Vanguard Healthcare Agrees to Resolve Federal and State False Claims Act Liability
Settlement by Nursing Home Chain is Largest Worthless Services Resolution in Tennessee's History
NASHVILLE, Tenn. –February 27, 2019– U.S. Attorney Don Cochran and the Department of Justice announced today that Brentwood, Tennessee-based Vanguard Healthcare, LLC, and related Vanguard companies (“Vanguard”) agreed to pay more than $18 million in allowed claims to resolve a lawsuit brought by the United States and the State of Tennessee for billing the Medicare and Medicaid programs for grossly substandard nursing home services. Vanguard Healthcare and several related Vanguard companies that have reorganized in bankruptcy agreed to pay more than $5.1 million towards the settlement, and two Vanguard entities that are liquidating in bankruptcy have agreed to $13.5 million in allowed claims in bankruptcy. The settlement agreement, approved by U.S. District Court Judge Terrance Berg, sitting by special designation, also resolves claims brought by the United States against Vanguard’s majority owner and CEO, William Orand, and Vanguard’s former director of operations, Mark Miller, who agree to pay $250,000 as part of this settlement.
“Simply stated, our elderly and vulnerable citizens who can’t care for themselves deserve far better treatment than what they were subjected to by Vanguard,” said U.S. Attorney Don Cochran. “The substandard care that many of these facilities’ residents endured while the companies were raiding the public coffers is deplorable. This settlement holds them accountable and the ensuing Corporate Integrity Agreement should ensure that this conduct is not repeated going forward.”
The United States and Tennessee filed suit against several Vanguard companies, Miller, and Orand, alleging that they were responsible for five Vanguard-owned skilled nursing facilities submitting false claims to Medicare and Medicaid for nursing home services that were grossly substandard or worthless. In particular, the United States and Tennessee alleged that the five facilities failed to administer medications as prescribed; failed to provide standard infection control, resulting in urinary tract infections and wound infections; failed to provide wound care as ordered; failed to take prophylactic measures to prevent pressure ulcers, such as turning and repositioning patients; used unnecessary physical restraints on residents; and failed to meet basic nutrition and hygiene requirements of residents. The lawsuit further alleged that the defendants were responsible for the submission of hundreds of preadmission forms by these facilities to TennCare, Tennessee’s Medicaid Program, which contained forged nurse or physician signatures.
“Seniors rely on the Medicare and Medicaid programs to provide them with quality 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 aggressively pursue those operators who bill Medicare and Medicaid for substandard nursing services.”
Vanguard is a holding company that owns a chain of subsidiary skilled nursing facilities, including Boulevard Terrace Rehabilitation and Nursing Center in Murfreesboro, Tennessee; Glen Oaks Health and Rehabilitation in Shelbyville, Tennessee; and Manchester Health Care Center in Manchester, Tennessee. Vanguard previously operated three additional facilities in Tennessee, including Crestview Health and Rehabilitation in Nashville; Imperial Gardens Health and Rehabilitation in Madison; and Poplar Point Health and Rehabilitation in Memphis. In addition, Vanguard Healthcare owned Elderscript Services, LLC, in Tupelo, Mississippi, which provided pharmacy services to the Vanguard skilled nursing facilities.
The United States’ claims were brought under the False Claims Act, which imposes treble damages and penalties on those who submit false claims for federal funds. The settlement resolves the governments’ claims that Vanguard, Orand, and Miller caused the Boulevard, Crestview, Glen Oaks, Imperial, and Poplar Point facilities to improperly bill Medicare and Medicaid for worthless nursing home services during the period from 2010 to 2015. The settlement also resolves the governments’ claims that Vanguard, Orand, and Miller caused the Boulevard, Crestview, Glen Oaks, Imperial, and Poplar Point facilities to submit preadmission forms with forged signatures to TennCare in order to be reimbursed by Medicaid from 2012 to 2014. Tennessee’s claims were brought and settled under the Tennessee Medicaid False Claims Act, which prohibits conduct similar to the False Claims Act.
“This nursing home chain allegedly neglected its patients and billed worthless services to Medicare and Medicaid in order to pad their bottom line,” said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. “This settlement should send a clear message to health care providers that we will do everything in our power to protect our most vulnerable citizens from corporate greed.”
"This office appreciates the hard work of U.S. Attorney Don Cochran and his office,” said Tennessee Attorney General Herbert H. Slatery III. “The size and scope of this settlement sends the important message that nursing home facilities that fail to provide proper care to residents and fraudulently bill Medicaid and Medicare will be held accountable.”
“Investigations like these are important to ensure that the most vulnerable members of our community receive the quality of care they need and deserve,” said David Rausch, Director of the Tennessee Bureau of Investigation. “Indifference by providers like this can greatly impact the lives of those who must depend on service providers-even for their most basic needs. We are fortunate to have this strong partnership between state and federal agencies in the pursuit of false claims.”
Due to the filing of bankruptcy proceedings by the Vanguard entities, the United States anticipates that the total government recovery in this case will ultimately exceed $6 million. Contemporaneous with the settlement announced today, the reorganized Vanguard corporate defendants and Orand further agreed to enter into a chain-wide, quality of care Corporate Integrity Agreement with the United States Department of Health and Human Services, Office of Inspector General, which will remain in effect for five years. The CIA requires a government-selected quality of care monitor to be retained by Vanguard, along with other heightened compliance obligations that are designed to ensure that Vanguard implements and maintains systems to address the quality of resident care.
The case was handled by Assistant U.S. Attorney Ellen Bowden McIntyre of the United States Attorney’s Office for the Middle District of Tennessee and Trial Attorney Susan Lynch of the Department of Justice Civil Division, Fraud Section, and the Tennessee Attorney General’s Office. The case was investigated by the Tennessee Bureau of Investigation, Medicaid Fraud Control Unit and the Department of Health and Human Services, 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 impact beneficiaries of Medicare, Medicaid, and other federal health care programs. This case is a product of the Elder Justice Task Force of the United States Attorney’s Office for the Middle District of Tennessee that launched two years ago. For more information about the Department’s Elder Justice Initiative and the Elder Justice Task Force, see https://www.justice.gov/elderjustice/ and https://www.justice.gov/uaso-mdtn/elder-justice-task-force.
The case is docketed as United States v. Vanguard Healthcare, LLC, et al., No. 3:16-cv-02380 (M.D. Tenn.). The claims in the complaint are allegations only, and there has been no determination of liability.
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