One of the most alarming forms of healthcare fraud involves the provision of substandard care and the subsequent billing for that care to government programs like Medicare and Medicaid. Under applicable laws, a medical facility or skilled nursing entity can expose itself to False Claims Act liability for failing to meet minimum care standards – which are set forth by the Centers for Medicare and Medicaid Services (CMS) in its various policy manuals. Standards for resident care are also codified in 42 CFR § 483.10, which includes dozens of requirements imposed upon any long-term care facility treating Medicare and Medicaid enrollees. Failure to abide by these standards can not only expose the patient to injury or death, but will undoubtedly expose the facility to liability under the False Claims Act.
Allegations Against Extendicare Health Services, Inc.
Extendicare Health Services (hereinafter, “Extendicare”) and its subsidiary Progressive Step Corporation (hereinafter, “ProStep”) recently agreed to pay $38 million to settle allegations of substandard care and medically unnecessary procedures with regard to Medicaid and Medicare patients in its facilities. The company operates through its subsidiaries, 146 long-term care facilities across 11 states. Its subsidiary ProStep offers physical, speech-language, and occupational therapy services.
According to allegations, 33 of the skilled nursing facilities operated by Extendicare billed Medicare and Medicaid for “materially substandard skilled nursing services” that did not meet federal standards of care and regulatory minimum thresholds. Select examples of substandard care provided by the Department of Justice include:
- Failure to maintain a sufficient number of skilled nursing specialists in order to adequately care for the number of residents;
- Failure to adequately clean and change catheters;
- Failure to prevent pressure ulcers (bed sores);
- Failure to implement safety measure to prevent falls;
- Failure to prevent malnourishment and dehydration;
- Failure to prevent head injuries;
- Development of unnecessary infections requiring hospitalization.
In addition to these allegations, the Department of Justice also asserts that the defendants engaged in a business model designed to maximize profits at the expense of patient care. Particularly, Medicare Part D patients were required to undergo extensive and unnecessary rehabilitation services. In one email, made public as part of the whistleblower lawsuit, a facilities manager rebuked employees after a patient missed a rehabilitation therapy session due to suffering a seizure. The contents of the email include the following language: “Financial loss of 2300 bucks!!!!….We have to step up and make sure that this doesn’t happen again!!!!”
According to the Department of Justice, the settlement with ExtendedCare represents the largest failure of care settlement with a skilled nursing facility in the history of the False Claims Act.
According to Acting Associate Attorney General Stuart F. Delery:
“Our seniors rely on the Medicare and Medicaid programs to provide them with quality care, ensuring that they are treated with dignity and respect when they are most vulnerable….It is critically important that we confront nursing home operators who put their own economic gain ahead of the needs of their residents. Operators who bill Medicare and Medicaid while failing to provide essential services or bill for services so grossly substandard as to be effectively worthless will be pursued for false claims.”
Several state attorneys general commented on the matter, including Ohio Attorney General Mike DeWine:
“This investigation and settlement highlights the importance of leveraging the joint resources and expertise of the states and federal government….Working together allowed us to focus our efforts nationally on protecting the most vulnerable in our population who rely on quality care in our nursing homes.”
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