$60 million lawsuit alleges memory care understaffing, false billing

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$60 million lawsuit alleges memory care understaffing, false billing
$60 million lawsuit alleges memory care understaffing, false billing

Forty-five senior living communities in North Carolina have defrauded the state and federal governments of more than $60 million by submitting claims for personal care services that, based on staffing levels, could not have been provided to residents living in their memory care units, alleges a lawsuit announced Monday.

All of the communities were managed by Meridian Senior Living at the time the complaint originally was filed, according to the document, which was unsealed on Friday. In mid-2016, Meridian CEO Charles. E. Trefzger Jr. formed Affinity Senior Living, which assumed management of them. The communities, Meridian, Affinity, related companies and Trefzger are named in the suit.

The lawsuit claims that since at least 2010, the communities routinely billed the Medicaid program for the monthly maximum allowable amount for the provision of personal care services even if services were not provided for an entire month because of death, a move or some other reason.

“That's the core of this False Claims Act [lawsuit], that they submit 100 percent of the hours that Medicaid has approved them for, regardless of the care actually provided, which is flatly against the law,” plaintiffs' co-counsel Matthew Lee, of the law firm Whitfield Bryson & Mason LLP, told McKnight's Senior Living.

The communities allegedly overbilled by 1.5 to 1.75 hours of personal care services per day more than the actual staff time available for each resident.

“If you go down the staffing schedules — who was on, how many people were on, how long they were on — they can't have provided the number of hours to these residents that they submitted in bills,” Lee said.

The complaint also alleges that the communities did not meet minimum staffing levels required by the state and did not provide an amount of services to meet resident needs as determined by assessments performed by an independent contractor hired by the state.

“The regulations for special care units are very specific about their staffing requirements. …You provide the level of personal care services that are required to meet the needs of the residents,” Lee said. “And so the hours that they're approved for isn't all they have to do, necessarily. …But they're not even meeting the minimums much less meeting the needs of the residents, which is a huge problem.”

The lawsuit was brought by Stephen Gugenheim.

“He's an attorney who's been working in the healthcare industry for his entire career, virtually, and became aware of these [alleged] false claims through working injury claims against Meridian,” Lee said.

“One of the most common impacts of understaffing is people getting hurt, people dying, because they're not taken care of,” he added. “And so there's a natural interaction between understaffing and injury claims, and Mr. Gugenheim was in a unique position to see that.”

Whitfield Bryson & Mason is one of two law firms handling the case for “whistleblower” Gugenheim and the other plaintiffs — the governments of the United States and North Carolina — who also are represented by Marshall, Roth & Gregory P.C. The governments have opted not to intervene in the case at this point, Lee said, “so in order to do our job for the citizens of North Carolina, we need to have comparable resources.”

“This is a big case,” he added. “There's going to be a whole lot of work to do.”

The law firms also are investigating potential claims of Medicaid fraud in other Meridian facilities throughout the country, he said. Meridian has senior living communities in 20 states, including 44 communities that offer memory care across 17 states, according to its website.

“I hope that this will change industry practices,” Lee said. “I think that this is pervasive across the industry.”

Meridian Senior Living did not respond to requests for comment.

See Affinity Living Group's response here.

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