Nursing Home Chain Agrees to Pay $11.2 Million to Resolve False Claims Act Allegations

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Nursing Home Chain Agrees to Pay $11.2 Million to Resolve False Claims Act Allegations 

On May 21, 2021, SavaSeniorCare LLC and several of its affiliates, which own and operate skilled nursing facilities across the country, agreed to pay $11.2 million to resolve claims that the companies billed Medicare for rehabilitation therapy services that were not reasonable or necessary. Sava also resolved allegations that it billed Medicare and Medicaid for grossly substandard nursing care.

The government filed a consolidated False Claims Act complaint against Sava in 2015, alleging the nursing home chain submitted false claims for therapy services in a systematic effort to increase its Medicare billing. The government contended, among other claims, that Sava pressured its skilled nursing facilities to meet unattainable financial targets that resulted in billing for unnecessary services and delaying discharging patients who did not need further care. According to the government, the financial targets were allegedly set at the highest Medicare reimbursement rate without any relationship to the patients’ clinical needs.

Additionally, the government alleged that Sava knowingly submitted false claims to the Medicare and Medicaid programs for grossly substandard—or even worthless—skilled nursing services. The government further claimed Sava did not have appropriate staffing at certain facilities to meet residents’ needs and failed to follow medical protocols.

Pursuant to the settlement with the United States and participating states, Sava agreed to pay approximately $11.2 million, plus additional amounts if certain financial contingencies occur. Sava also entered into a five year Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General. The settlement also requires Sava to engage an Independent Monitor to review its resident care.

Read more in the DOJ’s press release. Additional information can be found here.

Healthcare Company and Founder Charged with Multimillion-Dollar Fraud

Last week, the Securities and Exchange Commission charged Premier Healthcare Solution, LLC, a New Jersey-based healthcare company, and its founder with violating the antifraud provisions of the federal securities laws. 

The SEC alleges that Premier and its founder have been raising funds from investors by selling membership interests in Premier since 2017. The healthcare company purportedly offers employers a supplemental medical reimbursement plan, but the SEC claims the plan consists of a tax-exempt healthcare-related contribution from the employee to Premier, a loan from a lender to repay the employee’s contribution, and an insurance policy obtained by Premier payable at the employee’s death to repay the loan. According to the SEC, Premier and its founder told investors that the company had secured a bank loan which was necessary for its business plan. In reality, however, the business had not received the loan. The company and its founder also allegedly made misrepresentations that the business model was patent-pending or patented when its applications to the U.S. Patent and Trademark Office had actually been repeatedly denied. Finally, the government contends the founder, who has felony convictions and a history of regulatory violations, deceived investors when he failed to disclose his prior criminal history.

According to the SEC, Premier and its founder fraudulently raised nearly $4 million from over 130 investors across the country. The SEC is seeking disgorgement of the ill-gotten gains with prejudgment interest, civil penalties, and permanent injunctive relief.

The SEC’s press release and the complaint are available online.

Watchdog Report Concludes Department of Defense's Use of $1B COVID-19 Relief Fund Complied with Law

Last week, the U.S. Department of Defense  Office of Inspector General found that the DOD’s use of a $1 billion COVID-19 relief fund complied with the Defense Production Act and other regulations.

Congress originally provided the funding, which was part of the COVID-19 relief bill, to the DOD to increase the Defense Industrial Base (“DIB”) manufacturing capacity. The DOD allocated $100 million to offer loans under the DPA, which gives the president and agencies authority to address domestic industry issues for supporting the national defense as they deem necessary. Another $213 million was allocated to medical supplies and equipment. The remaining funds—$687 million—were used to offset financial distress within the DIB.

The department’s quick use of the funds was rebuked by lawmakers and the OIG was asked to launch a probe in September 2020. The lawmakers suggested the $1 billion was meant to bolster domestic supplies of medical and personal protective equipment and not for defense contractors. The OIG “Audit of the DoD Coronavirus Aid, Relief, and Economic Security Act Awards to the Defense Industrial Base” concluded that the DPA is not limited to increasing manufacturing capacity but can be used to sustain the Defense Industrial Base. The OIG reviewed the highest-value awards from six designed defense industrial base sectors and determined they fell within the sustainment authority of the DPA. According to the OIG, the sample of the six funding agreements also showed that the DOD had employed appropriate vetting for the deals.

The OIG’s “Audit of the DoD Coronavirus Aid, Relief, and Economic Security Act Awards to the Defense Industrial Base” is available online.  Additional reporting can be found here.