Nursing Home Operator Guardian Elder Care to Pay $15.5M in False Claims Act Settlement

Guardian Elder Care, a nursing home operator with more than 50 buildings, will pay $15.5 million to resolve federal accusations of medically inappropriate therapy practices, the Department of Justice announced Wednesday.

The Brockway, Pa.-based Guardian faced allegations — brought by a pair of former employees — that the company pressured therapists to perform unnecessary services in order to maximize reimbursements. In some instances, the DOJ claimed, Guardian encouraged clinicians to treat residents with dementia who did not need or want rehabilitation services, as well as those receiving hospice care.

The case, which covered allegations spanning from January 2011 through December 2017, was prosecuted by the U.S. Attorney’s Office for the Western District of Pennsylvania, based in Pittsburgh.

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“Billing federal health care programs for medically unnecessary rehabilitation services not only depletes these programs’ funds but also exploits our most vulnerable citizens,” U.S. attorney Scott Brady said in a statement announcing the deal. “Our office will continue to aggressively pursue providers who take advantage of our seniors by putting financial gain ahead of patient care.”

As is common in False Claims Act cases, the $15.5 million settlement resolves the allegations without Guardian admitting fault or the federal government reaching a formal determination of civil liability.

Under the qui tam provisions of the False Claims Act, whistleblowers Philippa Krauss and Julie White will split $2.8 million of the settlement money.

Guardian — which operates facilities in Pennsylvania, Ohio, and West Virginia — must also enter into a Corporate Integrity Agreement with the Department of Health and Human Services (HHS) Office of the Inspector General (OIG).

“Resident care remains our first priority and we are committed to meeting our obligations under this agreement,” Guardian chief compliance officer Patricia McGillan said in a statement provided to SNN. “We are confident that Guardian’s Corporate Compliance Program advocates for our patients, their families, and caregivers.”

During the course of the investigation, according to the DOJ, Guardian voluntarily told the government that it had employed two individuals who had previously been excluded from federal health programs; the settlement figure thus also covers any payments associated with services provided by the two ineligible employees.

U.S. attorney William McSwain, who represents the Eastern District of Pennsylvania, praised Guardian for its candor during the process.

“We also commend Guardian Elder Care for telling us about its employment of the excluded providers,” McSwain said in a statement. “It is in their best interest for companies to make voluntary disclosures and emphasize compliance going forward, as my office will take this sort of cooperation into consideration when determining an appropriate resolution.”

False Claims Act cases against skilled nursing operators and their therapy partners have been a common regulatory cudgel, particularly under the previous Resource Utilization Group (RUG) reimbursement system — which directly linked therapy volume with financial incentives.

The new Patient-Driven Payment Model (PDPM) for Medicare nursing home reimbursements was designed in large part to remove the temptation to provide questionable therapy services for financial gain, shifting the incentive toward accurately capturing and treating resident conditions.

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