Three Whistleblowers Share $3 Million Award After Exposing Medicare Fraud at Longwood’s Skilled Nursing Facilities in California

California-headquartered Longwood Management Corporation and a large number of its affiliates have agreed to pay $16.7 million to settle Medicare fraud claims. Longwood’s alleged violations were brought to light by three whistleblowers, Judy Boyce, Benjamin Monsod, and Keith Pennetti, who will now share a $3 million award.  

Three Whistleblowers Share $3 Million Award After Exposing Medicare Fraud at Longwood’s Skilled Nursing Facilities in California

Longwood operates numerous skilled nursing facilities (SNFs) across California. According to two separate whistleblower lawsuits, over a period of nearly eight years, Boyce, Monsod, and Pennetti observed how the company pressured rehabilitation therapy specialists to bill the therapies they administered at the highest level of Medicare reimbursement.

Whistleblowers Expose Medicare Fraud

Between January of 2010 and April of 2012, Benjamin Monsod was a nurse assessment coordinator at Longwood’s Montrose Healthcare Center. In this position, also known as MDS coordinator, he was charged with designing care plans for residents; a task that likely allowed him to detect fraudulent billings based on inappropriate care plans and unnecessary rehabilitation therapy sessions.

According to the lawsuit filed by Monsod and Boyce, "Through his employment at the Montrose facility, Mr. Monsod gained first-hand knowledge of the fraudulent scheme." Monsod is currently an MDS at the Casitas Care Center, a California-based SNF.

A Kansas, resident, whistleblower Judy Boyce worked at the Golden Living Center in Cottonwood Falls, Kansas, between 2004 and 2010, first as a Social Service Director and later as the facility’s Executive Director. 

The Cottonwood Falls Golden Living Center is owned by Aegis, a company that is also a defendant in the lawsuit. Aegis provides skilled nursing services for many Longwood operated facilities. According to the Boyce-Monsod lawsuit, "Through her employment at the Cottonwood Falls facility, Ms. Boyce gained first-hand knowledge of the fraud."

Whistleblower Keith Pennetti has been the Director of Operations for California at RPM Rehab since 2012. A physical therapist by training, Pennetti was described by one of his employers as "an industry leader in rehabilitative medicine for over 20 years," and an expert in "compliance training." Undoubtedly, Mr. Pennetti, was also in an ideal position to detect fraudulent behavior by the defendants. 

Fraudulent Medicare Billings by Skilled Nursing Facilities

One of the most common forms of billing fraud in the healthcare sector is called "upcoding." It involves selecting inappropriate service codes when billing Medicare, in order to maximize reimbursements. Skilled nursing facilities also engage in fraudulent misconduct when they inappropriately categorize patients as requiring the highest level of rehabilitation therapy. In these cases, Medicare reimburses skilled nursing providers at the highest rate based on a fixed amount per patient, per day.  

According to Boyce, Pennetti, and Monsod, Longwood and its affiliates set high Medicare revenue targets in their business plans, pressuring therapists to systematically bill Medicare at the highest rate even when patients did not require such frequent and complex therapy services.   

RUG Categories 

Medicare bills rehabilitation therapy services provided by SNFs based on something called "RUG" levels. There are seven basic RUG categories, each with a different payment rate. 

These are:

  • Special Care
  • Rehabilitation
  • Reduced Physical Function
  • Impaired Cognition
  • Extensive Services
  • Clinically Complex
  • Behavior Problems

According to the Boyd-Monsod complaint, the defendants "have inverted the proper methodology for determining RUG levels. Rather than a therapist assessing a patient and determining the appropriate amount of therapy, Defendants begin by asking themselves what RUG level would be most profitable to them, then take steps to shoehorn patients into those RUG levels, either by performing therapy that is not needed, or by couching certain activities as ‘therapy' when they plainly are not."

Longwood, GGNSC Holdings, and Aegis, the plaintiffs wrote, "conspired to. . . defraud Medicare by billing for ‘therapy’ that was not provided, and by billing for therapy that was not medically necessary," and "engaged in this scheme both to enrich themselves directly and to further Aegis’s efforts to win contracts with other SNFs. 

Indeed, Aegis’s marketing program explicitly focuses on its ability to increase Medicare payments to participating SNFs." The whistleblowers also stated that the defendants' fraud "emanates from their headquarters and percolates through their companies to the therapists, who are low-level, hourly employees." 

The U.S. Attorney for the Central District of California, Nick Hanna, said in a statement that the case against Longwood was an example of “the power of whistleblowers to shine a light on improper business practices and obtain significant recoveries on behalf of United States taxpayers.”

Longwood Skilled Nursing Facilities and Affiliates Mentioned in The Lawsuit

Between 2006 and 2016, prosecutors said, Longwood and its affiliates defrauded Medicare by submitting false claims for payment triggered by services provided at the following skilled nursing facilities:

  • Whittier Pacific Care Center
  • Western Convalescent Hospital Alameda Care Center
  • West Hills Health & Rehab Center
  • View Park Convalescent Center
  • Sunnyview Care Center
  • Studio City Rehabilitation Center
  • Sherman Oaks Health & Rehab Center
  • San Gabriel Convalescent Center
  • Pico Rivera Healthcare Center
  • Park Anaheim Healthcare Center
  • Montrose Healthcare Center
  • Montrose Healthcare Center
  • Monterey Care Center
  • Magnolia Gardens Convalescent Hospital
  • Longwood Manor Convalescent Hospital
  • Live Oak Rehabilitation Center
  • Laurel Convalescent Hospital
  • Intercommunity Healthcare Center
  • Imperial Crest Health Care Center
  • Imperial Care Center
  • Green Acres Lodge
  • Crenshaw Nursing Home
  • Covina Rehabilitation Center
  • Colonial Care Center
  • Chino Valley Rehabilitation Center LLC
  • Burlington Convalescent Hospital
  • Burbank Rehabilitation Center

The settlement, which implies no admission of guilt, is accompanied by a corporate integrity agreement, which establishes that the SNFs Medicare billings will be closely monitored over the next five years. 

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