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Elderwood to pay almost $1M to settle Medicare, Medicaid fraud claims

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Elderwood Amherst (copy)

Elderwood in Amherst is one of the facilities run by Elderwood Senior Care.

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Elderwood, a Buffalo based chain of senior care companies, has agreed to pay $950,000 to settle a civil suit that accuses the chain of filing fraudulent claims for Medicare and Medicaid payments over a six-year period, U.S. Attorney Trini E. Ross announced Tuesday.

Elderwood submitted false claims for physical therapy, occupational therapy and speech therapy services between Aug. 1, 2013, and Dec. 31, 2018, that were "medically unnecessary," according to the Department of Justice. By submitting these claims, Elderwood received larger payments than they were entitled from Medicaid.

The civil settlement stemmed from the whistleblower lawsuit filed in 2015 by a former Elderwood licensed practical nurse, Jean Nolan. She will receive 19% of the settlement payments, which amounts to $180,500 if the full sum is collected. She filed her complaint under the New York False Claims Act, which allows a private party to file accusations on behalf of the U.S. government. 

Chuck Hayes, Elderwood's vice president of marketing and communications, said Tuesday that Elderwood did not admit any wrongdoing in settling the lawsuit.

“Defending these types of subjective allegations of overutilization in court requires an unsustainable allocation of resources that we believe are better used to enhance resident care,” Hayes said in a statement.

Under the settlement, Elderwood must pay $837, 657 to the federal government $112,343 to New York State.

Elderwood, which operates 17 nursing homes, including seven in the eight counties of Western New York, and 13 assisted living centers and two independent living facilities. It is one of the highest-rated nursing home chains in New York, with nursing homes in Lancaster, Grand Island and Wheatfield recognized as among the best in the state by the federal Centers for Medicare and Medicaid Services.

Elderwood at Lancaster, the facility where Nolan worked when it was called Elderwood at Linwood, is one of only 119 nursing homes out of 609 in New York State that were given the top 5 star rating.

Elderwood nursing homes in Amherst, Cheektowaga, Grand Island, Hamburg, Lancaster, Liverpool, Waverly, Wheatfield and Williamsville are included in the settlement.

Nolan filed her complaint in February 2015, accusing Elderwood at Linwood, a senior care facility on Como Park Boulevard in Lancaster, of committing several illegal and fraudulent practices at the "physical expense of patients and at great cost to the government."

Among those practices that Nolan detailed were Elderwood's leveraging of hospital relationships to receive more patients, as well as admitting for rehabilitation patients who did not meet Medicaid or Medicare standards.

Nolan also accused Linwood of improperly assessing patients' conditions, with all patients initially admitted at the most expensive level of treatment, a corporate policy. Instead of physicians prescribing a level of care to a patient, physical therapists often did instead, the complaint claimed, with the physicians' approving the prescriptions.

Holding patients whose conditions improved for longer than necessary, moving patients from long-term care care to more expensive rehabilitation programs without regard for patients' conditions, and requesting reimbursement for skilled services that did not qualify were other claims of wrongdoing in Nolan's lawsuit.

The lawsuit provided examples: It accused Elderwood of admitting a person identified only as Patient A into its rehabilitation program, even though she suffered from debilitating cancer with limited mobility and no chance of physical improvement. Patient A could not swallow and weighed approximately 75 pounds, despite being 6 feet tall. She remained in rehab for the maximum permitted 100 days under Medicare, when she was immediately placed in hospice and died approximately two weeks later.

Nolan said in the complaint that her April 29, 2014, firing came as a result of her complaints against Elderwood's illegal practices and her refusal to engage in them.

When Dr. Jeffrey Rubin and Warren Cole bought the Elderwood nursing homes for $141 million in 2012, they kept the for-profit chain’s headquarters in Buffalo. Rubin moved from New York City to Buffalo to run the business.

Mike McAndrew also contributed to this report.

Ben Tsujimoto can be reached at btsujimoto@buffnews.com, at (716) 849-6927 or on Twitter at @Tsuj10.

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