A $60 million lawsuit alleging understaffing and fraudulent billing at 45 senior living communities in North Carolina “is an erroneous interpretation of Medicaid reimbursement in the state,” says the senior living operator at the center of the complaint.

“We categorically deny and reject the claims in this lawsuit,” Charles Trefzger, president and CEO of Affinity Living Group, told McKnight’s Senior Living in a statement.

As previously reported, the False Claims Act lawsuit, unsealed July 7, maintains that the communities defrauded the state and federal governments 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. The “whistleblower” in the case is Stephen Gugenheim, a healthcare attorney who filed injury claims against the provider in the past.

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

The lawsuit in part 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. The practice “is flatly against the law,” plaintiffs’ co-counsel Matthew Lee, of the law firm Whitfield Bryson & Mason LLP, told McKnight’s Senior Living.

Affinity, however, said that Medicaid reimbursement for personal care services is based on services performed, not hours of service provided to residents. Bills for services performed, the company added, are based on a resident’s independent assessment and care plan created by the state shortly after admission.

Affinity said it serves 4,500 assisted living residents in the state, 3,000 of whom are Medicaid beneficiaries. That’s 23% of the state’s assisted living residents and the same percentage of assisted living residents whose care is funded by Medicaid, according to the company.

“As North Carolina’s largest assisted living provider, Affinity has sustained more than a dozen audits over the past few years by the North Carolina Department of Health and Human Services that upheld our interpretation of regulations and billing guidelines for Medicaid,” Trefzger said. “Our top priority has always been providing exemplary care … which is why so many families choose to live in our homes.”

The company provided two external opinions of its actions to McKnight’s Senior Living.

“It appears the state’s guidelines are generally interpreted in a uniform manner across the assisted living industry and the state’s Medicaid agency conducts regular audits to ensure compliance,” Lanier Cansler, president of consulting firm Cansler Collaborative Resources, said in a statement verified by McKnight’s Senior Living. Cansler was secretary of the North Carolina Department of Health and Human Services from 2009 to 2012, according to his company’s website. Affinity is a client, he told McKnight’s Senior Living.

“It’s unfortunate that recent legal attacks appear to use meritless interpretations of industry regulations against [personal care services] service providers, interpretations that government agencies have not pursued,” Cansler added.

The vice president of the North Carolina Association of Long Term Care Facilities also said that operators in the state follow the same approach to billing for personal care services.

“This agreement on implementation is particularly important given the wave of unwarranted lawsuits on long-term care providers in recent years, which take away time and resources that should be fully focused on caring for our state’s most vulnerable citizens,” Hugh Campbell said in a statement.

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.

“Affinity staffs its facilities well in excess of state requirements and ensures that all the needs of our residents are taken care of — in a timely manner, and with dignity,” Trefzger said.