North American Healthcare Inc. to Pay $30 Million for Defrauding Medicare

North American Healthcare Inc. to Pay $30 Million for Defrauding Medicare

In the words of North American Health Care Inc. (NAHC) — a for-profit company that runs 35 nursing homes — “Caring is our main concern!” It’s a catchy slogan, but according to the Department of Justice (DOJ), making a profit is much more of a concern than the well-being of the people at facilities run by NAHC.

In a settlement last week, the Department of Justice announced that NAHC will pay $30 Million “to resolve allegations that they violated the False Claims Act by causing the submission of false claims to government health care programs for medically unnecessary rehabilitation therapy services provided to residents.” In other words, NACH got caught using the patients in their care as a means to defraud Medicare and boost profits.

As part of the settlement, NAHC’s chairman, John Sorenson, has agreed to pay $1 Million, and Margaret Gelvezon, senior vice president of Reimbursement Analysis, has agreed to pay $500,000. While it’s good news to see executives fined for their company’s fraudulent behavior – as opposed to Wells Fargo banking chief Carrie Tolstedt, for instance – this latest settlement is but a tiny step in curbing the widespread abuse of patients by the nursing homes who are supposed to be caring for them.

The Quality Gap Between For-Profit and Non-Profit Nursing Homes

To help families make informed choices about nursing homes, the Centers for Medicare & Medicaid Services (CMS) developed the Five-Star Quality Rating System. Nursing homes receive ratings from 1 to 5 stars based on health inspections, staffing, and various quality measurements. According to a study released last year by the Kaiser Family Foundation (KFF):

Forty-two percent of for-profit nursing homes received a relatively low overall score (1 or 2 stars), double the rate observed among non-profit nursing homes. One in five for-profit nursing homes received only 1 star, the lowest possible rating, as compared to less than one in ten non-profit nursing homes. This finding is consistent with previous studies conducted by other researchers and GAO [Government Accountability Office] which have found greater numbers of deficiencies, including ones that involve actual harm or immediate jeopardy to residents, among for-profit nursing homes compared with non-profit nursing homes.

The takeaway? Almost half of for-profit nursing homes receive low ratings and, compared to non-profit nursing homes, for-profit institutions tend to have serious deficiencies which put their patients in harm’s way.

Putting Profits Ahead of Patients – A Sickening Trend

NAHC is far from the only company using their patients as a means to make more money. Earlier this month, the federal government and the state of Tennessee filed a False Claims Act lawsuit against Vanguard Healthcare for submitting claims for services that were “nonexistent, grossly substandard and/or worthless, and resulted in significant physical and mental harm to vulnerable elderly, disabled and low income residents”. As Vanguard bilked the state and Medicare for these sham services, they failed to provide a “clean, safe and sanitary living environment” for their residents.

The horrible situation in nursing homes run by Vanguard is not a unique situation. Often times, the poor treatment residents receive is a result of understaffing. At for-profit homes across the country, understaffing is a serious problem. Because of this, vulnerable patients find themselves in the hands of aides and nurses who don’t have the resources to care for them.

“Black Box” Warning Labels on Antipsychotics Ignored for Convenience

In a wrongful death lawsuit, filed this month in Delaware, the family of Sylvia Pierce contends that she was killed as a result of the powerful antipsychotic drugs she was given against the family’s wishes. Mrs. Pierce was living with dementia, and yet the nursing home, run by Genesis Healthcare, prescribed Zyprexa®. Zyprexa has a “black box” warning label that reads "elderly patients with dementia-related psychosis treated with antipsychotic drugs are at an increased risk of death." This raises an important question: why would the nursing home ignore the “black box” label?

Nursing homes sometimes use antipsychotics as a “chemical restraint” even though Medicare and Medicaid prohibit this practice. According to The Consumer Voice, “a chemical restraint is a drug not needed to treat medical symptoms and used because it is more convenient for facility staff or to punish residents . . . [and] as a means of behavior control and/or as a substitute for good, individualized care.” Good, individualized care is what people expect when they put their loved ones in a nursing home. If that home is understaffed, antipsychotics are all too often used as a dangerous shortcut.

Taking care of the patients in their charge should be the top priority of nursing homes. And yet, for-profit companies like NAHC, Vanguard, and Genesis Healthcare continually put their residents in jeopardy. Instead of spending money on care, these companies are focused on profit. Instead of making people better, revenue hungry nursing homes fail to provide essential services, defraud the government, and put vulnerable patients at serious risk.

Sokolove Law Team

Contributing Authors

The Sokolove Law Content Team is made up of writers, editors, and journalists. We work with case managers and attorneys to keep site information up to date and accurate. Our site has a wealth of resources available for victims of wrongdoing and their families.

Last modified: December 28, 2016