Skip to main content
Press Release

Watsonville Nursing Home Owners, Operators And Manager Agree To Pay $3.8 Million To Settle Allegations Of False Claims

For Immediate Release
U.S. Attorney's Office, Northern District of California
Nursing Home Owners Agree to Abide By Corporate Integrity Agreement to Prevent Future Allegations of Overmedicating Residents

SAN FRANCISCO – The owners, operators, and manager of two nursing homes in Watsonville, Calif., have agreed to pay $3.8 million to settle allegations that they submitted false claims to the United States, announced United States Attorney Melinda Haag, U.S. Department of Health and Human Services OIG (HHS-OIG) Special Agent in Charge Ivan Negroni, and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.

Today’s settlement stems from a complaint filed by the United States on August 29, 2014, in U.S. District Court for the Northern District of California.  In the complaint, the United States alleged the owners, operators, and managers of two nursing homes submitted to federal Medicare and Medi-Cal programs false claims for materially substandard or worthless services.  Specifically, the complaint alleges between 2007 and 2012, the defendants persistently overmedicated elderly and vulnerable residents of the nursing homes, causing infection, sepsis, malnutrition, dehydration, falls, fractures, pressure ulcers, and for some residents, premature death.  The complaint alleges the defendants violated the Federal False Claims Act, 31 U.S.C. §§ 3729-3733.  The named defendants are the nursing homes, Country Villa Watsonville East Nursing Center (renamed Watsonville Nursing Center in April 2014) and Country Villa Watsonville West Nursing and Rehabilitation Center (renamed Watsonville Post-Acute Center in April 2014); the for-profit entities that own and operate the nursing homes, CF Watsonville East, LLC, and CF Watsonville West, LLC; the entity that exercised oversight and control over the finances and operations of the nursing homes, the ARBA Group; and the entities responsible for the management of the nursing homes under consulting agreements with the owners, Country Villa Health Service Corporation, dba Country Villa Health Services.

In addition to the monetary settlement, defendants CF Watsonville East, LLC, and CF Watsonville West, LLC have entered into a five-year Corporate Integrity Agreement (CIA) with HHS-OIG.  Among other things, the CIA requires these defendants to implement and maintain a robust compliance program and retain an independent monitor to help ensure the nursing homes’ compliance with Medicare and Medicaid regulations and standards of care.

“Our nursing home residents rely on the Medicare and Medi-Cal programs to receive life sustaining, and other essential medical services,” said United States Attorney Haag.  “The allegations in this complaint are appalling.  It is my hope that the families whose loved ones suffer at the hands of nursing homes that provide substandard care can find solace in the commitment from me that these owners, operators, and managers will be held accountable for their actions.”

“It’s outrageous when nursing home owners accept Medicare and Medicaid money to care for vulnerable nursing home residents and in return provide care so lacking in quality and compassion it shocks the senses,” said Special Agent in Charge Ivan Negroni, HHS-OIG.  “Our agency is committed to investigating such substandard care and, through our Corporate Integrity Agreement with these two nursing homes, requires an independent monitor and other protections designed to hold these nursing homes accountable for providing appropriate, high quality care in the future.”

“This case demonstrates our continued commitment to investigate, and hold accountable, individuals and organizations seeking to victimize the elderly through the misuse of taxpayer funded Medicare and Medi-Cal programs,” said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office.  “The FBI remains vigilant on our continued effort to work with our civil enforcement partners on these cases and will seek to hold those responsible for providing substandard care accountable for both past violations and future compliance.”      

Assistant U.S. Attorney Gioconda Molinari litigated the case with the assistance of paralegal Lucille Yee and auditor Michael Zehr.  The lawsuit is the result of an investigation by the U.S. Attorney’s Office, the Federal Bureau of Investigation, and the HHS-OIG.

If you know someone who is the victim of elder abuse, neglect, or exploitation in a nursing home, you can report it to:

Updated September 1, 2015