Lab.

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Nursing home companies accused of misusing federal money received hundreds of millions of dollars in pandemic relief

Fighting Fraud: A Guide to Keeping Your Money Safe

OHIO— Scams targeting the elderly are on the rise, and it's not just strangers who try to take advantage of aging adults.

It's often those who are closest to seniors — neighbors, friends, and even family members are responsible.

An Ohio law is on the books, designed to reduce how often older Ohioans are defrauded and increase the financial penalties for those who exploit the elderly.

The bill increases financial penalties for theft from someone older than 65. It mandates someone convicted to pay full restitution, plus a fine of up to $50,000.

Even with increased awareness and efforts by lawmakers, more than 3,630 cases of elder exploitation were reported across Ohio in 2018, according to the Ohio Department of Job and Family Services.

Legislation to combat elder fraud and exploitation was signed into law this week, an effort led by State Senator @SteveWilsonOH. Learn more about #SB158→https://t.co/cT316HUb9I pic.twitter.com/SwvoGyPVAc

— Ohio Senate GOP (@OhioSenateGOP) December 20, 2018

Fraud against elder citizens are on the rise and the myriad way con artists use to gain access to your money continues to grow. Learn the signs of elder abuse and neglects, and make yourself aware of the many scams that prey on the elderly.

We've listed just a few of the most common ways that criminals try to seperate you from your money.  This list could literally go on for pages and pages.  Visit the common fraud page at the FBI for more details.

KNOW THE SCAMS

• Advance Fee Schemes

An advance fee scheme occurs when the victim pays money to someone in anticipation of receiving something of greater value—such as a loan, contract, investment, or gift—and then receives little or nothing in return.

• Counterfeit Prescription Drugs

Counterfeit prescription drugs are illegal, fake medicines that may be hazardous to your health.

• Credit Card Fraud

Credit card fraud is the unauthorized use of a credit or debit card, or card number, to fraudulently obtain money or property.

Every year millions of elderly Americans fall victim to creative criminals who make up stories to gain their trust, and then deceive them. Help the #FBI stop #ElderFraud. Take steps to protect your loved ones today. https://t.co/xX4M9HYT4u pic.twitter.com/c88UKql4Qn

— FBI Jacksonville (@FBIJacksonville) September 23, 2019

• Identity Theft

Identity theft occurs when someone assumes your identity to perform a fraud or other criminal act.

First comes technology, and fraud is closed behind: identity theft through DNA test scams. https://t.co/1WYV5pgSX8 #DNATestScam

— Hawkins Elder Law (@HawkinsElderLaw) September 16, 2019

• Internet Fraud

Internet fraud is the use of Internet services or software with Internet access to defraud victims or to otherwise take advantage of them.

• Reverse Mortgage Scams

Reverse mortgage scams are engineered by unscrupulous professionals in a multitude of real estate, financial services, and related companies to steal the equity from the property of unsuspecting senior citizens or to use these seniors to unwittingly aid the fraudsters in stealing equity from a flipped property.

• Telemarketing Fraud

When you send money to people you do not know personally or give personal or financial information to unknown callers, you increase your chances of becoming a victim of telemarketing fraud.

The @FTC has recently seen a new twist on the #SocialSecurity imposter #scam. Check out this #SSA imposter #robocall, which says your benefits will end.

(That’s not true, by the way.) https://t.co/Wh9yoIWdmb 🔊 pic.twitter.com/m4Tv3Dc1Bn

— Stop Fraud Colorado (@StopFraudCo) September 15, 2019

Protect yourself from #Medicare fraud by knowing what to look for. If a caller says they’re from Medicare and asks for your Medicare number or other personal information – hang up. It’s probably a scam. https://t.co/OnQoc7GkAY pic.twitter.com/7lvXGmawof

— CMSGov (@CMSGov) September 12, 2019

BE AWARE OF THE WARNING SIGNS

There are typically warning signs or red flags. Below are just a few.

• Watch for unusual or unexplained bank account withdrawals, wire transfers, or other financial changes.
• There may be missing cash, belongings, or valuables from an older adult's home.
• The sudden or dramatic shift in investments can be a red flag.
• Unexpected changes in wills, trusts, power of attorney, or beneficiaries should be questioned.
• Older adults may exhibit concern or confusion about missing funds or credit card charges for items they typically don't purchase.
• Money borrowed from family or friends that are not repaid.
• Change in lifestyles or becoming more isolated from friends and family is another warning sign.

KNOW HOW TO GET HELP

If you're a professional caregiver, and older adult, or are concerned that a family member is involved in a scam or financial fraud, help is available.

