Nursing Home Chain Agrees to Pay Record Amount to Settle False Claims Allegations

by Paul Mandelkern

Extendicare Health Services, Inc., which operates 146 skilled nursing facilities in eleven states, agreed in October to pay $38 million to the United States and eight states to resolve allegations that it billed Medicare and Medicaid for substandard nursing services that were so deficient they were effectively worthless and that it billed Medicare for medically unnecessary rehabilitation therapy services. According to the United States Department of Justice this is the largest settlement amount paid by a chain-wide skilled nursing facility in a worthless services case.

As part of the settlement, Extendicare is also required to enter into a five year chain-wide Corporate Integrity Agreement with the United States Department of Health and Human Services Office of Inspector General (OIG). Under the Corporate Integrity Agreement Extendicare must establish a comprehensive compliance program that includes, among other things, corporate level committees to address compliance and quality, including audit programs to assess the quality of care provided to its residents; retain an independent monitor, selected by the OIG, who will regularly visit Extendicare’s facilities and report to the OIG; and be subject to an independent review organization will perform annual reviews of Extendicare’s claims to Medicare.

In its press release, the Department of Justice stated that it began investigating Extendicare because, based upon available federal and state survey data, it identified Extendicare as a national chain where the care rendered to residents appeared to be well below that provided by its peers in the industry. The Department of Justice also investigated two separate complaints filed by whistleblowers against Extendicare alleging violations of the federal False Claims Act.

Based on its investigation, the Department of Justice alleged that between 2007 and 2013 Extendicare failed to have a sufficient number of skilled nurses to adequately care for its residents; failed to provide adequate catheter care to some of its residents; failed to follow appropriate protocols to prevent pressure ulcers and falls; and failed in some cases to safely administer medication. The Department of Justice also alleged that Extendicare charged Medicare for unreasonable and unnecessary rehabilitation therapy services, particularly during the seven day assessment period afforded to each patient.

According to Acting Assistant Attorney General, Joyce R. Branda, “Our team’s investigation revealed that Extendicare inappropriately admitted very sick residents without the ability to provide adequate care for them. The result was that the short-term residents did not get the minimum skilled care that they needed and Extendicare’s long-term care residents were often ignored.”

Extendicare, in its press release, denied engaging in any illegal conduct, and it said that it agreed to the final settlement without any admission of wrongdoing.

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