Two whistleblower lawsuits against nursing home operator Preferred Care and other related defendants has helped the U.S. and Kentucky recover more than $540,000 for Medicare and Medicaid.

According to the U.S. Department of Justice, Susan Helton and Joseph Donchatz, both former employees of Preferred Care, filed whistleblower lawsuit under the False Claims Act, alleging the defendants upcoded Medicare beneficiaries and provided “worthless services” to maximize their income.

Preferred Care of Plano, Texas, owns or operates about 100 skilled nursing facilities in the U.S., including 20 nursing homes in Kentucky.

The whistleblower lawsuits alleged that Preferred Care’s Stanton Nursing and Rehabilitation Center in Stanton, Kentucky, upcoded Medicare and Medicaid beneficiaries in its billings, effectively exaggerating the amount of therapy and services the patients required. These practices occurred between July 1, 2012, and Oct. 31, 2017, federal prosecutors claimed.

After investigating the whistleblowers’ allegations, the government also determined that patients at Stanton Nursing received “materially substandard or worthless services,” for which the U.S. and state of Kentucky were billed.

Preferred Care declared Chapter 11 bankruptcy last November. A bankruptcy court in the Northern District of Texas approved the whistleblower lawsuit settlement on June 26.

“The United States is committed to protecting our senior community by ensuring that taxpayer dollars are not misspent and nursing facility residents are receiving appropriate, high quality care,” said Robert M. Duncan, Jr., U.S. Attorney for the Eastern District of Kentucky.  “This settlement … highlights our efforts to combat health care fraud, waste, and abuse, and hold accountable those who fraudulently deprive government health care programs of vital resources.”

The whistleblowers will share an award of $175,000 for helping the U.S. and Kentucky recover the health care funds, according to McKnight’s Long-Term Care News. Preferred Care will also pay one whistleblower $100,000 and the other $25,000 for legal fees.



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