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Skilled Nursing Facility Resolves Illegal Kickbacks Allegations

Talking-to-Patient-300x186The Department of Justice (DOJ) has recently resolved a case involving the largest settlement of alleged violations of the Anti-Kickback Statute by a skilled nursing facilities company in the United States. The skilled nursing company, Plaza Health Network, and its former president and executive director have agreed to pay $17 million to resolve allegations that the company violated the False Claims Act (FCA) by submitting claims to Medicare and Medicaid for patients that were referred to the company through illegal kickbacks. The whistleblower, who brought the case under the qui tam provisions of the FCA, will receive $4.25 million as his share of the recovery.

Plaza Health Network, formerly known as Hebrew Homes Health Network, allegedly drafted and provided the medical directors with uniform contracts that detailed numerous job duties for the positions.These positions, however, were actually “ghost positions” that did not require the medical directors to perform any work.  The medical directors, however, performed none of the job duties listed in their contracts, but were still paid the previously specified salaries amounting to several thousand dollars monthly, a salary which exceeded fair market value quite significantly. They were being paid for patient referrals to the company’s facilities. The directors were not required to show up for work and did not have to submit timesheets for the hours they supposedly worked. Additionally, the facilities had multiple medical directors at the same time.

The medical directors’ patient referrals increased significantly once the medical director contract and payments began. In fact, according to the whistleblower, up to 70% of admissions to the nursing facility was a result of these referrals by paid medical directors. In addition to hiring these medical directors, the employees of the nursing facility sent emails discussing the kickbacks. The employees, allegedly, recommended via e-mail increasing the salary of various medical directors because of their high number of patient referrals. The e-mail also recommended decreasing the salary of those medical directors who did not produce as many patient referrals. The relator also alleged that Plaza Health submitted false claims to Medicaid and Medicare for therapy services that were never provided or charged an inflated cost. Additionally, Hebrew Homes billed for services rendered by unskilled staff and misrepresented the severity of the nursing facility’s patients’ conditions to allow billing at a higher Resource Utilization Group (URG) category for reimbursement.

The facility was defrauding Medicare and Medicaid programs while paying kickbacks to 55 doctors, which is illegal under federal law. Between 2008 and 2011, the facility, a Miami-Dade County nursing home network, paid $2 million to 11 of the 55 doctors. The whistleblower alleged that the skilled nursing facility defrauded federal healthcare programs from 2006 through 2013 by operating a kickback scheme in which they hired physicians as medical directors under contract. In total, the defendants billed Medicare for almost $130 million between 2008 and 2011, according to the suit.

Plaza Health was founded more than six decades ago as a convalescent home for elderly Jewish people and war veterans. Since then, the company has grown to be a non profit network including eight nursing and rehabilitation centers.The facility provided skilled nursing services at seven rehabilitation and skilled nursing facilities in the Miami area. The whistleblower, Stephen Beaujon, was a former CFO working for the nursing facility. He is a certified public accountant (CPA) and has been in the position of CFO since 2002. He was allegedly demoted for raising concerns about the company’s illegal activities. He claimed that the facility intentionally illegally induced physicians to refer patients to the facility, which violates the Anti-Kickback Statute, which is in place to ensure that a physician’s medical judgement is not compromised by improper financial incentives. According to the relator, the fraudulent scheme was being led by the company’s president, the board of directors and former chairman, Russell Galbut.

According to the FBI, US Attorney’s Office and US Department of Health and Human Services, as part of the settlement agreement, the company’s president, William Zubkoff, agreed to resign from his position in the company, which he had held since January 2006. The company also entered into a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General. On top of that, the facility agreed to change its policies on hiring and maintaining medical directors. Plaza Health has not admitted any liability with the settlement.