Skilled Nursing Facilities Operator Settles False Claims Case for $21.3M Admits Former Employees Issued Quotas

A skill nursing facilities operator has agreed to pay $21.3 million to settle allegations they billed federal healthcare programs for services that were unreasonable, unnecessary, unskilled or that did not occur as billed.

Between Jan. 1, 2014 and Sept. 30, 2019, Strauss Ventures, doing business as Grand Healthcare System is alleged to have knowingly submitted false claims for rehabilitation therapy for residents at 12 facilities Strauss Ventures owned and operated.

The Settlement Agreement

As part of the false claims settlement, the company admitted that some now-former management level employees implemented quotas that each of the 12 facilities were expected to reach. These treatment quotas related to patients’ lengths of stay and to the percentage of patients billed at the highest reimbursement level.

Quotas Initiated

To meet these quotas, the skilled nursing facilities often scheduled patients to receive therapy without taking into consideration what was reasonable and necessary based on the individual patients’ clinical condition.  In some cases, the company allegedly pressured therapists and patients to complete the planned minutes of therapy even when patients were sick or declined to participate.

Limiting Patient Discharge

The company also directed that no more than three patients be discharged from any facility per week and instructed that no Medicare Part A patients should be discharged from rehabilitation therapy unless it had been discussed with corporate officials. This resulted in some Medicare beneficiaries “staying on therapy longer than was reasonable and medically necessary.”

Unqualified Actors

The company also admitted there were times when supervisory officials, who did not personally evaluate or treat patients, set or adjusted the number of minutes of therapy that a Medicare patient would receive. And there were instances where supervisory personnel falsified the number of therapy minutes in the company’s electronic recordkeeping system or instructed subordinates to do so, well after the therapy allegedly took place, a clear violation of the false claims act.

Medicaid Also Involved

The billings occurred under the Resource Utilization Groups (RUGs) billing system, which was changed in October 2019 to the current Patient Driven Payment Model. Under the RUGs system, reimbursements were based almost entirely upon the levels of therapy a patient received. This resulted in numerous cases of upcoding and suspicious clustering of patients near upper pay thresholds.

Finally, the settlement resolves federal allegations that the company submitted false claims to Medicaid for services rendered at its Pawling, New York, nursing home between Jan. 1, 2016, and June 30, 2021. These claims were allegedly false because the reimbursement rate was inflated by data inaccurately reflecting the degree of care, including rehabilitation therapy services, needed by Medicaid patients there.

Whistleblower Action

The case was initiated by two whistleblowers, Stacey Rosenberger and Kelley Retig, in U.S. District Court in New York pursuant to the qui tam provisions of the False Claims Act. It was formally referred to as United States ex rel. Rosenberger and Retig v. Strauss Ventures, LLC, et al., No. 1:19-cv-1311 (N.D.N.Y.)

The two, who are former rehab providers, will receive more than $4 million for their part in bringing the case to the attention of the federal government. Under the False Claims Act, whistleblowers are entitled to a percentage of settlements.

The Corporate Agreement

In addition to the settlement payment, the company entered into a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG) that requires an independent review organization to annually assess the medical necessity and appropriateness of therapy services billed to Medicare.

How We Can Help

Whistleblower cases are highly complex and require the knowledge and skill of an attorney who has extensive and relevant experience. The Health Law Offices of Anthony C. Vitale is known for its representation of whistleblowers, as well as its ability to defend those who become the target of a whistleblower action. Whether you are a whistleblower or the target of a whistleblower action, our extensive experience and specialized knowledge ensure your case is handled with exceptional skill and care.

For more information, contact us at 305-358-4500 or email info@vitalehealthlaw.com