Nursing Homes to Pay $4.5 Million to Settle Whistleblower Complaint Over Neglect of Residents

The United States and the State of Michigan have reached a $4.5 million settlement with Villa Financial Services LLC, Villa Olympia Investment LLC, and six nursing homes they owned and operated, resolving allegations that the companies defrauded Medicare and Medicaid by providing grossly substandard care to elderly and disabled residents.

The case originated as a federal whistleblower lawsuit filed by Villa employees, who claimed to have witnessed the mistreatment of residents.  The whistleblowers alleged that the nursing homes defrauded the Medicare and Medicaid programs by not providing the level and quality of care that the government healthcare programs require and pay for.

According to the complaint, the facilities were understaffed and failed to properly train personnel, resulting in widespread issues such as untreated infections, falls, pressure ulcers, and inadequate assistance with daily activities like toileting.  The whistleblowers claimed residents were often left in soiled clothing or bedding, and that staff failed to follow appropriate protocols for hygiene and medical care. 

The nursing home residents included elderly, disabled, and bedridden individuals who require basic care to carry out their daily functions and maintain their physical, mental, and psychological well-being.  The whistleblowers alleged that the nursing homes failed to provide a sufficient number of appropriately trained staff to adequately care for the residents; failed to take adequate measures to prevent, control, and provide care related to infections, such as pneumonia, sepsis, urinary tract infections, and wound infections; failed to take adequate measures to prevent and follow appropriate protocols related to resident falls; failed to appropriately provide for residents’ activities of daily living, including residents’ toileting needs; and  failed to follow appropriate protocols for the treatment of pressure ulcers.

The government alleged that these failings amounted to “worthless services” — care so deficient that it had no value — and that the homes’ billing to Medicare and Medicaid therefore violated the False Claims Act.  Villa denied all allegations but agreed to the settlement to resolve the matter.

As part of the resolution, Villa has entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services' Office of Inspector General.  Under the agreement, Villa must retain an independent monitor to assess compliance with quality-of-care standards and evaluate the company's ability to detect and address patient care problems.

The whistleblowers in this case will receive a portion of the $4.5 million settlement.

The False Claims Acts permit private citizens to bring lawsuits on behalf of the government against persons who present false or fraudulent claims for payment under government contracts or programs, such as Medicare, Medicaid, and TRICARE.  Whistleblowers who report fraud under the False Claims Act are entitled to receive between 15% and 30% of any recovery by the government.  

Sub-standard care is just one way nursing homes can violate the False Claims Act.  Other types of whistleblower cases against nursing homes include:

• Billing for Services Not Performed: Submitting claims for services that were never provided to residents is a frequent basis for FCA liability.
• Billing for Unnecessary Services: Nursing homes sometimes bill for excessive or medically unnecessary treatments, such as unwarranted therapies or tests, to obtain higher reimbursements from Medicare or Medicaid
• Upcoding: Facilities may charge for more expensive levels of care than were actually provided by exaggerating the complexity or intensity of services (i.e., upcoding).
• Improper Cost Reports: Submitting inaccurate annual cost reports to secure higher payments from Medicare or Medicaid is another type of false claim.
• Kickbacks and Stark Law Violations: Engaging in financial arrangements or providing incentives for referrals that violate the federal Anti-Kickback Statute or Stark Law can also result in FCA liability, as claims submitted under these circumstances are considered false or fraudulent.
• False Certifications: Nursing homes may be held liable when they certify compliance with Medicare or Medicaid requirements (such as staffing ratios, safety, or treatment guidelines) while actually failing to meet these standards.

Most often, whistleblowers (current or former employees, patient families) bring these cases, and successful claims can result in significant penalties and settlements for providers as well as financial awards for those who report the fraud.

If you have evidence that a nursing home defrauding Medicare, Medicaid or other government healthcare programs, you may be entitled to a financial reward and legal protections as a whistleblower.  Call 212-601-2728 today to schedule a free and confidential consultation with an experienced whistleblower lawyer to learn whether you qualify.