Longwood Management, Affiliates to Pay $16.7M in False Claims Act Settlement Over Rehab Services

Longwood Management Corporation, along with 27 individual affiliated skilled nursing facilities, will pay $16.7 million to settle federal allegations of rehabilitation billing fraud, the Department of Justice announced Monday.

The government accused the Los Angeles-based firm of pressuring therapists to hit predetermined targets for rehab minutes under the Ultra High category, which provided the greatest Medicare reimbursements under the since-retired Resource Utilization Group (RUG) payment system.

“Longwood’s business plan called for substantial revenue from Medicare, and it pressured therapists to provide additional, unnecessary services when targets were not met,” Nick Hanna, U.S. attorney for the Central District of California, said in a statement announcing the deal. “This case demonstrates the power of whistleblowers to shine a light on improper business practices and obtain significant recoveries on behalf of United States taxpayers.”

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The three whistleblowers who brought the initial allegations against Longwood — Judy Boyce, Benjamin Monsod, and Keith Pennetti — will receive slightly more than $3 million of the settlement cash under the qui tam provisions of the False Claims Act.

By paying the $16.7 million, Longwood and the affiliates will formally put to rest any liability surrounding the alleged improper billing, which the DOJ claims occurred between May 2008 and August 2012 at six properties: Alameda Care Center, Burbank Rehabilitation Center, Magnolia Gardens Convalescent Hospital, Montrose Healthcare Center, Sherman Oaks Health & Rehab, and West Hills Health & Rehab Center.

The settlement also covers false claims the government says were submitted between January 2006 and October 2014 at the following 21 properties:

  • Burlington Convalescent Hospital
  • Chino Valley Rehabilitation Center LLC
  • Colonial Care Center
  • Covina Rehabilitation Center
  • Crenshaw Nursing Home
  • Green Acres Lodge
  • Imperial Care Center
  • Imperial Crest Health Care Center
  • Laurel Convalescent Hospital
  • Live Oak Rehabilitation Center
  • Longwood Manor Convalescent Hospital
  • Monterey Care Center
  • Intercommunity Healthcare Center
  • Park Anaheim Healthcare Center
  • Pico Rivera Healthcare Center
  • San Gabriel Convalescent Center
  • Whittier Pacific Care Center
  • Studio City Rehabilitation Center
  • Sunnyview Care Center
  • View Park Convalescent Center
  • Western Convalescent Hospital

A message left at Longwood’s corporate headquarters seeking comment was not returned as of press time.

As is common in False Claims Act cases, Longwood additionally entered a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services’ (HHS) top watchdog arm, the Office of the Inspector General (OIG).

Under the CIA, the OIG will require an independent third party to audit the company’s Medicare billing for medical necessity.

“The government contended Longwood falsely claimed medically unreasonable and unnecessary levels of rehabilitation services at the expense of taxpayers,” Timothy B. DeFrancesca, HHS OIG special agent in charge, said in the statement. “My agency’s compliance agreement is designed to monitor claims to Medicare and prevent submission of false claims in the future.”

Crucially, by paying the settlement money, the government is not formally finding Longwood liable for the alleged conduct, and the company is admitting no fault; the claims remain accusations only for legal purposes.

The federal government has also since replaced the RUG system with the Patient-Driven Payment Model (PDPM), a new Medicare funding mechanism that links payments to resident acuity — in theory removing sheer therapy volume as a motivator for care decisions.

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