“We are pleased to finally put this matter behind us and look forward to continuing our efforts to deliver quality care and services to our patients and residents,” Tim Lukenda, president of Extendicare, said in a statement. “We have already invested substantial resources to enhance our existing compliance program over the past several years.”
The civil settlement involves alleged substandard care between 2007 and 2013 in 33 skilled-nursing homes in eight states: Ohio, Pennsylvania, Wisconsin, Indiana, Kentucky, Michigan, Minnesota and Washington. The corporate integrity agreement, however, applies to all of Extendicare's facilities.
The federal government will receive $32.3 million as a result of the settlement, and the eight state Medicaid programs will receive $5.7 million. The case stems from two whistle-blower cases, one in Pennsylvania in 2010 and another in Ohio in 2013—both of those patients also will receive a portion of the monetary settlement from the federal government.
The settlement alleges that, in violation of the False Claims Act, Extendicare billed Medicare and Medicaid for substandard skilled-nursing services while failing to provide care that met federal and state standards and regulations. This includes Extendicare's alleged inability to adequately staff skilled nurses at the facilities in question, its apparent failure to provide appropriate catheter care for some patients and its alleged inability to follow protocols intended to prevent pressure ulcers or falls, among other allegations.
The federal government also alleges that Extendicare provided “medically unreasonable and unnecessary rehabilitation therapy services” to Medicare Part A beneficiaries, particularly during assessment periods, which allowed Extendicare to bill for the highest daily rate possible.
Though DOJ and HHS attorneys allege that Extendicare's failure to provide adequate care resulted in fractures, head injuries, malnutrition, dehydration, pressure ulcers and infections, no criminal charges have been filed. Some patients required hospitalization and amputation of limbs as a result of poor care, attorneys claimed.
“It is critically important that we confront nursing home operators who put their own economic gain ahead of the needs of their residents,” Stuart F. Delery, acting associate attorney general, said in a statement. “Operators who bill Medicare and Medicaid while failing to provide essential services or bill for services so grossly substandard as to be effectively worthless will be pursued for false claims.”
Extendicare said in the release that the $38 million lump-sum payment was accrued to its results for the second quarter of 2014. The company doesn't expect the settlement to have a material adverse effect on its business or long-term consolidated financial position, it said, but it will impact its results for fiscal 2014. It expects the cost of compliance with the corporate integrity agreement to be between $1.5 million and $3.5 million each year for the duration of the five-year agreement.
An appellate court in Illinois ruled in August that in order for poor care—as opposed to an actual lack of care delivery—to be considered under the False Claims Act, “the performance of the service (must be) so deficient that for all practical purposes, it is the equivalent of no performance at all.”
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