BAYADA Home Health Care: The Agency Purchase Behind the Referral Allegations

The BAYADA home health fraud settlement required the company to pay $17 million to resolve allegations that it bought two Arizona home health agencies to induce Medicare patient referrals from the seller’s retirement communities. The alleged kickback sat inside a business acquisition. For someone in growth, acquisitions or referral operations, that is the detail worth recognizing: the deal’s value to the buyer allegedly included the patients the seller could send afterward.

The Justice Department announced the BAYADA settlement on September 8, 2021. The seller, Watermark Retirement Communities, later agreed to pay $4.25 million over allegedly receiving the kickback. The larger settlement concerned the buyer, the smaller one the seller. Both concerned the same deal.

An Agency Purchase That Allegedly Bought Referrals

The government alleged that BAYADA bought the Arizona agencies to induce referrals from Watermark’s retirement communities. The commercial question reaches beyond the agencies changing hands: what was the buyer paying the seller to do once the deal closed?

In this case, the government connected the purchase of agencies in Arizona to referrals from the seller’s retirement communities elsewhere as well. The purchased agencies and the alleged source of future business were different parts of the transaction.

We look at the business being purchased alongside the patient access allegedly being purchased with it. An acquisition agreement describes a change in ownership. The referral relationship can explain what the buyer expected to gain beyond the agencies themselves.

We see patients being treated as part of the acquisition in that allegation. The patient was the business opportunity.

What Is Kickback in Healthcare?

A kickback in healthcare is money or another benefit knowingly offered, paid or received to induce referrals for care paid for by a federal health care program. The Anti-Kickback Statute reaches benefits beyond cash handed over for each patient. The Justice Department’s BAYADA announcement says the prohibition extends to asset purchases intended to induce referrals.

Here, the alleged exchange was the acquisition payment for access to Medicare beneficiaries living in the seller’s communities. The government then connected that exchange to claims BAYADA submitted for services furnished to those patients. That connection brought the referral arrangement into the False Claims Act case.

The contract’s subject can vary. Sham marketing contracts can conceal payments for patients. An acquisition can carry alleged referral payments inside the purchase of an operating business. The question for an insider is what earned the money and what happened to the patients afterward.

Buying referrals puts the interests of the buyer and seller ahead of the patient and the agency competing on the strength of its care. The business can change hands before a nurse ever makes the first visit.

What the BAYADA and Watermark Settlements Covered

BAYADA’s resolution concerned the alleged payment of the kickback and the Medicare claims that followed. Watermark’s later resolution concerned allegedly soliciting and receiving the payment, then causing the home health operator to submit false claims for the referred patients.

The Justice Department’s August 31, 2023 announcement linked Watermark’s resolution to BAYADA’s earlier settlement. The alleged recipient faced False Claims Act allegations over the Medicare claims its referrals caused, even though the home health operator submitted them.

The Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of New Jersey coordinated the resolution, with assistance from the Department of Health and Human Services Office of Inspector General. A former BAYADA director of strategic growth had brought the qui tam case. The government pursued the arrangement the insider reported from both sides of the transaction.

Arizona Agencies, Referrals Across Five States

The alleged referral arrangement centered on eight Watermark retirement homes in Arizona, Connecticut, Delaware, Florida and Pennsylvania. According to the government, those were places where the companies had overlapping operations. That overlap explains how a purchase in one state could allegedly bring patient referrals in others.

The government’s alleged false-claims period ran from January 1, 2014 through October 31, 2020. BAYADA allegedly billed Medicare for services to beneficiaries referred through the transaction. Watermark allegedly caused those claims through the referrals. The commercial arrangement reached the payment system through the people admitted to care.

A retirement community and a Medicare home health agency do different work in this chain. The community supplies the living setting and, in this allegation, access to residents who could be referred. The agency supplies visiting care and submits the home health claim.

The deal reaches Medicare billing through the agency’s certification and patient records. Someone in acquisitions may understand the deal’s purpose, while someone in intake sees the resulting flow of patients.

What Evidence Is Needed to Prove Fraud?

For an acquisition-based referral allegation, the useful evidence connects the purchase, its purpose, the resulting referrals and the Medicare claims. We work with the insider to establish those connections, including what the people making the deal expected to receive in return.

We compare acquisition and valuation records with referral communications and Medicare claims. The work is connecting what management expected from the deal to the patients the agency received and the care it billed.

Acquisition, retirement-community and intake employees can see different parts of the same arrangement. We bring those perspectives together with the documents behind them.

The BAYADA whistleblower’s job was director of strategic growth. That role matters here: the case concerned how the business obtained patients. The allegation began with a commercial relationship and followed it into healthcare billing. Where an insider also suspects unnecessary home health care, we examine the clinical records alongside the referral relationship.

Other Benefits Can Buy the Same Access

The alleged payment for access to residents can also appear in operating arrangements with their facilities. In a separate civil settlement involving Evolution Health, the government alleged that home health providers offered lease payments, wellness services, tickets, meals and other benefits to induce referrals from assisted living facilities and practitioners.

That comparison puts BAYADA’s acquisition allegation in a recognizable business setting. The benefit to the referral source might appear in a lease, a service arrangement or a purchase agreement. For the employee who knows what the arrangement actually delivered, the useful detail is the connection between that benefit and the patients sent in return. We follow that connection through to the agency’s claims.

How Much Does Medicare Fraud Whistleblower Pay?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In the BAYADA resolution, the Justice Department announced that the former director of strategic growth would receive more than $3 million.

One insider, one deal, settlements on both sides. The director of strategic growth knew the commercial side of the business, where the alleged bargain for patients began.

You Know What the Deal Was Meant to Buy

If you know how an agency purchase or facility arrangement was tied to promised patients, talk with our whistleblower experts about the deal and the referrals. We build the case with you around the transaction, the decisions inside the business and the Medicare claims, and bring in home health fraud whistleblower lawyers who understand referral payments. Bring us what you know about the business, and we will stay beside you to build your strongest home health whistleblower case.