Memphis Operator Spring Gate: The Settlement Over Care Called Worthless

In the Memphis Operator Spring Gate fraud case, the nursing home operator agreed to pay $500,000 to resolve allegations that it billed Medicare and TennCare for materially substandard and worthless care from 2012 through 2015. The settlement covered allegations about the care residents received over that period, not just the way a bill was coded.

The Department of Justice announced the settlement on February 2, 2018. It identified the operator as Memphis Operator, LLC, doing business as Spring Gate Rehabilitation and Healthcare Center, and the payment recipients as the United States and Tennessee.

Who Agreed to Pay in the Spring Gate Case?

Memphis Operator, the company operating under the Spring Gate name, agreed to make the settlement payment. The lawsuit also named Vericare Management Inc., a behavioral health services provider for nursing home residents, and PharMerica Corporation.

For an insider who knows a supplier’s work, the useful connection is between the company’s decisions and the services billed for particular residents. We examine that connection company by company: who employed the staff, who authorized the service and whose claim reached the payer. Vericare’s separate New Jersey case, discussed below, shows why an order for a resident’s care can also tell a story about the supplier’s sales incentives.

What the Government Alleged About Spring Gate Care

The Spring Gate complaint alleged substandard and worthless nursing home services. According to the Justice Department, the claims involved care that also violated essential requirements for skilled nursing facilities. The department explained that Medicare and TennCare do not pay for services so deficient that they are essentially worthless.

Alongside its settlement, Spring Gate entered a corporate integrity agreement with the Department of Health and Human Services’ Office of Inspector General intended to deter future wrongful conduct.

The payment side takes its own records. A dually certified nursing facility can provide a Medicare skilled stay and a Medicaid-funded residence under different coverage rules. A resident can remain in the same room while the source of payment changes. Connecting the care to the claim therefore means identifying the resident, the service, the dates and the program paying for it.

The California Research Bureau’s 1997 report, Fraud and Abuse in the Health Care Market of California, identified repeated poor-quality care as a form of fraud and abuse. It described a systematic pattern of substandard treatment and the need to evaluate treatment against medical practice. That perspective puts the clinical work at the center of the inquiry. A bill can identify a service and its price; the people treating the resident can explain what the service actually amounted to. In a case about the value of care, that knowledge matters as much as familiarity with the billing system.

Golden Living’s Wound-Care Case

The separate Golden Living wound-care settlement announced in 2013 shows a more specific version of that connection. In that case, the government alleged inadequate and worthless wound monitoring, documentation, prevention and treatment that produced false Medicare, Medicaid and Veterans Administration claims.

The alleged failures included both the treatment and the documentation of it. For someone responsible for resident care, that is where clinical knowledge becomes useful to a billing investigation: the notes describe what the facility says it did, and the people providing care know what happened. The wound-care allegations reached work before and during treatment, including prevention and monitoring. An insider’s account of that work can explain the clinical meaning of entries that a billing employee sees only as supporting paperwork.

What Evidence Is Needed to Prove Fraud?

In a nursing home care case, useful evidence connects the services residents received to the assessments, certifications and claims submitted for payment, together with the people who knew or controlled those representations. We connect that clinical knowledge to the healthcare claims with you.

The Minimum Data Set assessment draws on observations and information from direct-care staff across shifts. A registered nurse conducts or coordinates the assessment, and each contributor certifies the accuracy of their portion. We read the completed assessment alongside the observations and clinical notes supporting it, particularly when the assessment and the care tell different stories.

A Separate Vericare Case Shows Why Orders Matter

Vericare’s separate settlement in New Jersey in 2015 concerned allegations of routine evaluations for new nursing home admissions without patient-specific medical-necessity orders. The whistleblower’s complaint described an alleged incentive inside the supplier:

The alleged bonus rewarded securing an order that sent every new resident to a psychologist. The complaint also alleged that Vericare paid clinicians bonuses tied to the services they provided and the reimbursement they generated. Managers had an incentive to secure the order, and clinicians had an incentive to generate reimbursable work under it.

That is why supplier records can matter alongside the nursing home’s chart: the decision generating a service may sit in a manager’s incentive or a standing order. A clinician may know why the visit occurred, while an administrator knows who arranged the order and a billing employee sees the resulting claim. Those are different views of the same health care transaction, and we bring them together when assessing a whistleblower case.

A Whistleblower Started the Spring Gate Case

The Spring Gate allegations first reached court through a whistleblower’s qui tam case under the False Claims Act. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What Care Reached the Resident

If you saw a nursing home’s claims diverge from the care residents received, speak with our whistleblower experts about what happened. We work with you to build your strongest nursing home whistleblower case around the clinical facts and the decisions behind the billing, and bring in skilled nursing facility fraud whistleblower lawyers who understand both. We remain your partners through the pursuit of the case.