Guardian Elder Care Will Pay $15.4 Million to Resolve Allegations of Medicare Fraud - Whistleblowers Will Receive $2.8 Million

Guardian Elder Care Holdings Inc. and a list of related entities, including Guardian LTC Management and Guardian Rehabilitation Services (collectively, Guardian), have agreed to pay $15.4 million to settle a False Claims Act lawsuit. According to the complaint, Guardian billed government healthcare programs for medically unnecessary services. The company allegedly defrauded both Medicare and the Federal Employees Health Benefits Program. 

Guardian Elder Care Will Pay $15.4 Million to Resolve Allegations of Medicare Fraud - Whistleblowers Will Receive $2.8 Million

Pennsylvania-headquartered Guardian operates over 50 nursing facilities in Pennsylvania, Ohio, and West Virginia. According to the whistleblower lawsuit filed by two rehab managers who worked at a Guardian facility in Carlisle, Guardian caused some of its facilities in all three states to bill the government for medically unnecessary services, at the highest level of Medicare reimbursement, solely to maximize profits.

The whistleblower complaint resolved by the $15.4 million settlement was filed under the False Claims Act (“FCA”). Under the FCA, whistleblowers with original information about a fraud can come forward and become eligible for an award ranging between 10 and 30 percent of any resulting recovery. The two whistleblowers in this case, Philippa Krauss and Julie White, will share a $2.8 million award.

Medicare pays skilled nursing facilities a set daily rate per qualifying patient based on the level of rehabilitation they require. The highest reimbursement level is known as “Resource Utilization Group” (“RUG”), and the type of therapy required is known as “Rehab Ultra High” (“RU”). A patient requiring RU must receive at least 720 minutes per week of two or more skilled therapy disciplines. Only the most clinically complex patients are in this category. 

There is another score that influences the reimbursement level. “In addition to reflecting a patient’s rehabilitation therapy needs,” the lawsuit states, “each RUG also reflects the patient’s ability to perform certain activities of daily living (“ADL”), like eating, bathing, toileting, bed mobility and transfers (e.g., from a bed to a chair). A patient’s ADL score (ranging from A to C) reflects his or her dependency level when performing an ADL.”

According to the DOJ, between 2011 and 2017, Guardian routinely billed Medicare at the highest level for patients who did not require Rehab Ultra High. The whistleblower lawsuit states that “Guardian pressured [whistleblowers] Philippa Krauss and Julie White and their staff to: 

  1. “inflate the RUG levels; 
  2. “maximize the number of days it billed to Medicare at the RU level, regardless of medical necessity; 
  3. “increase average lengths of stay; 
  4. “plan the minimum number of minutes of therapy required to bill at the highest reimbursement level while discouraging the provision of therapy in amounts beyond that minimum threshold, despite the Medicare requirement that the amount of care provided be determined by patients’ clinical needs; 
  5. “arbitrarily shift the number of minutes of planned therapy between different therapy disciplines to ensure targeted reimbursement levels were achieved; 
  6. “report that time spent on initial evaluations was therapy or education time in order to avoid the Medicare prohibition on counting initial evaluation time as reimbursable therapy time; 
  7. “inflate the ADL levels; 
  8. “report that time spent providing unskilled palliative care was time spent on reimbursable skilled therapy and 
  9. “artificially increase the number of therapy units under Medicare Part B without regard to medical necessity.” 

Upon the announcement of the settlement, U.S. Attorney for the Eastern District of Pennsylvania William M. McSwain stated that “Too much rehabilitation therapy can actually harm patients, just like giving them too many pills or too much medicine. And, of course, it harms taxpayers who foot the bill for unnecessary treatment.” McSwain also thanked whistleblowers Krauss and White “for their role in bringing this alleged scheme to light.”   

The Department of Justice’s Elder Justice and Nursing Home Initiative played an active role in the investigation into the alleged scheme. The DOJ’s Assistant Attorney General, Civil Division, Jody Hunt, said in a statement, “Seniors rely on the Medicare program to provide them with appropriate care, and to ensure that they are treated with dignity and respect.” 

Hunt also made it clear that the DOJ is currently targeting fraud perpetrated by nursing home operators, “The department will not tolerate nursing home operators that put their own economic gain ahead of the needs of their residents, and will continue to hold accountable those operators who bill Medicare for unnecessary rehabilitation services.”  

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