U.S. DOJ Settles Allegations Against Extendicare

Thanks to the efforts of two whistleblowers, or relators, the U.S. Department of Justice and eight states announced on October 10, 2014 that they had settled allegations of fraudulent billing against Extendicare Health Services, Inc. (“Extendicare) and its subsidiary Progressive Step Corporation (“ProStep”). The U.S. government and the several states involved in the investigation alleged that Extendicare billed both Medicare and Medicaid for nursing services that were so deficient as to be worthless to the government and the patients. Likewise, the government alleged that ProStep billed Medicare for unnecessary rehabilitation procedures.

The settlement, worth $38 million, is the largest settlement the Department of Justice has ever announced involving allegations of failure of care at skilled nursing facilities operated by the same owner. Of that amount, the eight states will receive $5.7 million.

The alleged billing for worthless or unnecessary services occurred between 2007 and 2013 at 33 of Extendicare’s skilled nursing facilities. The government alleges, for example, that Extendicare did not adequately staff its nursing homes to care for the patients that were living there, failed to provide proper catheter care, and did not do enough to prevent falls and pressure ulcers. In addition, the government alleges that ProStep provided medically unnecessary rehabilitation services, particularly when a patient was undergoing care assessments, so that it could bill Medicare at the highest daily rate possible.

In addition, Extendicare has entered into a five-year Corporate Integrity Agreement with the Department of Health and Human Services Inspector General’s Office that requires it and its subsidiary ProStep to enforce a comprehensive compliance program, address the quality of residents’ care, create a committee to address staffing needs, conduct internal audits, and retain an independent monitor selected by the Inspector General’s Office to check on Extendicare’s progress.

As a result of their assistance in alerting the government to the fraud and for their help during the investigation, the two relators will receive a portion of the government’s recovery. One relator will receive $1.8 million, and the other will receive $250,000.

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