NEW YORK, NY — The United States has filed a civil healthcare fraud lawsuit against Issac Laufer, Tami Whitney, Montclair Care Center, Inc., East Rockaway Center LLC, Excel At Woodbury For Rehabilitation And Nursing, LLC, Long Island Care Center Inc., Treetops Rehabilitation & Care Center LLC, Sutton Park Center For Nursing & Rehabilitation, LLC, Suffolk Restorative Therapy & Nursing, LLC, Oasis Rehabilitation And Nursing, LLC, Forest Manor Care Center, Inc., Surge Rehabilitation & Nursing LLC, Quantum Rehabilitation & Nursing LLC, and Paragon Management SNF LLC
The lawsuit seeks damages and civil penalties under the False Claims Act for fraudulently billing Medicare for unreasonable and unnecessary services provided to patients at eleven skilled nursing facilities located in New York.
The complaint alleges that, during the period from at least January 2010 through September 2019, Defendants systematically kept patients at the Facilities longer than necessary in order to maximize the amount billed to Medicare for the patients’ stays. During those stays, the Facilities systematically put patients on higher levels of rehabilitation therapy than necessary based on their actual clinical needs in order to bill Medicare at the highest rate.
Issac Laufer, who is a part owner of ten of the eleven Facilities and operates all eleven Facilities through Paragon Management SNF LLC, and Tami Whitney, the Coordinator of Rehabilitation Services for the Facilities, instructed and pressured staff to engage in these fraudulent practices. As a result, according to the complaint, the Facilities submitted, or caused to be submitted, false claims for payment for rehabilitation services that were unreasonable and unnecessary, or in some cases, did not even involve the provision of skilled therapy.
From at least January 2010 through September 2019, the Defendants systematically kept Medicare patients at the Facilities longer than reasonable or necessary, and put those patients on higher levels of rehabilitation therapy than reasonable or necessary. These practices were designed to increase the amounts billed to Medicare beyond what was justified based on patients’ clinical needs. In some instances, the Facilities went so far as to intentionally limit patients’ progress in order to create the appearance of a continued need for services. In one instance, Whitney reported to Laufer that the Facilities should not allow patients to go to the bathroom by themselves because they would then “think they are ready to go home.”
Laufer and Whitney directed the Facilities to engage in this conduct. Specifically, Whitney carefully tracked the length of stay for each Medicare patient and expected staff at the Facilities to justify discharges scheduled to take place before the patient’s stay approached 100 days—the maximum compensable by Medicare. Together with management at the Facilities, Whitney devised strategies for extending patient stays, including giving patients unnecessary tests to gauge their balance proficiency at the point they were ready for discharge to create a pretext for extending their stays. Whitney reported on the success of these “discharge prevention” measures to Laufer, noting both areas where these measures succeeded and those where the Facilities had to work harder to prolong patient stays—such as for patients who were “younger and smarter” or “high level.” Laufer, in turn, received daily updates from the Facilities reporting the number of Medicare patients who had been discharged, and, on a number of occasions, instructed Whitney to curb discharges. Laufer gave these instructions without any information about the patients’ clinical needs and made explicit that they were designed to increase revenue.
Whitney, with Laufer’s knowledge, also instructed the Facilities to provide virtually all Medicare patients with therapy at the “Ultra High”—i.e., highest billing—level, without regard to the patients’ needs or whether, due to their conditions, they could benefit from this intense therapy. To qualify for the Ultra High level, a patient must receive at least 720 minutes of skilled therapy services (i.e., physical, occupational or speech therapy requiring the services of a trained therapist) per week. Employees understood that there was virtually no wiggle room when it came to determining how much rehabilitation therapy a patient would receive. The pressure to provide this level of therapy in turn led the Facilities to bill for services that did not actually qualify as skilled therapy and thus were not eligible for Medicare reimbursement (such as simply moving the limbs of patients with severe cognitive impairments or assisting with routine self-care tasks).
Laufer and Whitney’s efforts to keep Medicare patients at the Facilities for as close as possible to 100 days and to provide almost all patients, without regard to need, with therapy at the Ultra High level succeeded. During the relevant period, the Facilities were significant outliers, compared to other skilled nursing facilities, with respect to Medicare patients’ average length of stay and levels of rehabilitation therapy.
These practices resulted in the Facilities submitting claims to Medicare for rehabilitation therapy that was not reasonable or necessary, was billed at a higher rate than appropriate, or did not involve the provision of skilled services and, accordingly, were ineligible for payment. In addition, the Facilities made or used false statements and records that were material to false claims submitted to Medicare for payment for rehabilitation therapy that was unreasonable, unnecessary, or unskilled.
The Government intervened in a private whistleblower lawsuit before the Honorable Cathy Seibel that had previously been filed under seal pursuant to the False Claims Act.
The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorneys Jacob Bergman and Rachael Doud are in charge of the case.
Dirtbags!