Centers Healthcare Pays Over $6 Million for False Statements on Medicare Cost Reports

ALBANY, NEW YORK – United States Attorney John A. Sarcone III announced today that Centers Healthcare is paying $6,063,500 to resolve allegations that 44 Skilled Nursing Facilities (SNFs) submitted cost reports to Medicare that contained false statements or omitted material information regarding their transactions with related organizations.  The 44 SNFs are related to Centers through common ownership or control and are located in Rhode Island, Kansas, Missouri and New York, including 15 facilities in the Northern District of New York (Albany, Essex, Fulton, Jefferson, Oneida, Onondaga, Otsego, Rensselaer, Schenectady, Ulster, Warren, and Washington counties).  

“Taxpayer dollars fund nursing homes” said United States Attorney John A. Sarcone III.  “I expect that nursing homes will truthfully account for how they spend those dollars, which are entrusted to them to care for our elderly and most vulnerable citizens.”

Federal regulations require SNFs to submit cost reports to the Centers for Medicare and Medicaid Services (CMS)’s Medicare Administrative Contractors about their allowable charges and expenses related to the care of nursing home patients, including information about their dealings with related organizations. A related organization is an entity that is related to the SNF through common ownership or control.  When a SNF does business with a related organization, it is required to calculate and disclose the allowable cost of the services, facilities, or supplies.  The allowable cost is the is the lower of: (1) the actual cost of the supply or service to the provider, or (2) the price in the open market for comparable services, facilities, or supplies.  The reason for these requirements is that when a SNF obtains services or supplies from a related organization they are effectively doing business with themselves.  Centers admitted that the cost reports associated with 44 SNFs contained one or more false statements or material omissions regarding related organization transactions and that Centers management reviewed the cost reports and knew or reasonably should have known of the false statements.

“When nursing home operators knowingly submit false information in cost reports, they undermine the integrity of federal health care programs and misuse taxpayer dollars,” said Special Agent in Charge Linda T. Hanley of the U.S. Department of Health and Human Services Office of Inspector General (HHS/OIG). “HHS-OIG, including our investigators and auditors, will continue working with our DOJ partners to hold bad actors accountable and aggressively pursue those who engage in healthcare fraud.”

The investigation and resolution of this matter were the result of a coordinated effort between the United States Attorney’s Office for the Northern District of New York and HHS-OIG’s Office of Investigation (Kansas City Region) and Office of Audit Services (Kansas City Region).  Assistant United States Attorneys Christopher R. Moran and John D. Hoggan represented the United States.