A federal judge in Florida put on hold an order requiring 53 skilled-nursing facilities to return more than $347 million in false claims to the federal government because it could force a total of 183 facilities to “collapse.”
Last month, a federal jury found four Florida-based facility operators fraudulently billed Medicare and Medicaid by falsifying care patients received. The companies liable for payments are CMC II, Salus Rehabilitation, 207 Marshall Drive Operations and 803 Oak Street Operations.
In a ruling this week, U.S. District Judge Steven Merryday said the facilities don't have the funds to make the payments and doing so would force them to default on loans. This could have a “cascading” effect, triggering “the collapse of scores of skilled-nursing facilities in 17 states.”
All four operators in the suit and more than 100 other companies have a joint-loan of $168 million with MidCap Financial. This joint-loan is used to operate 183 skilled-nursing facilities in 17 states.
Under terms of the loan, if any one facility defaults on payments, MidCap has the authority to halt lending to all 183 skilled-nursing facilities part of the agreement.
Judge Merryday said that the $347 million repayment would cause “an abrupt halt in operations” for the 183 facilities which treat more than 17,000 patients.
The stay ordered by Merryday is in effect as the defendants work to appeal the verdict.
CMC II reported $3.99 million in revenue for fiscal 2016 and was ordered to pay $109 million in damages for 123 false Medicare claims, according to the lawsuit. 803 Oak Street Operations reported $875,000 in revenue last year and 207 Marshall Drive Operations earned $30,000.