Guardian Elder Care: Therapy for the Revenue Target

In the Guardian Elder Care fraud case, Guardian Elder Care Holdings agreed to pay $15,466,278 to resolve allegations that it pushed medically unnecessary rehabilitation therapy to meet revenue goals. The alleged pressure reached residents with dementia who did not need or want the treatment and dying residents receiving hospice care. For a therapist told to keep treating someone to satisfy a financial target, the conflict is familiar: the business wants more therapy than the resident needs.

The Department of Justice announced the settlement on February 19, 2020. At the time, Guardian operated more than fifty nursing facilities across Pennsylvania, Ohio and West Virginia, including locations in the Lehigh Valley, the Poconos and Bucks County. The HHS Office of Inspector General’s account identifies alleged overbilling of Medicare and the Federal Employees Health Benefits Program.

Two former Guardian employees brought the qui tam case under the False Claims Act, and the government joined it. While the government investigated the therapy allegations, Guardian also disclosed a separate problem involving employees excluded from federal health care programs. Both components became part of the settlement.

What Guardian’s Former Employees Alleged

Guardian’s former employees alleged that the company pressured rehabilitation therapists to meet financial targets without regard to clinical need. The settlement covered allegations arising from its facilities management practices from January 2011 through December 2017.

The dementia example makes the allegation concrete. According to the whistleblowers, certain residents did not need or want rehabilitation, yet Guardian pressured therapists to provide it anyway.

The hospice allegation carried the same conflict to residents at the end of life. The Justice Department described patients who were dying, receiving hospice care and allegedly had no medical need for intensive therapy. Guardian nevertheless allegedly pressed therapists to treat them to meet the same financial goals. Even a dying resident allegedly had a revenue target to satisfy.

That is the decision an insider can illuminate. What did the treating therapist conclude about the resident’s needs, and what did management insist should happen next? We examine that connection through the clinical account, the instructions given to staff and the services represented for payment. The employee who heard the instruction may understand a treatment entry very differently from someone reading it in isolation.

The Payment Model Behind the Therapy Target

Guardian’s alleged conduct occurred during the historical RUG-IV payment system, when therapy minutes helped determine Medicare’s payment category for a skilled nursing stay. Those categories gave a revenue target a practical meaning on the therapy floor: additional counted minutes could move a resident into a higher-paying group.

The historical Ultra High category, described in the Justice Department’s Life Care settlement announcement, required at least 720 minutes of therapy in a week, across two disciplines, with one provided five days a week. A manager seeking that category had a reason to focus on the amount of therapy recorded and when it occurred. The clinical question was whether the resident needed that treatment. The alleged financial pressure arose when management made the payment category the goal and expected treatment to follow.

The assessment and bill connect those decisions to Medicare. The Minimum Data Set records the resident assessment, which supplies a payment classification for the claim. Under Medicare Part A’s bundled payment, the skilled nursing facility receives payment for covered care that includes nursing and therapy. The therapist, the assessment staff and the billing operation can therefore hold different parts of the same payment story.

A therapist may know the treatment actually delivered. Assessment staff may know how it was represented. Billing staff may know how those representations affected payment. Our work is to connect those views to the same resident and treatment period.

Medicare’s Patient-Driven Payment Model replaced RUG-IV on October 1, 2019. Patient characteristics and clinical needs replaced therapy-minute groups as the basis for classification.

Under the newer model, diagnoses, functional abilities and nontherapy care needs recorded in the assessment affect payment. For an insider who sees clinical information changed to reach a higher-paying category, we examine how the assessment compares with the resident’s care records and the resulting claim.

The Excluded Employees Were a Separate Payment Issue

Guardian voluntarily disclosed that it had employed two people excluded from federal healthcare programs while the therapy investigation was underway. The settlement also resolved claims that Guardian improperly received payment for services provided through those employees during their exclusions.

The therapy allegation asks why treatment was provided and whether the patient needed it. The excluded-worker component asks whose services generated the payment and whether that person was excluded at the time.

For an employee who knows about an excluded worker, the useful connection runs from the person’s work and exclusion dates to the services and payments. We examine employment and payroll records alongside the service dates, billing entity and payer to understand that connection.

The Settlement and Whistleblower Reward

The Justice Department announced that the two former employees would share approximately $2.8 million of the recovery between them.

Guardian also agreed to enter a chain-wide Corporate Integrity Agreement with the HHS Office of Inspector General. The government described the agreement as a way to promote compliance and protect nursing home residents.

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

When a Treatment Plan Becomes a Payment Target

Other nursing home therapy cases show how a revenue goal can become a direction to the person treating the resident. In the government’s complaint against Life Care Centers of America, a manager’s instruction allegedly made the payment category the reason to preserve planned therapy minutes:

The instruction described in that complaint protected the reimbursement plan from a reduction in treatment. It gives operational meaning to the kind of financial pressure alleged in Guardian’s case: a manager’s expectation can follow a patient into the therapy schedule.

The Kindred/RehabCare settlement addressed allegations that therapy staff inflated assessment-period minutes, counted evaluation or unskilled time as therapy, and reported services they had not delivered. That case reached a therapy supplier that allegedly caused false facility claims, with separate settlements involving customers. It shows why the connection between the therapy operation and the facility bill matters.

A broader workplace perspective appears in Pressure to Commit Fraud in the Workplace: Two Teaching Cases Addressing Fraud and Whistleblower Protection, published in the Journal of Forensic & Investigative Accounting in 2018. The paper describes survey respondents’ willingness to justify illegal payments under pressure to meet financial targets. In the Guardian allegations, that pressure took a specific clinical form: therapists were allegedly expected to keep revenue ahead of residents’ needs.

The records we examine follow that pressure into the claim. Contemporaneous treatment notes, patient participation, assessment dates and changes in recorded treatment can connect what happened in the therapy room with what the facility represented for payment. Management instructions supply another part of the story: why staff were expected to deliver or record the disputed services. An insider who knows how those instructions worked can give the billing records their missing context.

You Know Why the Therapy Continued

If you saw treatment continue to satisfy a revenue target, or know how excluded employees’ services reached a government bill, talk with our whistleblower experts. We build the case with you and bring in skilled nursing facility fraud whistleblower lawyers who understand therapy billing and the decisions behind it. We stay beside you from the first account of what happened through the pursuit of a recovery.