Falsifying Staffing Records

McKnight’s had an article showing how the profitable nursing home industry is whining about regulatory oversight. According to Foley & Lardner partner Matt Krueger, the increased “scrutiny” faced by nursing home providers since 2020 includes an “overall increased and increasingly hostile approach by surveyors in the quality-of-care area. Another area that I think we continue to see a lot of attention are the financial relationships between facilities and other providers.”

Translation: “How dare the government fine us for abusing and neglecting residents and asking questions about all the money siphoned during Covid.”

The attorney referenced the November settlement in the Paksn Inc. case. In this case, the operator of six skilled nursing facilities in California was fined $45 million and “where the government alleged that they payments to physicians that were supposed to be for administrative services [and] the government alleged that they were payments to induce the physicians to refer to admission to the SNF.” A clear kick-back scheme.

Kruger said that providers must be “cautious” with how their financial relationships are structured with any physicians, hospitals, and or anywhere that is a source of residents to facilities as this is a “hot area” for the government to focus on.

Recently, two Pennsylvania SNFs were found guilty of healthcare fraud and other counts. Comprehensive Healthcare Management Services owned both of these facilities. Additionally, five executives of this management company were brought up on criminal fraud charges based on allegedly falsifying records related to staffing to meet specific state and federal guidelines.

Jassak said, “There were some allegations of creating ghost employees, clocking people in and out who were not even there, that mandates to cut costs associated with employees would be pursued, and focusing on just simply satisfying minimum requirements by falsifying records would result in bad outcomes, and in that case, the companies were found guilty of fraud; however, the executives did escape with not-guilty results.”

The Pennsylvania case was decided without the federal minimum staffing requirement for SNFs, all while a federal lawsuit filed by healthcare associations and nursing homes challenged the national staffing mandate. This case argued that it exceeds CMS authority and creates “impossible” standards that could harm
facilities and residents.

Kruger said, “I think when facilities face so much pressure… and there is a need to provide quality care, that there can … [be] the temptation down at the facility level to be inflating or misrepresenting its staffing levels, and that can be a big, big risk area that will continue even if the new rule doesn’t go into effect.”

Krueger ranked issues regarding legal compliance and risks and called it a “spectrum of seriousness.” The lowest level is when operators risk civil monetary penalties imposed by CMS, usually partnered by the states and related to the quality of care issues. “Not to say those aren’t serious, but those will be handled merely at an administrative level. You won’t have to interact with the Department of Justice,” Krueger said. Then, at the next level, are allegations made under
the False Claims Act, “where the Department of Justice gets involved, and where those suits can also come from whistleblowers.”

Allegations under the False Claims Act can be costly and a considerable risk area. States are becoming more active in their “scrutiny” of SNFs, not only by
pursuing financial penalties but also by implementing interventions like independent monitors. The top-level risks are criminal charges that could potentially be brought against operators. According to an attorney, the best approach for providers is to be proactive from the beginning when a problem arises. Providers should prioritize quick and effective complaint responses and communications to families and how they “acted to remedy it.”

Regarding predicted trends, no matter the outcome of the most recent election, there will be lots of governmental scrutiny on this industry, “partly because care for senior folks is going to be a bipartisan issue.” Jassaks said that the industry can expect to see an “increased scrutiny of the corporate structure, ownership, and relationships among nursing home facilities.”

Referencing the joint employer rule, the Biden Department of Labor “ramped up” wage and hour standards enforcement. The attorney predicts that with Trump’s current place in office, we are “likely to see the wage and hour enforcement ramp back to levels that it was before the current administration.” We will also see a predicted rollback to pre-Biden levels of antitrust enforcement during Trump’s term.