Consumer Fraud

Nursing home giant settles fraud allegations for $38 million

One of the largest nursing home chains in the United States has agreed to pay the federal government $38 million to settle False Claims Act allegations that it routinely billed Medicare for “substandard” and “worthless” patient care services and therapy services that were medically unnecessary or unreasonable, the Justice Department announced Friday.

The settlement between the federal government and Extendicare Health Services, which operates 146 facilities in 11 states, is the largest False Claims Act settlement involving “failure of care” allegations the Justice Department has ever reached with a nursing home company.

“Protecting this nation’s vulnerable populations – including our seniors – has been, and continues to be, one of this department’s highest priorities,” Acting Associate Attorney General Stuart Delery said in a statement. “As more and more seniors rely on nursing homes for care, it becomes increasingly important for us to ensure that they receive the services they need.”

As part of the resolution, Extendicare will also enter into a five year chain-wide corporate integrity agreement with the U.S. Department of Health and Human Services (HHS). The Justice Department said this agreement will contain innovative staffing requirements designed to safeguard against this type of fraud from reoccurring in the future.

The Justice Department said that it has redoubled its efforts in cracking down on abuse, neglect, and financial exploitation of the elderly and other vulnerable citizens. The federal government’s push to raise public awareness of elder abuse in recent years has included funding research, developing training materials for elder abuse prosecutors, and launching campaigns to raise public awareness of the problem.

When health care providers bill taxpayer-funded programs such as Medicare and Medicaid for medical services that are substandard or were never performed, they make false claims to these programs for compensation.

In 2009, the Justice Department and the Department of Health and Human Services joined forces to create the Health Care Fraud Prevention and Enforcement Action Team initiative, which investigates and pursues fraudulent health care providers, including physicians, hospitals, home health care and hospice providers, pharmaceutical companies, and pharmacy benefit management companies.

The federal government has also beefed up protections and incentives for potential whistleblowers, who often serve as the eyes and ears of justice within a company. Under the qui tam provisions of the False Claims Act, private citizens can sue on behalf of the government for the recovery of funds fraudulently taken from federal programs and agencies.

Whistleblowers whose cases result in a recovery of funds are rewarded up to 30 percent of the amount recovered. Since 2009, the government was recouped more than $14 billion in cases involving health care fraud.


The U.S. Department of Justice