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Department of Justice
U.S. Attorney’s Office
Eastern District of Pennsylvania

FOR IMMEDIATE RELEASE
Wednesday, February 19, 2020

Pennsylvania Nursing Home Chain To Pay $15.5 Million to Settle False Claims Act Allegations of Inappropriate Therapy

PHILADELPHIA – United States Attorney William M. McSwain announced today that Guardian Elder Care Holdings, Inc., and its related companies will pay $15,466,278 to settle claims that the skilled nursing home chain provided medically unnecessary rehabilitation therapy to residents in order to meet revenue goals, instead of clinical needs. Guardian Elder Care operates more than fifty facilities throughout Pennsylvania—including locations in the Lehigh Valley, the Poconos, and Bucks County—as well as in Ohio and West Virginia.

The settlement resolves allegations in a whistleblower complaint filed in federal court in the Eastern District of Pennsylvania under the qui tam provisions of the False Claims Act. These provisions allow private citizens to bring civil actions on behalf of the United States and share in any recovery. The whistleblowers, Philippa Krauss and Julie White, will share approximately $2.8 million of the recovery between them. Guardian Elder Care formerly employed both of these whistleblowers.

The whistleblowers generally alleged that Guardian Elder Care pressured its rehabilitation therapists to provide services to meet financial targets and maximize revenue, without regard to clinical need. For example, they alleged that certain patients suffered from dementia and did not need or want rehabilitation therapy, but Guardian Elder Care allegedly pressured therapists to provide those services anyway to meet revenue goals.

Other patients were allegedly dying and receiving hospice care—and therefore had no medical need for intensive therapy—but Guardian Elder Care allegedly pressured therapists to treat those patients, as well, in order to meet the same financial goals. Today’s announced settlement agreement resolves the allegations arising from Guardian Elder Care’s facilities management practices from January 2011 through December 2017.

Additionally, while the government was investigating these allegations, Guardian Elder Care voluntarily disclosed that it had employed two people who were excluded from federal healthcare programs. The settlement therefore encompasses claims that Guardian Elder Care inappropriately received payment for services provided through these excluded persons during their term of exclusion. The public can search the government’s database of excluded providers on the website: http://exclusions.oig.hhs.gov/.

“Too much rehabilitation therapy can actually harm patients, just like giving them too many pills or too much medicine,” said U.S. Attorney McSwain. “And of course it harms taxpayers who foot the bill for unnecessary treatment. We thank Ms. Krauss and Ms. White for their role in bringing this alleged scheme to light. We also commend Guardian Elder Care for telling us about its employment of the excluded providers. It is in their best interest for companies to make voluntary disclosures and emphasize compliance going forward, as my Office will take this sort of cooperation into consideration when determining an appropriate resolution.”

“Seniors rely on the Medicare program to provide them with appropriate care, and to ensure that they are treated with dignity and respect,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “The Department will not tolerate nursing home operators that put their own economic gain ahead of the needs of their residents, and will continue to hold accountable those operators who bill Medicare for unnecessary rehabilitation services.”  

​“Billing federal healthcare programs for medically unnecessary rehabilitation services not only depletes these programs’ funds but also exploits our most vulnerable citizens,” said U.S. Attorney Scott W. Brady of the Western District of Pennsylvania. “Our office will continue to aggressively pursue providers who take advantage of our seniors by putting financial gain ahead of patient care.”

“Protecting our beneficiaries from unnecessary services is a priority and we will not tolerate companies putting financial gain ahead of quality of care,” said Maureen R. Dixon, Special Agent in Charge, Office of the Inspector General-U.S. Department of Health and Human Services (HHS-OIG). “HHS-OIG will continue to work with our partners at the Department of Justice and OPM-OIG to root out fraud, waste and abuse in the Medicare and Medicaid programs.”

OPM OIG Deputy Assistant Inspector General for Investigations Thomas W. South, Deputy Assistant Inspector General for Investigations said: “Subjecting vulnerable patients to unnecessary treatments for financial gain is unconscionable. First and foremost, OPM OIG prioritizes protecting Federal employees and their dependents from patient harm. I am proud that we were able to work with our law enforcement partners to hold Guardian Elder Care accountable for their unscrupulous behavior.”

In addition to the nearly $15.5 million payment, Guardian agreed to enter into a chain-wide Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General. Such agreements promote compliance and protect vulnerable nursing home residents.  

Assistant United States Attorneys Michael S. Macko and Scott W. Reid handled the case in the Eastern District of Pennsylvania, with assistance from auditor Dawn Wiggins, and worked jointly with Assistant U.S. Attorney Rachael L. Mamula of the Western District of Pennsylvania and Susan Lynch, Senior Counsel for Elder Justice, of the Civil Fraud Section of the Department of Justice. The case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General, and the U.S. Office of Personnel Management Office of Inspector General.

This case was supported by the Department of Justice’s Elder Justice and Nursing Home Initiative, which coordinates the Department’s activities combatting elder abuse, neglect, and financial exploitation, especially as they affect beneficiaries of Medicare, Medicaid, and other federal health care programs. The case was also a product of the Elder Justice Task Force of the United States Attorney’s Office for the Eastern District of Pennsylvania that launched four years ago. For more information about the Department’s Elder Justice Initiative and the Elder Justice Task Force, see https://www.justice.gov/elderjustice/.  

The case is docketed as United States ex rel. Krauss v. Guardian Elder Care Holdings, Inc., et al., Civil Action No. 3:15-cv-6850 (E.D. Pa.). There has been no determination of civil liability. The settled civil claims are allegations only.

Topic(s): 
False Claims Act
Contact: 
UNITED STATES ATTORNEY’S OFFICE EASTERN DISTRICT OF PENNSYLVANIA Suite 1250, 615 Chestnut Street Philadelphia, PA 19106 JENNIFER CRANDALL Media Contact 215-861-8300 If you have not done so already, follow @USAO_EDPA and @USAttyMcSwain on Twitter to get the most up-to-date information about big cases and community news.
Updated February 19, 2020