Grand Healthcare Strauss Ventures: Therapy Targets, Altered Minutes and the Limited Admissions

In the Grand Healthcare Strauss Ventures fraud case, The Grand Health Care System agreed to pay $21.3 million to resolve allegations of unnecessary therapy and inflated treatment records. Its admissions reach inside the rehabilitation department, from patients assigned the highest therapy level before evaluation to minutes changed after treatment. The people setting those targets could be far from the patient, but their decisions reached the patient’s schedule, discharge and bill.

The Justice Department announced the settlement on July 10, 2024. The settling parties were Strauss Ventures, LLC, doing business as The Grand Health Care System, and 12 New York skilled nursing facilities. Two former rehabilitation providers brought the qui tam case under the False Claims Act, and the United States joined the case as part of the settlement.

Grand supplied corporate compliance, billing, analytics and back-office services to the facilities. That corporate role matters: the settlement agreement describes instructions traveling from rehabilitation supervisors to facility directors, then into individual treatment plans. The Medicare and TRICARE allegations covered facility-specific periods beginning as early as January 1, 2014 and ending September 30, 2019.

How RUG Therapy Payment Worked

For the historical Medicare billing at issue here, therapy minutes helped determine how much a skilled nursing facility received. Medicare classified patients into resource utilization groups, commonly called RUGs. The therapy categories ran from low through medium, high and very high to ultra-high, based primarily on skilled therapy delivered during a seven-day assessment period.

The agreement describes an ultra-high threshold of at least 720 minutes of skilled rehabilitation across at least two therapy disciplines, with one provided at least five days a week. That category generally paid more than the others. Physical, occupational and speech therapy were the services behind the classification. The patient’s need for skilled care was supposed to determine the treatment.

The government’s allegation reverses that order. Grand allegedly built budgets around billing the vast majority of patients at the ultra-high level, planned minutes to reach the targeted category and discouraged therapy beyond its minimum threshold. Corporate officials unfamiliar with individual patients allegedly adjusted schedules to meet, but not exceed, the amount needed for the targeted payment. Enough treatment to reach the rate, with pressure against going beyond it.

The payment threshold also left a pattern in the wider assessment data. In its 2018 payment rule, the Centers for Medicare & Medicaid Services reported that assessments in the 720-to-739-minute band increased from 5% in fiscal year 2005 to 33% in fiscal year 2013. A few extra minutes on a log could be worth a higher rate.

That tension sits inside a payment system intended to control costs. The Bureau of Labor Statistics’ 1999 Monthly Labor Review article, Health Services Industry: Still a Job Machine?, described the move toward payments based on average treatment costs and explained its purpose this way:

The Grand allegations show pressure applied to the classification itself: shape the treatment schedule to produce the desired payment category. The treatment record becomes a way to reach a budget already set elsewhere.

Medicare replaced RUG-IV with the Patient Driven Payment Model on October 1, 2019. The new model uses patient characteristics, including diagnosis, function and nursing needs, instead of the old therapy-volume classification. Grand’s historical Medicare therapy case belongs to the earlier system.

What Grand Admitted

Grand admitted specified conduct involving therapy quotas, discharge restrictions, supervisory control over treatment minutes and falsified electronic records. The details show how a reimbursement target reached a patient who had yet to be evaluated.

A Therapy Level Before an Evaluation

Management set quotas for the share of Medicare Part A patients at the ultra-high level and for their average length of stay. Rehabilitation directors often started new patients at that therapy level, sometimes before an evaluation, and scheduled it unless the patient could not physically tolerate it.

Supervisors responsible for billing and rehabilitation pressed facility directors to raise ultra-high billing, including for patients the supervisors had never evaluated or treated. The admitted account includes a director’s statement that all incoming Medicare patients would be planned at ultra-high. It also describes supervisors setting or increasing minutes to capture a projected RUG or avoid a lower classification, even when the treating provider considered less therapy appropriate.

One exchange strips away any pretense that the question was purely clinical. A rehabilitation director asked a supervisor whether to try for a higher RUG for a particular patient. The reply appears in the conduct Grand admitted:

The supervisor’s words matter because they accompany the operational detail: a patient, a proposed higher category and a decision from someone controlling the therapy program.

Discharges Required Corporate Discussion

Grand also admitted that a supervisor required an average Medicare length of stay greater than 35 days. One instruction required corporate discussion before a Medicare Part A patient could leave rehabilitation therapy. Another limited discharges to no more than three patients per facility per week.

Those restrictions sometimes kept patients on therapy longer than was reasonable and medically necessary. Directors were asked to extend particular patients’ treatment or delay discharge to protect the facility’s figures. The admitted conduct reached the decision to keep treating someone after the clinical reason for doing so had run out.

