LOS ANGELES, CALIFORNIA – A whistleblower lawsuit brought by Phillips & Cohen LLP was the primary basis for a $48 million settlement the federal government announced today with the Ensign Group involving Medicare billing fraud.
The “qui tam” (whistleblower) lawsuit alleged skilled nursing facilities operated by Ensign subsidiaries in California were billing Medicare for treatment of patients that wasn’t actually provided or wasn’t medically necessary. The government also alleged that some patients were admitted for treatment at the nursing homes when they didn’t need to be and that some were kept in the facilities longer than was medically necessary.
“The culture of the company emphasized profits over compliance and patient needs,” said Larry P. Zoglin, a San Francisco whistleblower attorney who is Of Counsel with Phillips & Cohen.
Each facility administrator was required by company management to set what were called “Big Hairy Audacious Goals” for the number of Medicare patients and the amount of Medicare reimbursement per day, according to the whistleblower complaint. When goals were reached, administrators were rewarded with benefits such as all-expense paid trips to Hawaii, Alaska and other vacation spots.
“The goals that administrators were required to set were ‘audacious’ — not because they were overly optimistic but because the company was pressuring administrators to achieve goals that realistically could be met only by cheating Medicare,” attorney Zoglin said.
One way that managers met their “audacious” goals was to offer incentives to rehabilitation therapists and others to achieve high Medicare revenue targets, which the therapists could do only by billing at higher rates than was justified or by extending rehab therapy for longer periods than the patients needed, according to the settlement agreement.
The $48 million settlement resolves both a qui tam lawsuit brought by a former Ensign employee represented by Phillips & Cohen (US et al. v. Ensign Group, Inc., et al., CV06-6956) and a separate whistleblower complaint (US et al. v. Ensign Group, Inc., CV06-0643). Both lawsuits were filed in 2006 in federal district court in Los Angeles and were joined by the government.
“The US Attorney’s Office in Los Angeles did a fantastic job,” said Zoglin. “Assistant US Attorney Howard Daniels, Civil Fraud Investigator Michael Harley and Auditor Fufa Biftu should be commended for their tireless work on this case.”
The settlement covered allegations of fraud at six skilled nursing facilities operated by Ensign subsidiaries:
- Atlantic Memorial Healthcare Associates, Inc., d/b/a Atlantic Memorial Healthcare Center, Long Beach, California.
- Ensign Panorama LLC d/b/a Panorama Gardens, San Fernando Valley, California.
- Ensign Whittier West LLC d/b/a The Orchard Post-Acute Care (aka Royal Court), Whittier, California.
- HB Healthcare Associates LLC d/b/a Sea Cliff Healthcare Center, Huntington Beach, California.
- Southland Management LLC d/b/a Southland Care Center, Norwalk, California.
- Victoria Ventura Healthcare LLC d/b/a Victoria Care Center, Ventura, California.
The qui tam lawsuits were filed under the False Claims Act, which encourages private citizens to sue the companies that are committing fraud against the government. If the government joins the case, whistleblowers receive a reward of 15 percent to 25 percent of the recovery.
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