False Claims Act Case based on the Switching of Medicare Plans for Patients

by Jeffrey J. Downey, Esq

The Southern District of New York settled a false claims act case against Plaza Rehab and Center, operated by Citadel Care Centers, LLC for $7.85 million.  It’s one of the first cases of its kind, alleging the fraudulent switching of residents’ healthcare coverage to increase Medicare reimbursement.

The case alleged that Plaza Rehab was switching nursing home patients from their Medicare Advantage plan to a Medicare Fee for service plan, without advising the patients or their families.  Not surprisingly, the Medicare Fee for Service plans paid more to the nursing home than the Medicare Advantage plan

The Plaza is one of five facilities owned and operated by Citadel in New York. After receipt of payment, the government will pay 1.5 million of the recovery to the relator, who blew the whistle on this nursing home chain, explains Nursing Home attorney Jeffrey Downey.

Patients, not nursing homes, have the ability to determine what insurance coverage they want to use where federal nursing homes are involved.  After a qualifying hospital stay, Medicare will provide limited coverage for skilled rehabilitation for up to 100 days.  For the first 20 days, Medicare pays full costs for covered services, but for the following 21 to 100 days, patients are required to pay coinsurance, which can vary depending on your Medicare plan.

Medicare beneficiaries may enroll in the original parts of Medicare, known as Original Medicare, or in Medicare Advantage Plans, which are privately administered. Original Medicare and Medicare Advantage Plans differ in how healthcare providers, including skilled nursing facilities, obtain reimbursement. Under Original Medicare, CMS directly reimburses skilled nursing facilities on a fee-for-service basis.

In contrast, when furnishing medical services to a Medicare beneficiary enrolled in a Medicare Advantage Plan, the provider submits claims to the Medicare Advantage Organization that operates the Medicare Advantage Plan, which in turn pays the provider an agreed-upon amount. In the nursing home industry, it is well known that it is more profitable to admit patients enrolled in the original Medicare compared to the Medicare advantage plans.  The qui tam complaint alleges that from 2016 through 2019, Citadel pressured Plaza staff to increase the number of patients enrolled in the original Medicare plan, often without the patient’s consent.

The defendants’ misconduct came to light because a whistleblower came forward when she noted that the Plaza Rehab staff had forged her grandfather’s signature and had made unauthorized changes to his healthcare coverage in the Medicare online portal. Ultimately, this whistleblower’s case caused Citadel to change its practices going forward and pay a substantial fine.

Patients being admitted to nursing homes need to be vigilant in reviewing documents signed upon admission and clarifying what sources of coverage will be used, explains Downey. Many facilities have their patients sign mandatory arbitration provisions, waiving their right to file a court claim if they are subject to neglect or abuse. For guidance on this issue, check out this link.

Admission to a nursing home can be a stressful and difficult time for a family that is new to the process, explains nursing home lawyer Jeffrey Downey.  Sometimes residents who suffer from pressure wounds (pressure sores), falls, dehydration, malnutrition, elopements, or wrongful death are unable to file Court cases because they have inadvertently signed admission paperwork waiving their rights. The admission process can also lead to a patient giving a facility too much control over their finances or coverage sources.


Know Your Rights

Under Federal law, a nursing home is not allowed to impose a charge against the personal funds of a resident for any item or service for which payment is made under Medicaid or Medicare. See 42 C.R.R. § 483.10 et seq (residents rights).  Insurance coverage and Medicare reimbursement can be complicated, so do not be afraid to ask questions and seek legal advice.

The author, Jeffrey J. Downey, has over 30 years of experience handling personal injury and complex nursing home cases. He is admitted to practice in the states of Virginia, Maryland, N.Y., and Washington D.C.

For a good source of information on a resident’s rights in a Virginia nursing home visit this link.


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If you have questions about nursing home reimbursement, or if you or a loved one have been abused or neglected by a health care provider, call us for a free consultation.
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