AJIT Healthcare and Westlake: A Hospital Round Trip to Keep Medicare Paying

AJIT Healthcare Inc., doing business as Westlake Convalescent Hospital, and two physicians paid $3,563,140 to settle the AJIT Westlake fraud case over alleged patient cycling through a hospital to extend Medicare-covered nursing-home stays. DOJ alleged that a referral source supplied patients, one physician sent them through the hospital, another signed orders, and Westlake billed public health care programs for care the patients did not need.

A former Westlake employee brought the False Claims Act case. Westlake is a Los Angeles nursing home, and its bills went to Medicare and Medi-Cal.

How the Westlake Patient-Cycling Scheme Worked

The Justice Department alleged that Westlake paid a Skid Row care consortium for patient referrals between 2008 and 2010. The people recruited into the broader transfer scheme were mostly homeless and vulnerable. Their movement between facilities supplied the occasions for billing.

The two physicians were a married couple who worked at Westlake. During that period and afterward, one physician allegedly sent Westlake patients back to Temple Community Hospital and then returned them to Westlake to extend their Medicare-covered stays. According to the government, the physician knew the patients did not require further services at either facility. The other physician allegedly signed medical orders for services that were not payable. Westlake allegedly billed both public programs for medically unnecessary services.

The alleged arrangement put vulnerable residents through another hospital stay to keep the nursing home’s Medicare billing going. The clinical reason for moving them was precisely what the government said was missing.

The California Research Bureau’s 1997 report, Fraud and Abuse in the Health Care Market of California, treats false claims and paid patient steering as distinct mechanisms. One concerns the information submitted for payment. The other concerns buying the business that generates the claim. In Westlake’s alleged arrangement, the referral payment bought the patients, and the hospital round trip kept them billable.

Why the Hospital Stay Mattered to Skilled Nursing Coverage

A qualifying hospital stay is a gateway to Medicare-covered skilled nursing care. The Medicare Benefit Policy Manual’s ordinary coverage framework calls for three consecutive medically necessary inpatient days, followed by qualifying skilled care.

That payment connection explains the alleged trip through Temple Community Hospital. The government said the physician used readmission and return to Westlake to extend Medicare-covered nursing-home stays despite knowing further services were unnecessary. The hospitalization was part of the alleged way to obtain payment for the nursing-home care that followed.

For a clinician, the question is what condition required the patient to leave and what skilled care the patient needed on return. For someone in admissions or billing, the same trip appears as discharge and admission dates, orders and claims. Connecting those views shows whether the clinical account supports the paid stay. Patients and taxpayers bear the cost when the movement between facilities serves the billing instead of the patient.

What Evidence Is Needed to Prove Fraud?

For a patient-cycling allegation, the useful evidence connects the reason for hospitalization, the return to the nursing facility, the orders and the claims. We examine those records together with referral payments and the decisions behind them.

Hospital admission and discharge records show when the patient moved and the clinical reason recorded for the transfer. We compare that account with the nursing facility’s orders, care notes and bills for the returning patient. The question is whether the care claimed matches the need described.

The referral side has its own evidence. A contract describes the arrangement, while payment records can show where the money went. We connect those payments with the transfers and the care claimed to understand who was buying patient referrals and how those referrals became bills.

An admissions employee may see the repeated returns. A nurse may know that the clinical picture did not support the care being ordered. A billing employee may see the coverage and claims. Those are different views of the same resident’s stay, and our work is to bring them together into a case.

Hospital Referrals and Coverage in Other Cases

The hospital stay also supplied the payment connection in the case involving Saint Joseph’s Hospital of Atlanta. The Justice Department’s settlement announcement covered allegations that unnecessary three-day hospital admissions were arranged so patients could qualify for subsequent Medicare skilled nursing coverage.

A whistleblower’s complaint concerning the Riverside nursing facility described the same incentive in unusually plain terms:

The complaint concerning Brius Management alleged another way to buy the flow of patients: payments to hospital case managers disguised as consultation fees. Read alongside Westlake, these allegations show why a referral agreement, a hospital chart and a nursing-home claim can all matter to the same healthcare fraud inquiry.

The Westlake Settlement and Whistleblower Reward

The Justice Department announced the resolution in September 2016 and reported that the former employee who brought the qui tam case had received a share of the settlement.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Saw Why the Patient Came Back

If you know why residents were sent to a hospital and returned to another paid stay, talk to our whistleblower experts. We build the case with you around the clinical decisions, referral money and billing, and bring in skilled nursing facility fraud whistleblower lawyers who understand hospital admissions and referral kickbacks. We stay with you from the first call through the case.