The individual discharge recommendation and the corporate instruction tell different parts of that story. One records the treating provider’s judgment. The other can show why the facility continued billing for therapy anyway.

The Minutes Changed After Treatment

Grand admitted instances in which supervisors falsified therapy minutes in its electronic recordkeeping system well after the therapy was said to have occurred, or instructed subordinates to do so. Almost every such change increased the minutes billed.

That admission gives an insider a precise point of comparison: what the therapist recorded when care occurred and what appeared later in the billing record. A retrospective increase can connect the corporate target to the claim even when the supervisor never treated the patient. The edit and the instruction behind it belong in the same account.

The settlement also records Grand’s Corporate Integrity Agreement with the Department of Health and Human Services’ Office of Inspector General. Grand’s obligations include retaining an independent review organization to perform annual reviews and submitting reports to the inspector general.

Which Is an Example of Billing Fraud?

Adding treatment minutes that never occurred is an example of billing fraud alleged in the Grand complaint. The whistleblowers described the practice in direct terms:

The complaint also alleged that directors told therapists to add previously missed minutes days later. It described staff counting time spent persuading patients to attend therapy toward scheduled minutes and treating a patient’s trip downstairs in a wheelchair as therapy. The government separately alleged that Grand counted initial evaluations and unskilled services as skilled treatment and pressured sick or unwilling patients to complete planned minutes.

The pressure appears in a director’s message quoted in the complaint:

The phrasing puts the payer ahead of the patient. In the complaint’s account, a refusal of treatment became a problem with the minute total. In the government’s broader allegations, even an evaluation or unskilled task could become time credited toward the skilled-therapy target.

The same conflict appears in the separate Stern Therapy Consultants settlement, announced in March 2026. That case concerned unnecessary ultra-high therapy, continued treatment despite documented lack of benefit or a patient’s refusal or inability to participate, and certifications by a nonclinical director. The recurring question is who kept therapy going when the patient’s condition called for a different decision.

The Separate Pawling Medicaid Allegation

The Pawling Medicaid allegation concerned inflated descriptions of residents’ care needs that raised the facility’s payment. The government alleged that Grand and The Center for Rehabilitation and Healthcare at Dutchess, LLC, operating as The Grand Rehabilitation and Nursing at Pawling, submitted false Medicaid claims for a period extending through June 30, 2021.

According to the agreement, employees supplied New York’s Department of Health with data misrepresenting the care certain residents required, including rehabilitation. That distorted residents’ RUG scores and raised Pawling’s Case Mix Index, increasing the money it received from Medicaid. This part of the agreement concerns Pawling’s Medicaid rate. It is separate from the Medicare therapy-minute conduct.

The complaint adds a picture of how a care-need story could enter the chart. It alleged that patient lists used to plan therapy screens and evaluations circulated to nursing departments so nurses would begin documenting a decline. In another allegation, a therapist said a patient already drank thin liquids without difficulty, yet a director wanted the chart to describe a more restrictive swallowing status and justify therapy toward the ability the patient already had.

How Much Does a Medicare Fraud Whistleblower Case Pay?

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

The agreement’s reward provision allocated the two whistleblowers collectively nineteen percent of each settlement payment the government received. The announcement described an anticipated combined award of approximately $4 million.

What Is a Red Flag for Health Care Fraud?

A treatment record changed to reach a reimbursement target is a concrete red flag for healthcare fraud. Grand’s admitted retrospective edits show why the original entry, later version and supervisor’s instruction matter together. The therapist knows what happened in the room. The electronic history can show what changed afterward.

The evidence crosses departments: nursing observations describe the resident’s function, therapy notes record the treatment, and Minimum Data Set assessments carry care needs into the payment calculation. Connecting those accounts to the supervisor’s instruction and the resulting claim is work we do with you.

Someone in rehabilitation, nursing, assessment or billing may know only part of that sequence. Our work is to connect those views: the patient who could not tolerate the schedule, the recommendation to end therapy, the instruction to keep going and the claim that followed. The Grand agreement shows why knowledge of a supervisor’s decisions can matter as much as access to the final bill.

You Saw the Treatment and the Target

If you saw therapy minutes rewritten, discharge recommendations overruled or care needs invented to raise payment, speak to one of our whistleblower experts about what happened inside your facility. We work with you to build your strongest skilled nursing whistleblower case around those decisions and bring in skilled nursing therapy-billing whistleblower lawyers who understand the clinical records and reimbursement. We stay beside you throughout the case, connecting what you know about the care to what the government paid.