Georgia Nursing Home Operator Fraud: Money for Hotels While Residents Went Hungry

The Georgia nursing home Medicaid fraud case exposed an operator who collected $32.9 million from Medicare and Medicaid while residents went without food, supplies and adequate nursing care. In its account of the criminal trial, the Justice Department described employees buying groceries for residents with their own money while the operator bought property for a hotel development. The people keeping the homes running were paying for essentials the government had already paid him to provide.

A federal judge convicted the operator of conspiring to defraud Medicare and Medicaid on April 2, 2012. The homes were Mount Berry and Moran Lake in Rome, Georgia, and Wildwood in Brunswick. The court found that the operator billed for worthless services: the care was so deficient that the bundle of services had no medical value. For an administrator or finance employee, the case connects a familiar set of records: who controlled the accounts, which bills went unpaid, what staff told management and what the facilities kept billing.

The Owner on Paper and the Person Controlling the Money

The name on the provider paperwork did not always identify the person directing the money. The Eleventh Circuit’s account of the criminal case describes the operator seeking to regain control of the homes through Forum Healthcare Group, while state records and Medicare and Medicaid applications listed his then-girlfriend as its owner, president and office manager.

The criminal indictment traces subsequent changes through Forum Group Corporation and renamed facility businesses. It says the later Georgia Medicaid applications listed the operator himself as office manager and a person with an ownership or controlling interest in all three homes. He also signed their Medicare enrollment applications as president.

The indictment alleges that the operator and the corporate secretary took complete control of the facilities’ bank accounts, locking out administrators who previously had access. Accounts in the names of Forum Healthcare Group and Forum Group Management Services processed Medicare and Medicaid money and paid facility expenses. An administrator could remain responsible for daily operations while losing access to the money needed to run them.

In its later Georgia Comprehensive Program Integrity Review, published in December 2014, the Centers for Medicare & Medicaid Services found gaps in the state’s enrollment disclosures. A paper application used by businesses such as home health agencies did not collect complete ownership, control or managing-employee information. We examine who actually directed spending alongside the names on an application.

What Medicare and Georgia Medicaid Paid For

The indictment describes nursing-home revenue paid by the day, with Medicare and Georgia Medicaid supplying nearly all of the facilities’ per-diem income. It describes Medicare paying for skilled nursing care following a qualifying hospital stay, while Georgia Medicaid paid for beneficiaries to reside in the homes and for certain medical expenses and prescription drugs.

According to the Justice Department’s trial account, the operator billed the programs approximately $39.4 million between July 2004 and September 2007. His certifications and promises covered a safe and clean physical environment, nutritional meals, medical care and services supporting residents’ quality of life. Food, clean laundry and nursing supplies were part of the care the money was supposed to buy.

The indictment alleged that the electronic claims falsely represented that the homes had provided the required care, services and environment. The trial account then describes what the court found: a sustained pattern of food shortages bordering on starvation, leaking roofs, missing supplies, poor sanitation, severe staffing shortages and safety problems.

Bounced Paychecks Became Missing Care

The Justice Department’s account of the trial connects staffing shortages directly to the operator’s failure to pay employees. Bad paychecks prompted resignations. He also deducted health insurance premiums while letting coverage lapse for nonpayment. Existing workers left, and payroll and insurance problems discouraged new applicants.

The indictment supplies the management communications behind that account. It alleges that administrators repeatedly called, emailed and faxed the operator and corporate secretary about conditions. Some faxes were thrown away unread. Administrators sought reliable payroll funding, and the Mount Berry administrator eventually said staff would stop signing payroll checks unless the bank had enough money to cover them.

Food and supply problems followed the same financial pattern. The trial summary describes unpaid food suppliers, pharmacy and laboratory vendors, waste services and nursing-supply vendors. Employees bought milk, bread, groceries, nursing supplies and cleaning supplies themselves. They took residents’ laundry to laundromats or washed it at home.

