DOJ to Pursue Criminal Charges in False Claims Act Cases Against Nursing Homes

The Department of Justice will soon embark on a plan to pursue criminal charges in False Claims Act cases involving nursing homes, Bloomberg Law reported Monday, as the federal government attempts to crack down on bad actors in the space.

“We need to go after cases civilly because they a [sic] providing grossly substandard care and, in the appropriate case, refer it for a parallel criminal prosecution,” associate deputy attorney general Toni Bacon told the publication. “As America’s aging, it’s becoming a larger problem and we need to be able on the federal side to identify who is the worst of the worst.”

The federal government has routinely gone after skilled nursing facilities for civil penalties under the False Claims Act, which governs the conduct of private companies that do business with Medicare, Medicaid, and other public health care funding sources. These cases typically involve fraud, such as the provision of unnecessary therapy services in an attempt to boost reimbursements, or instances of substandard care, Bloomberg observed.


For instance, just this past week, the Department of Justice reached an $8.5 million settlement with a diagnostics company accused of soliciting illegal kickbacks from skilled nursing facilities in violation of the False Claims Act. In June, a quartet of SNFs and a physical therapy provider agreed to pay $9.7 million to settle charges that they had conspired to “upcode” patients into inappropriately high therapy groups.

These settlements are usually civil matters with no criminal component; by paying the federal government and dealing with public discussion of their alleged misdeeds, the companies involved in FCA settlements are generally absolved of any further liability.

In fact, the DOJ’s own press releases announcing the deals often take pains to note that any misdeeds that the government described remain only allegations, and the companies themselves are not formally admitting guilt by paying the settlement cash.


In fact, some companies vocally dispute the government’s claims even while forking over settlements: A leader at Clear Choice Health Care, an operator involved in a $1.5 million total settlement to resolve a FCA kickback case in January, told SNN at the time that it disputed the allegations but “determined that it would be less disruptive to its business and its patients to negotiate a settlement with the government.”

But proposed push from the Department of Justice — an extension of its Elder Justice Initiative — could complicate matters by putting criminal charges such as wire fraud and health care fraud on the table for reimbursement fraud cases, Bloomberg Law reported.

The publication pointed to recent embezzlement, wire fraud, and health care fraud charges brought against a Connecticut woman accused of stealing money from nursing home residents’ bank accounts; a federal court also recently sentenced Philip Esformes, the mastermind behind a $1.3 billion nursing home fraud scheme described by DOJ as the largest in history, to 20 years in prison on a variety of counts.

The American Health Care Association pushed back on the theory that criminal charges will improve resident care, however, when reached by Bloomberg Law.

“Criminalizing poor quality is not the answer,” AHCA senior vice president of quality and regulatory affairs David Gifford told the publication in a statement.

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