flag waving in front of Department of Justice building

The 2014 sale of two home health agencies by a national senior living provider is at the center of a recent $17 million settlement to resolve False Claims Act kickback allegations.

According to a news release from the Justice Department, Moorestown, NJ-based Bayada, Bayada Home Health Care, Bayada Health and Bayada Home Care “knowingly and willfully” bought two Arizona home health agencies from a retirement community operator “to induce patient referrals” of Medicare beneficiaries living at other retirement communities owned by the seller. 

The False Claims Act and the Anti-Kickback Statute prohibit direct payments for healthcare referrals and ban “asset purchases that are intended to induce referrals,” the Justice Department said. According to the settlement agreement, the Bayada companies submitted false claims to Medicare between Jan. 1, 2014, and Oct. 31, 2020, for services provided to residents at several retirement communities.

Although allegations against other entities involved in the case and the name of the retirement communities accused of referring residents to Bayada remain under seal, the details in the settlement agreement align with Bayada’s 2014 purchase of two Tucson, AZ-based home health agencies that operated under the name Watermark at Home and were owned by Tucson, AZ-based Watermark Retirement Communities, according to the Arizona Daily Star

A Watermark spokeswoman said the company is unable to provide a response at this time.

A Bayada spokeswoman shared a statement with McKnight’s Senior Living that said that the company denies the allegation and any wrongdoing and that it entered into a settlement to “avoid the significant expense of protracted litigation and allow our focus to remain on providing high quality home healthcare to our patients.”

“It is important to note that the allegations in this matter do not relate in any way to patient care,” the statement continues. “All of the care provided to our patients was medically necessary, and neither the relator nor the government have alleged anything to the contrary.”

Watermark manages 58 communities in 28 states, including continuing care retirement communities and stand-alone independent living, assisted living and memory care communities, as well as Medicare-certified rehabilitation and skilled nursing neighborhoods. Bayada operates home health agencies that provide nursing, rehabilitative, therapeutic, hospice and assistive care services to people living in residential facilities and in homes in the greater community. 

The civil settlement resolves claims brought in 2017 by David Freedman, who was director of strategic growth for Bayada from 2009 to 2016. Freedman will receive $3 million, as well as $695,000 in attorneys’ fees, under the whistleblower provisions of the False Claims Act. The settlement also includes $8,500 in restitution.

Bayada reached the settlement with the U.S. Attorney’s Office for the District of New Jersey, the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Department of Health and Human Services Office of Inspector General.