The indictment quotes the corporate office’s response when an administrator asked to be reimbursed for purchases that included an igniter for a broken water heater:

The indictment says the email left reimbursement timing unclear and copied both defendants. Employees were financing essentials with their own money while the corporate office told them not to. The bills still needed paying.

The Bills the Operator Chose to Pay

Of the Medicare and Medicaid money paid for residents’ care, the operator diverted slightly more than $8 million to his personal use, according to the Justice Department’s account of the trial evidence. While the homes lacked essentials, he bought approximately $2.7 million in properties for a planned hotel complex in Rome and considered hotel developments in Atlanta and Brunswick.

The same trial account describes a house bought for his former wife for approximately $1.4 million. He put her on the nursing-home payroll instead of paying alimony, although she never worked at the homes. Corporate bank accounts also paid for Mercedes-Benz automobiles, furniture and vacations.

The people providing care received bad checks. Someone who did no work at the homes received a salary. We examine the payee, the work and the authorization together, because the label on an expense does not tell us what the money bought.

Complaints Brought the Conditions Outside the Homes

Families, staff and vendors complained to the Georgia Department of Human Resources’ Office of Regulatory Services, according to the trial announcement. A state surveyor testified about the conditions at Moran Lake.

The trial summary describes water-soaked ceiling tiles falling onto residents’ beds, unrepaired heating and cooling equipment, and rotting garbage accumulating because trash collection went unpaid. Residents even bet on which service or utility would be cut off next, according to testimony described in the announcement.

The indictment says the homes lost their participation in Medicare and Medicaid for failing to meet program requirements. The Federal Bureau of Investigation, the Health and Human Services Office of Inspector General and IRS Criminal Investigation investigated the case.

The Civil Pattern in Other Nursing Homes

Civil False Claims Act cases also connect diverted facility money to missing care. In the Hyperion Foundation settlement, the government alleged that Medicare and Medicaid funds went to businesses affiliated with the facility’s former president or AltaCare’s chief executive, leaving the home unable to pay for food, heat, air conditioning, pest control and cleaning. The settlement required $1.25 million to the United States. The building’s landlord, Academy Health Center, brought the whistleblower case.

The landlord’s role shows why knowledge of a home’s finances can come from outside its staff.

The Saratoga Center settlement addressed the control side of the pattern. The government alleged that a landlord forced out licensed operators and installed people and businesses that never obtained the required New York license. It alleged worthless nursing services after they took over. The landlord and former operators agreed to pay $7,168,000 to resolve the allegations.

These civil allegations put the same practical questions in front of a facility insider: who actually ran the home, who could authorize spending and what happened to the care after the money moved.

What Evidence Is Needed to Prove Fraud?

Evidence for a False Claims Act case connects what was billed, what health care residents actually received and who knew the difference. We work with you to connect the care records, financial records and management communications behind those questions.

Here, the indictment describes administrators reporting conditions while the defendants controlled accounts they could no longer access. Your knowledge of who could approve payroll, repairs or a vendor payment can explain why the care went unfunded. That is the difference between seeing an unpaid bill and knowing who decided not to pay it.

The 1996 Journal of Insurance Medicine study Health Care Fraud Control: Understanding the Challenge examined healthcare fraud controls and found that the quality-control programs it studied checked procedural compliance while accepting the claim’s information as true. Its sharpest observation concerns that gap:

The nursing-home case gives that distinction a human setting: residents needed food and staff, while the operator’s accounts received program payments. An insider can connect the payment to what happened after it arrived.

Can You Get Paid for Reporting Medicaid Fraud?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We build civil whistleblower cases around the payments, the care and what you know from inside the business.

You Know Which Bills Went Unpaid

If you watched care go unfunded while money left the nursing home, talk with our whistleblower experts about who controlled the spending. We work beside you to build your strongest nursing home fraud whistleblower case from your knowledge of the accounts, the care and the decisions behind both. We bring in nursing-home fraud whistleblower lawyers who understand facility finances, and we stay with you throughout the case.