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| The FBI, treasury and other law enforcement officers conduct an investigation at the Carmel home of then-American Senior Communities CEO James Burkhart in 2015. (IndyStar Photo Charlie Nye) |
After the FBI raided the office and Carmel home of then-American Senior Communities CEO James Burkhart in 2015, Burkhart and four associates were charged. They pleaded guilty in 2017.
Federal prosecutors said the five men set up shell companies to inflate costs and pay themselves kickbacks on vendor contracts for landscaping, food, medical supplies and more. In all, $19 million was stolen, prosecutors said.
Health & Hospital Corp. of Marion County, the county’s public health agency and owner of the homes managed by ASC, recovered $15.5 million and says it was “made whole.”
But there’s more to the story. Here’s what you need to know:
Company launched secret investigation
After the FBI raided Burkhart’s office and home, American Senior Communities quietly hired a team of Chicago attorneys that included former federal prosecutors.
What the public never knew was that ASC’s internal investigation turned up far more fraud allegations. IndyStar obtained a copy of the company’s confidential 277-page presentation to federal prosecutors, which was produced in 2016. It describes more than half a dozen schemes that were not included in the criminal case and identifies 20 alleged conspirators or “key players” who were never prosecuted. It also estimates far greater losses of at least $35 million.
ASC would not comment on its investigation. The office of U.S. Attorney Josh Minkler also declined to comment.
Alleged participants included Indiana Attorney General’s relative
Among those identified in ASC’s internal investigation was Rob New, a former Fishers businessman who coached boys basketball at Scecina Memorial High School. The company’s analysis claimed he participated in alleged schemes that resulted in millions of dollars in losses. And in court filings last year in its civil lawsuit against Burkhart, the company again accused New of participating in fraud schemes with Burkhart. New is not a defendant in the case.
New has never been charged with a crime. He denies any wrongdoing and his attorney called the allegations in the lawsuit against Burkhart “meritless and spurious.” Last year, New sold his Fishers mansion for $3 million to NBA star Gordon Hayward and now lives in a luxury high-rise condo near the beach in Naples, Florida.
Another person named in the company’s investigation is Gretchen Zoeller, the cousin of then-Indiana Attorney General Greg Zoeller. His agency was part of the criminal investigation and he accompanied prosecutors when charges against Burkhart and others were announced. He told IndyStar he was unaware his cousin was involved in the nursing home scandal at the time.
ASC is now suing Gretchen Zoeller for her alleged role in the schemes. She, too, has not been charged with a crime, and denies participating in any fraud.
Public agency quietly settled fraud claims
Although the nursing home buildings are privately owned, and managed under contract by ASC, the businesses are technically owned by Marion County’s public health agency and funded mostly with Medicaid and Medicare tax dollars.
The leader of that agency, the Health & Hospital Corp. of Marion County, is Matthew Gutwein. He knew about the findings from ASC’s internal investigation but quietly signed an agreement with the company in 2017 that allowed it to keep operating the homes.
The agreement, which was never publicly announced, recovered only $15.5 million — far short of the estimated losses identified in ASC’s own investigation. It also contains several secrecy provisions that helped keep a lid on the suspected scope of the fraud, IndyStar found.
A lawyer for HHC defended the deal, arguing that it made the government whole and outweighed the cost and uncertainty of additional litigation. HHC said ASC’s secret report was preliminary and the estimated losses it claimed were inflated because not every allegation could be substantiated.
Concerns about federal money loomed over fraud case
Gutwein’s decision to quickly settle the fraud allegations came at a time when he was deeply concerned that the scandal could threaten a much larger source of money for his agency.
As IndyStar reported in March, HHC and more than 20 other county hospitals across Indiana have bought up nearly every nursing home in the state, at least on paper, to take advantage of a program that provides extra Medicaid funds to government-owned facilities. The money is intended to provide care for vulnerable nursing home residents, but HHC and others exploited rules that allowed them to legally divert much of it to their hospitals instead, leaving Indiana with the worst elder care system in America, according to AARP.
The fraud case represented a major threat to the program, which provides about $180 million a year for HHC. In a victim impact statement, Gutwein wrote, “just as fraud and abuse erode the public’s trust, they can also affect the views of legislators and policymakers who, in response, could choose to cut back or even eliminate the federal supplemental program.”
HHC said its decision to settle with ASC had nothing to do with protecting the lucrative Medicaid funds. “Any suggestion that HHC chose to settle with ASC to avoid scrutiny is both offensive and meritless,” HHC said in a statement.
Public left in the dark
ASC has settled outside of court with at least five individuals or companies it suspected of fraud. But because of its agreement with the county agency, those settlement agreements — including the amount of money recovered — remain a secret.
As a result, the public may never know how much taxpayer money was recovered.
Meanwhile, HHC continues to do business with at least one of the people identified in ASC’s investigation. The agency pays New about $5.5 million a year to lease nine nursing homes and an assisted living facility.
Full Article & Source:
Investigation finds massive fraud in Indiana nursing home industry
