Grand Health Care System ordered to pay millions by DOJ

The Grand Health Care System -- which has facilities in Utica, Rome and Ilion -- has settled its case of false rehabilitation claims in federal court and is now looking at millions in settlements.

ALBANY, N.Y. (WUTR/WFXV/WPNY) -- The Grand Health Care System -- which has facilities in Utica, Rome and Ilion -- has settled its case of false rehabilitation claims in federal court and is now looking at millions in settlements.

The Department of Justice announced on Wednesday, July 10 that Strauss Ventures LLC -- which does business as the Grand Health Care System -- and 12 affiliated skilled nursing facilities have agreed to resolve allegations that they violated the False Claims Act. Strauss Ventures was accused of knowingly billing federal health care programs for therapy that was unnecessary or did not occur as billed.

Settling facilities that were named in the suit include the Grand facilities in Utica, Rome, and Ilion. Other facilities named are in Albany, Madison and Columbia Counties. As a result of the settlement, the Grand and the facilities have been ordered to pay over $21 million by the court.

“We expect nursing facilities to provide only reasonable and appropriate amounts of skilled rehabilitation therapy service to their residents and to bill government healthcare programs only for the services actually provided,” Brian Boynton, head of the Department of Justice’s Civil Division, said in a statement. “The department is committed to protecting both vulnerable nursing home patients and taxpayers against fraudulent conduct by unscrupulous actors.” 

According to the allegations, between January 2014 and September 2019, the Grand knowingly submitted false claims for therapy for residents at 12 facilities that they owned and operated. During this time, Medicare hospital insurance -- also known as Medicare Part A -- and TRICARE -- the Department of Defense's health care program -- paid for services based on the number of minutes of therapy provided. According to the Department of Justice, the Grand allegedly submitted bills where the reimbursement was based on providing more therapy than was reasonable or necessary, and in some cases, was not the amount provided.

As part of the settlement, the Grand admitted that former management employees allegedly implemented quotas at each of the 12 facilities. These included quotas relating to lengths of stay at the facilities that were allegedly billed at the highest reimbursement level.

To meet these imposed quotas, facilities would schedule patients to receive therapy that was unreasonable and unnecessary based on the patient's condition.

In addition, management allegedly directed that no more than three patients could be discharged from a facility per week. They also allegedly instructed that no person who received Medicare Part A benefits should be discharged from a facility unless it had been discussed with corporate officials. In their admission, the Grand said that this resulted in some Medicare beneficiaries "staying on therapy longer than was reasonable and medically necessary."

The Grand also admitted that supervisory officials, who did not evaluate or treat patients, would set or adjust the number of minutes of therapy a Medicare patient received. The company acknowledged that there were some incidents where supervisors would falsify the number of therapy minutes or instruct employees to do so well after therapy had been given.

The settlement resolves two older allegations of falsifying records. The first one was at the Grand's facility in Pawling, in Dutchess County. In those allegations, Grand employees allegedly inflated the reimbursement rate for therapy patients by inaccurate data.

The settlement also resolves a whistleblower lawsuit by two former providers of rehabilitation therapy at the Grand's facilities. Under the settlement, those two providers will receive a little more than $4 million.

As part of the settlement, the Grand will also enter into a corporate integrity agreement with the Department of Health and Human Services. Under the agreement, those facilities will be required to submit to an independent review to assess the necessity and appropriateness of therapy services that are billed to Medicare.

“Today’s settlement protects patients and taxpayers by ensuring that medical treatment is dictated by patient need and not by financial motive,” United States Attorney Carla Freedman said in a statement.  “Skilled nursing facilities provide important services to a vulnerable population, and we will continue to hold them accountable when they provide patients with unnecessary services and falsify records.”