Nursing chain to pay $38M for alleged fraud, poor care

A national nursing-home chain with 20 facilities in Pennsylvania, five in the Philadelphia area, has agreed to pay the federal government $38 million for alleged Medicare fraud, including $10 million for overbilling and $28 million for providing poor patient care.

Extendicare Health Services Inc. and subsidiary Progressive Step Corp. (ProStep) were accused of substandard care between 2007 and 2013 at 33 nursing homes in eight states.

The Justice Department investigated the complaints of two whistle-blowers, one a director of rehabilitation in Pennsylvania and Delaware, who contended that ProStep inflated therapy bills and charged for therapy not provided at nearly all 21 facilities in the Eastern region.

A second whistle-blower in Ohio said the chain of 146 nursing homes had provided poor nursing services that resulted in "disturbing examples of falls, fractures, and head injuries to residents," as well as malnutrition, dehydration, pressure ulcers, and infections, said acting Assistant Attorney General Joyce R. Branda at a briefing Friday in Washington.

Whistle-blower Tracy Lovvorn was area director of rehabilitation for ProStep's Eastern region, which included nursing homes in Dresher, Elkins Park, Langhorne, Levittown, and Norristown.

When she complained to her supervisor that ProStep was submitting false claims for payment, she was fired in November 2009. Lovvorn, who now lives in Massachusetts, filed a lawsuit in federal court in Philadelphia. ProStep provides physical, speech, and occupational rehabilitation services.

The U.S. Attorney's Office for the Eastern District of Pennsylvania "played a major role" in the four-year investigation, said Janet L. Goldstein, one of Lovvorn's attorneys.

The eight states involved in the settlement are Indiana, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, Washington, and Wisconsin. On its website, Extendicare lists no facilities in New Jersey.

Tim Lukenda, president and chief executive of Extendicare, based in Ontario, said the company was "pleased to finally put this matter behind us."

"We have already invested substantial resources to enhance our existing compliance program over the past several years," he said.

The company will enter into a five-year compliance agreement with the Inspector General's Office at the Department of Health and Human Services. The agreement requires the company to retain an independent monitor and make other changes to assess staffing, quality of care to residents, and annual reviews of Medicare claims.

"It is critical to the integrity of a system that benefits millions of Americans," said Zane David Memeger, U.S. attorney for the Eastern District, "that we do as much as possible to hold accountable those who commit fraudulent acts."