Skilled Nursing Provider Haunted by Problems of the Past When Taking Over from Troubled Tenants

When Lantis Enterprises, Inc., a South Dakota health care management firm, took over certain properties from the bankrupt Welcov Healthcare on September 1, 2018, the operators didn’t expect that a prior fraud claim — based on allegations of excessive and improper Medicare billing dating back to 2012 — would haunt their company name and potential for new business.

Welcov was officially forced into an involuntary Chapter 7 bankruptcy in February. Lantis, longtime family managers of the properties, have since taken back control of the facilities, adding the word “Kismet” plus the facility location to some of their legal names.

But because federal lawsuits can take several years from the initial investigation to the courtroom — combined with recent name changes to the LLCs associated with the facilities — confusion arose when area news outlets began reporting on home health fraud charges related to Welcov and its affiliates that allegedly occurred from 2012 to 2015.

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Wendy Soulek, COO of the Spearfish, S.D.-based Lantis, told SNN that the recent news assumes a current Welcov connection to Lantis’s skilled nursing facilities, which serve more than 900 residents — a mistake she says is dissuading potential residents and impacting staff morale.

“The negative press is killing us by hurting our reputation,” Soulek said. “Family members are saying, ‘I’m admitting my mom and dad somewhere else. I’m not going to you, and your people need to be punished.'”

Lantis had initially exited the operations side of the skilled nursing business in 2012, transferring control of the properties to Welcov. But based on its family history of operating in the sector and connection to the facilities, management seized the opportunity to jump back into operations when Welcov ran into financial trouble; Lantis today operates 39 long-term care, home health, and assisted living entities.

Soulek said that Welcov had harmed the buildings that her family had taken care of for 40 years. She had an option to rebuild the business, or sell and “let someone else try.”

Soulek and her family elected to rebuild. But the recent reports, according to attorney Craig Sieverding, failed to accurately account for the lawsuit’s timeline and the current management picture. Additionally, only home health LLCss were targeted in the suit — not the institutional skilled nursing component.

“The media lumped everything together, and then people assumed that all the entities were skilled nursing facilities that were charged with fraud,” said Sieverding, an attorney at the Davis Brown Law Firm who represents Lantis.

Lantis has provided talking points for employees to use when fielding questions from the community: “We are happy and proud to serve our residents and clients. The issue was prior to our ownership change on September 1, 2018. The report concerned a separate provider, Welcov Healthcare, LLC., who is unaffiliated with us. We strive for compliance and we look forward to continuing to serve you.”

Home health headaches

The federal government earlier this month accused several former Welcov-affiliated entities — Sergeant Bluff Healthcare, LLC; Red Oak Healthcare, LLC; Logan Healthcare, LLC; Elk Point Healthcare #1, LLC; and Flandreau Healthcare 2, LLC — of having “presented false certifications or false or fraudulent claims to Medicare in order to obtain millions of dollars in reimbursement” from January 2012 through December of 2015. Those allegedly false claims were related to services that were “not medically necessary and did not meet the Medicare rules” for reimbursement of home health care, according to the legal filing.

The government initially filed its claim on October 1, and a judge two weeks later approved an order for the LLCs to pay back $3.1 million in reimbursements; an attorney for the defendants also waived their right to appeal the decision.

That attorney did not respond to a phone call and e-mail from SNN as of press time.

The settlement doesn’t involve the current entities, and the previous lawsuit involved only home health care fraud allegations, which was not connected to institutional skilled nursing care sites.

“There are no allegations concerning the current operator,” Sieverding said.

To date, some names mentioned in the lawsuit have changed, with a handful of new managers and rank-and-file employees — such as Red Oak Healthcare, LLC, which is now known as Red Oak Rehabilitation and Care Center. Under Lantis, there are several individual LLCs called “WEL-Life and WELL-Home,” not to be confused with past company Welcov. In addition, Soulek believes it’s fated that she returned to operating her family business, which is why she added “Kismet” to each facility name.

Sieverding speculated that the legal complaint most likely originated as the Department of Justice (DOJ) was trying to recover funds from Welcov as part of its bankruptcy process.

“The DOJ technically needed to file a complaint in order to resolve it,” he said. “Usually there’s an investigation before filing a complaint and settlement. The DOJ usually settles and doesn’t file, but maybe they filed in order to secure rights to receive recovery after the bankruptcy.”

A phone number for Welcov’s former president was not in service when called by Skilled Nursing News; the DOJ also did not respond to a request for comment as of press time.

Sins of the previous owners can haunt

In an era of increasing mergers-and-acquisitions in the skilled nursing space — along with several high-profile bankruptcies and operational issues — it is common for prior problems from past operators bubble up and affect reputation, star ratings, and even potential interest rates or loan probabilities.

Weak ratings based on the actions of past operators, for example, can hurt the probability of obtaining a Department of Housing and Urban Development-backed loan.

“You can have a one-star facility taken over by another operator a year ago and have that facility still blemished by the previous performance – even though there’s a change in leadership,” Michael Gehl, chief investment officer of Housing & Healthcare Finance in Maryland, told SNN last week.

Soulek is currently working with staff on a large-scale project in an effort to turn the facilities around, though challenges remain.

In total, Lantis currently has about 850 employees, but needs closer to 1,200; in the meantime, the company has opted to use an agency to fill gaps in staff. The operator’s turnaround efforts have also included streamlining electronic records, beefing up compliance, increasing quality of care, and updating the physical plant — from overhauling heating and ventilation systems to buying new mattresses.

“We’re working fast and furiously to make progress,” Soulek said. “It can be a daunting process, especially with unemployment at an all-time low in our district. There are a finite number of available workers.”

Additional challenges for Lantis involve reimbursement issues around Amerigroup, Iowa’s managed Medicaid partner. When Iowa shifted to managed Medicaid, the layers of administrative issues for reimbursement increased, which elevated costs — while actual payments decreased, according to Soulek.

“We’re getting paid at 75% now, and Medicaid reimbursement rates are less than a motel room,” she said.

Soulek remembered her father purchasing his first nursing home in 1972. After selling it, the family soon expanded into managing multiple facilities throughout the region.

“It was a time when management rules were simpler, and things were easier,” she said. “We used to play piano and have picnics with the residents.”

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