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From Health Law Daily, October 14, 2014

Precedent-setting $38 million failure of care settlement announced

By Harold M. Bishop, JD

The resolution of the largest failure of care settlement with a chain-wide skilled nursing facility (SNF) in the history of the Department of Justice (DOJ) has been announced by the DOJ and the HHS Office of Inspector General (HHS-OIG). According to Acting Assistant Attorney General Joyce R. Branda, “The agreement is groundbreaking not only because of the size of the quality of care settlement, but also because of the innovative nature of this chain-wide corporate integrity agreement which focuses on remedying the wrongs that the Extendicare team uncovered.”

Richard P. Kusserow, HHS Inspector General for 11 years, and CEO of Strategic Management Services, LLC (SM) believes that “This case is particularly significant in the fact that the fraud charges resolved by the settlement were for billing for sub-standard care. It helps set precedents for taking actions against other providers who provide services whose services did not measure up to quality of care standards. The DOJ allegations focused on the fact that Medicare and Medicaid were billed for materially substandard nursing services. They alleged that the services were so deficient that they were effectively worthless and billed Medicare for medically unreasonable and unnecessary rehabilitation therapy services, meaning the claims were in fact false and fraudulent.”

Settlement. Under the settlement, Extendicare Health Services Inc. (Extendicare), an operator of 146 SNFs in 11 states, and its subsidiary Progressive Step Corporation (ProStep), a provider of physical, speech, and occupational rehabilitation services, have agreed to pay $38 million to the United States and eight states to resolve allegations that between 2007 and 2013, in 33 of its SNFs in eight states, Extendicare billed Medicare and Medicaid for materially substandard nursing services that were so deficient that they were effectively worthless and billed Medicare for medically unreasonable and unnecessary rehabilitation therapy services. The claims resolved by the settlement are only allegations and there has been no determination of liability. As a result of the settlement, the federal government will receive $32.3 million and eight state Medicaid programs, including Indiana, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, Washington and Wisconsin will share $5.7 million.

Government allegations. The government specifically alleged that Extendicare failed to have a sufficient number of skilled nurses to adequately care for its skilled nursing residents, failed to provide adequate catheter care to some of the residents, and failed to follow the appropriate protocols to prevent pressure ulcers or falls. According to Branda, “As a result of these pervasive problems, the investigation identified many disturbing examples of falls, fractures and head injuries to residents – often unnoticed by the staff for hours – as well as malnutrition, dehydration, pressure ulcers and infections – some of which required amputations and unnecessary hospitalizations.” The government also alleged that Extendicare provided medically unreasonable and unnecessary rehabilitation therapy services to its Medicare Part A beneficiaries so that it could bill Medicare for those patients at the highest per diem rate possible.

Corporate integrity agreement. In addition, as part of the settlement, Extendicare and ProStep are required to enter into a five-year chain-wide corporate integrity agreement (CIA).The CIA will require Extendicare to have a comprehensive compliance program with systems to address the quality of resident care. Extendicare’s compliance program must include corporate-level committees to address compliance and quality, including a committee to assess staffing, and an internal audit program to assess the quality of care provided to its residents. Extendicare must retain an independent monitor, selected by the OIG, who will regularly visit Extendicare’s facilities and report to the OIG.In addition, an independent review organization will perform annual reviews of Extendicare’s claims to Medicare.

Investigation. The United States began investigating Extendicare as part of the Elder Justice Initiative, a DOJ effort to proactively monitor the quality of care provided by the largest nursing home chains in the country. The investigation also included the claims of two relators who brought separate cases under the False Claims Act against Extendicare. Under the settlement, relator Tracy Lovvron will receive more than $1.8 million as her share of the recovery and relator Donald Gallick will receive more than $250,000.

Companies: Strategic Management Services, LLC

MainStory: TopStory NewsStory ComplianceNews ReimbursementNews CMSNews CMPNews CoPNews CorporateNews EnforcementNews FCANews PaymentNews PartANews QualityNews SNFNews

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