There have been $1.7 billion of reported losses or attempted threats in connection with financial fraud against older adults. Here are some resources for professional caregivers, older adults and their families. #ElderFraud #KnowGreaterValue https://t.co/20QPjDuimG

— Lenore C. Sanchez CPA (@LenoreCPA) September 21, 2019

Suspected elder financial abuse may be reported to the Federal Trade Commission or 877-FTC-HELP and to the Senate Special Committee on Aging at 855-303-9470


Full Article & Source:
Fighting Fraud: A Guide to Keeping Your Money Safe

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.

Full Article & Source:
OIG Puts the Pressure On as Hospice Fraud Cases Pile Up

Physician Gets Prison for Phony Hospice Certifications

OXFORD, Miss. (AP) — A Mississippi physician was sentenced Thursday to 39 months in federal prison and ordered to pay nearly $2 million in restitution to the federal Medicare program, part of a continuing investigation into fraud by end-of-life hospice care providers in Mississippi.

Dr. Nathaniel Brown of Cleveland pleaded guilty in January to guilty to one count of conspiracy to commit health care fraud, admitting he certified patients as terminally ill and thus appropriate for hospice care, when in fact those patients were not terminally ill. He was sentenced Thursday in Oxford.

One sign of hospice fraud is the share of patients that don't die while under hospice care but are instead discharged. The U.S. Center for Medicaid and Medicaid Services found that in 2014, Mississippi led the nation in live discharges, with 20.4 percent of patients outliving hospice care.
That compared with a national rate of 11 percent that year. The share fell in 2015, to 17.9 percent, but Mississippi still ranked third among the states.

The U.S. Department of Health and Human Services has led a multiyear investigation into fraud in Mississippi called Hospice Storm. Assistant U.S. Attorney Clay Dabbs has called hospice fraud a "runaway problem" in Mississippi, and at least eight people have been charged in the state since 2014. Angelic Hospice owner Regina Swims-King was sent to prison for nearly six years and ordered to pay back nearly $8 million.

Brown, who was the medical director of two Mississippi hospices, received $47,750 in payments by check, plus additional cash. Those hospices, in turn are alleged to have received $1.94 million in inappropriate payments from Medicare.

Two other people involved in those hospices have also pleaded guilty to federal charges.

Sandra Livingston pleaded guilty in 2015 and was sentenced to three years in prison and $1.1 million in restitution. Lara Lynn Thompson, a nurse who recruited patients for both of Livingston's hospices, pleaded guilty in 2015 and was sentenced to 13 months in prison. She shares the $1.1 million in restitution with Livingston, with $272,000 assigned to Thompson and $737,000 assigned to Livingston.

Criminal charges against Livingston say she took $600,000 from the scheme and gave another $200,000 to relatives.

Investigators say people sometimes go door-to-door to solicit patients. Thompson was such a runner. The recruiter then takes patients to be certified by a medical director, such as Brown.

Full Article & Source:
Physician Gets Prison for Phony Hospice Certifications

Frisco couple, 14 others indicted in Medicare hospice scheme that preyed on 'most vulnerable'

Update:  Read the latest here: Frisco hospice owner accused of fraud and harming patients had ties to other health-care companies

The owner of a Frisco-based hospice company, his wife and 14 others have been indicted in a $60 million Medicare fraud scheme that put financial interests over the needs of patients, according to the U.S. attorney's office for the Northern District of Texas.

Some patients died of overdoses at the hands of nurses, according to the indictment, which was unsealed Tuesday and includes charges of health-care fraud and conspiracy to commit health-care fraud.

Those charged include Bradley J. Harris, 35, of Frisco, who owned and operated Novus Health Services and Optim Health Services Inc., and his wife, 42-year-old Amy Harris, who co-founded Novus and worked as vice president of patient services.  Five of the defendants are doctors. Five are nurses.

The for-profit Novus Health Services is one of the largest hospice providers in North Texas.
The company did not respond to a request for comment. The defendants and most of their attorneys could not immediately be reached.

Attorney Mike Uhl is representing Samuel D. Anderson, 35, who co-founded Novus and worked as a vice president of marketing. Anderson was indicted on one count of conspiracy to commit health-care fraud.

"Sam and I will review the charges and whatever evidence the government has and then make a decision about the appropriate next steps," Uhl said by email. "At this point, he enjoys the presumption of innocence guaranteed all citizens."

The office for Novus Health Services was housed in this building in Frisco in 2015.

Among the accusations are that medical directors certified that patients were eligible for hospice care whether they were or not, according to authorities. Hospice care provides support to patients with terminal illnesses and their families.

