Insurancejournal.com, June 18, 2021
A civil healthcare fraud lawsuit against 11 New York-based skilled nursing facilities alleges that they fraudulently inflated Medicare reimbursements by prolonging patient stays without regard to patients’ medical needs. The suit also alleges these facilities billed for excessive rehabilitation therapy that patients did not need. The lawsuit seeks damages and civil penalties under the False Claims Act.
The complaint alleges that, from at least January 2010 through September 2019, the defendants kept patients at the facilities longer than necessary to maximize Medicare bills for patient stays. During those stays, the facilities put patients on higher levels of rehabilitation therapy than necessary based on their clinical needs in order to bill Medicare at the highest rate.
Issac Laufer, who is a part owner of 10 of the 11 facilities and operates all 11 through Paragon Management SNF LLC, and Tami Whitney, the coordinator of rehabilitation services for the facilities, instructed and pressured staff to engage in these fraudulent practices, the lawsuit alleges.
As a result, according to the complaint, the facilities submitted false claims for unnecessary rehabilitation services that, in some cases, did not involve the provision of skilled therapy. In some instances, the complaint alleges that the facilities intentionally limited patients’ progress to create the appearance of a continued need for services. In one instance, Whitney reported to Laufer that the facilities should not allow patients to go to the bathroom by themselves because they would then “think they are ready to go home,” the complaint says.
Specifically, Whitney tracked the length of stay for each Medicare patient and expected staff at the facilities to justify discharges scheduled to take place before the patient’s stay approached 100 days—the maximum compensable by Medicare, the complaint says. Together with management at the facilities, Whitney devised strategies for extending patient stays, including giving patients unnecessary tests to gauge their balance proficiency at the point they were ready for discharge to create a pretext for extending their stays.
Whitney reported on the success of these “discharge prevention” measures to Laufer, noting both areas where these measures succeeded and those where the facilities had to work harder to prolong patient stays, such as for patients who were “younger and smarter” or “high level.” Laufer, in turn, received daily updates from the facilities reporting the number of Medicare patients who had been discharged, and, on a number of occasions, instructed Whitney to curb discharges, the complaint says.
Whitney, with Laufer’s knowledge, also instructed the facilities to provide virtually all Medicare patients with therapy at the highest billing level, without regard to the patients’ needs or whether, due to their conditions, they could benefit from this intense therapy. To qualify for that level, a patient must receive at least 720 minutes of skilled therapy services per week, the complaint says.
During the relevant period, the facilities were significant outliers compared to other skilled nursing facilities with respect to Medicare patients’ average length of stay and levels of rehabilitation therapy. These practices resulted in the facilities submitting claims to Medicare for rehabilitation therapy that was not reasonable or necessary, was billed at a higher rate than appropriate or did not involve the provision of skilled services and, accordingly, were ineligible for payment, the complaint adds.
In addition, the facilities made or used false statements and records that were material to false claims submitted to Medicare for payment for rehabilitation therapy that was unreasonable, unnecessary or unskilled, the lawsuit says. The government intervened in a private whistleblower lawsuit before the Honorable Cathy Seibel that had previously been filed under seal pursuant to the False Claims Act.
The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorneys Jacob Bergman and Rachael Doud are in charge of the case. Article