Harris would place patients on continuous care — which Medicare paid at a higher daily rate than routine care— whether those patients needed it or not. In 2013, Medicare paid a daily rate of $153 for routine hospice services compared with the daily rates for continuous care that ranged from $303 to $895, according to the indictment.

Nurses gave high doses of drugs such as morphine, regardless of whether patients needed it,  to justify the higher payments, prosecutors said. In some instances, these excessive dosages resulted in serious bodily injury or death.

"That these defendants used human life at its most vulnerable stage as the grist for this scheme displays a shocking level of depravity that this community simply cannot tolerate," U.S. Attorney John Parker said in a news release Tuesday.

The case against Novus

The indictment alleges that from July 2012 to September 2015, Novus billed Medicare and Medicaid more than $60 million for fraudulent hospice services. The government paid Novus more than $35 million.

The defendants are accused of submitting false claims for hospice services, submitting false claims for continuous care hospice services, recruiting ineligible hospice beneficiaries by providing kickbacks to referring physicians and health care facilities, and falsifying and destroying documents to conceal these activities from Medicare, federal officials say.

Last March, when news of the federal investigation became public, Novus posted a statement online, saying, "We have not and would not — ever — willfully harm any patient."

In addition to the Harrises and Anderson, indictments were issued for Melanie L. Murphey, 35, of Fort Worth, who was Novus' director of operations; Patricia B. Armstrong, 33, of Coppell, who was a registered nurse and primary triage nurse for after-hours patients; Jessica J. Love, 37, of Gainesville, who worked as a registered nurse and a district manager; Ali Rizvi, 49, of Carrollton, who owned a separate physicians' home visit company; Tammie L. Little, 55, of Brashear, who worked as a registered nurse and district manager; Mary Jaclyn Pannell, 29, of Krum, who worked as Novus' director of nursing; Taryn E. Stuart, 32, of Sanger, who worked as a licensed vocational nurse; and Slade C. Brown, 47, of Plano, who worked as a director of marketing.

Five licensed physicians who worked as medical directors for Novus  were also indicted. They are Mark E. Gibbs, 46, of Lindsay;  Syed M. Aziz, 51, of Frisco; Reziuddin Siddique, 63, of Allen; Charles R. Leach, 64, of Arlington, and Laila N. Hirjee, 50, of Plano;  A woman who answered the phone at  Hirjee's office said, "We can't give you any comment at this time."

As part of the scheme, physicians and assisted living facilities were offered salaries or other forms of payment in exchange for patient referrals to Novus hospice care, the indictment stated. It quoted an email from Leach that stated in part: "My goal was to send as much business to Brad and Amy in return for directorships, etc."

But doctors had little oversight of patients. Instead, care was directed primarily by nurses and by Harris, a certified public accountant who didn't hold any medical licenses, authorities said.

According to the indictment, Gibbs or Hirjee would state that they had met personally with patients before they were recertified for hospice even though such encounters would not have been possible.

 In one instance, Gibbs signed 19 face-to-face evaluations on July 18,  2013, that would have required him to have traveled about 200 miles to 19 different locations before 1:30 p.m. In another example cited by the indictment, Hirjee dated recertification visits in Texas on dates when she was in Hawaii or Mexico.

Around May 2013, the indictment alleges Bradley Harris texted Taryn Stuart to take over one patient's care.  "I told this chick if she would just give her 1 ml of Ativan and turn her she would die," the indictment alleges Harris wrote.

Harris sent another text, saying, "[expletive] woman is still alive ... I need some boots on the ground."

Stuart stayed in contact with Harris, while she gave medicine to the patient. The indictment stated he then sent a text about the need to medicate in order to justify continuous care: "We have very strict guidelines that we must be providing skilled nursing interventions at least ever hour to stay in there."
After the patient died, Stuart texted Harris, and he responded, "Nice work."

The case is being investigated by the FBI, the U.S. Department of Health and Human Services office of inspector general and the Texas attorney general's Medicaid Fraud Control Unit. 

Read the full indictment, which was unsealed on Feb. 28, 2017:

Federal indictment in $60 million Medicare fraud scheme by The Dallas Morning News on Scribd

Full Article & Source:
Frisco couple, 14 others indicted in Medicare hospice scheme that preyed on 'most vulnerable'

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.

Full Article & Source:
Nursing Home Operators Face Over $115M For Medicare Fraud 

Elder Care Company Placed Thousands Of Seniors Into Nursing Homes To Defraud Medicare And Medicaid

The head of more than 30 assisted-living facilities in Florida has been charged for defrauding Medicare and Medicaid of more than $1 billion over the last 14 years — the largest case of health care fraud ever handled by the U.S. Department of Justice.

According to the DOJ’s findings, Esformes Network facilities owner Philip Esformes allegedly placed around 14,000 elderly people in nursing homes and assisted-living facilities, even if they didn’t meet the criteria to enroll. Many of these unqualified patients then received “medically unnecessary services” that staff billed to Medicare and Medicaid. In some cases, prosecutors claimed, Esformes and his “co-conspirators” plied elderly patients with narcotics to force an addiction that would prolong their stay and continue their reliance on Medicare costs.

The fraud didn’t stop outside of Esformes’ facilities. He and other top-level staffers allegedly received financial kickbacks for referring patients to other health care providers in the nearby communities who also forced unnecessary medical treatment on patients to receive federal dollars. These kickbacks were often paid in cash and disguised as charitable donations — and allegedly went toward Esformes’ personal purchases.

“Medicare fraud has infected every facet of our health care system,” said U.S. Attorney Ferrer in a DOJ press release. “As a result of our unrelenting efforts to combat these pernicious schemes, [we will] continue to identify and prosecute the criminals who, driven by greed, steal from a program meant for our aged and infirmed to increase their personal wealth.”

Esformes’ lawyer said he “strongly asserts his innocence” in the case, but his history in smaller courts for similar cases of health care fraud have left the DOJ with little sympathy. The DOJ said Esformes will be held without bail based on his current wealth and criminal history — two factors that make him much more likely to flee the country.

This record-breaking case was brought by the DOJ’s Medicare Fraud Strike Force, which was created in 2007. Cracking down on health care fraud has played a major role in the Obama administration’s effort to reduce wasteful health care costs; several provisions in the Affordable Care Act allocated more funds toward this effort and strengthened penalties for fraud.

The DOJ has recovered nearly $16.5 billion in health care fraud since January 2009 — making almost $8 in financial returns for every dollar spent on fraud investigations. Just last month, the DOJ announced a massive health care fraud sweep charging 301 individuals across 36 federal districts for their role in $900 million in fraudulent medical billing.

Full Article & Source:
Elder Care Company Placed Thousands Of Seniors Into Nursing Homes To Defraud Medicare And Medicaid

Medicare Fraud Case Claims Optum Put Patients in Hospice Care Who Weren't Terminal

A screen capture from Optum Palliative Care's website.

The U.S. Justice Department has decided to join in a federal lawsuit filed by two Colorado whistleblowers; it alleges that a national palliative care provider improperly billed Medicare millions of dollars for hospice services provided to patients who weren't terminally ill. The suit against Optum Palliative and Hospice Care claims that the company offered hefty bonuses to employees who kept the numbers of patients up and fired those who attempted to weed out patients who weren't eligible for hospice benefits.

"Hospice care plays a critical role in our health care system, providing for end-of-life care as opposed to curative life care," said John Walsh, Colorado's U.S. Attorney, in a statement announcing the lawsuit. "When companies overbill Medicare by keeping people in hospice when they don't need to be there, it jeopardizes the important benefit for others under the program."

The Minnesota-based Optum, formerly known as Evercare, operates in eleven states. The lawsuit was originally filed in 2011 by two former employees, Lyssa Towl and Terry Lee Fowler, under the False Claims Act, which allows citizens to sue on behalf of the government to recover funds that were improperly paid. The case was sealed for three years from public view while the feds decided whether to join in the litigation but was finally unsealed late last week.

Towl, at one time the company's executive director for northern Colorado, and Fowler, an RN who became a regional hospice quality manager, claim that up to one-fourth of Evercare's hospice clients at any given time didn't meet the Medicare eligibility requirements. Such care is reserved for patients with a life expectancy of six months or less, but the plaintiffs claim the company billed for patients who suffered from dementia, non-terminal pulmonary problems and other diagnoses such as "failure to thrive" -- and sometimes collected benefits for years. By way of example, the complaint in the lawsuit lists 21 cases involving patients who didn't meet the hospice criteria but generated Optum billings for periods ranging from several months to three years.

Between 2008 and 2010, Towl and Fowler claim, the number of Evercare hospice patients exceeding 180 days of billings rose from 28 percent to 44 percent, suggesting that close to half the cases may have been suffering from something other than a terminal illness and were thus ineligible.  (Continue Reading)

Full Article & Source:
Medicare Fraud Case Claims Optum Put Patients in Hospice Care Who Weren't Terminal