Mount Berry, Moran Lake and Wildwood: Care Money Bought Real Estate While Residents Went Hungry

Mount Berry, Moran Lake and Wildwood billed Medicare and Medicaid for worthless care, and the programs paid $32.9 million for services the court found had no medical value. Their operator used care money to buy real estate while employees bought residents’ groceries themselves. For someone inside a nursing home, the story runs through familiar places: the kitchen, the payroll office, the unpaid vendor account and the bank statement showing where the money went.

Mount Berry and Moran Lake operated in Rome, Georgia, and Wildwood operated in Brunswick. The indictment identifies Forum Healthcare Group and then Forum Group Corporation as the companies through which the operator owned and managed the homes.

The Justice Department’s account of the trial describes a scheme spanning July 2004 through September 2007. The homes billed approximately $39.4 million during that period, promising a safe, clean environment, nutritional meals and medical care. The government paid for those promises while the homes ran short of the things needed to keep them.

Food Deliveries Stopped, but Residents Still Needed to Eat

Unpaid supplier bills left kitchens without deliveries and residents without prescribed diets. The court’s findings describe Sysco warning administrators that food would not arrive unless the operator paid. Administrators repeatedly called, faxed and emailed him about the shortages.

A February 16, 2007 fax from Moran Lake’s administrator put the problem in terms nobody could misunderstand:

Staff went grocery shopping with their own money, often without reimbursement. Buying enough to put something on a plate did not deliver the prescribed diet. At Moran Lake, residents sometimes received pudding or applesauce in place of prescribed protein shakes and nutritional supplements. Diabetic residents ate what staff could find. At Mount Berry, the kitchen could not follow menus approved by its nutritionist.

The broken freezer made that improvisation harder. After intermittent repairs, Moran Lake’s freezer stopped working altogether and the operator never replaced it. Staff shopped meal by meal, unable to store the food or prepare the different therapeutic meals residents needed.

The food supplier even examined spending against occupied beds when the operator asked for further cuts. It told him the spending was already very low and that it knew of no way to lower it. The people delivering the food were telling the person controlling the money that there was nothing left to cut.

Bounced Paychecks Took Staff Away From Residents

The payroll failure directly reduced care. Employees raced to cash their checks because the accounts did not hold enough money to pay everyone. The court described staff leaving the homes to reach the bank, with supervisors trying to cover the residents they left behind. Those supervisors could not provide the timely care that the missing nursing assistants would have provided.

The problem spread beyond payday. The operator deducted health insurance premiums but failed to pay the insurer, leaving employees without coverage. The trial account describes resignations and difficulty recruiting replacements as payroll and insurance failures became known. Staffing shortages followed decisions about where the money went.

The same refusal to pay reached the buildings and vendors. Roofs leaked, heating and air conditioning failed, and garbage accumulated after trash collection went unpaid. Staff bought nursing and cleaning supplies and took residents’ laundry to laundromats or their own homes. Employees were trying to keep care going with their own money and labor while the operator spent the homes’ funds elsewhere.

Care Money Moved Into Real Estate and Personal Accounts

The government presented evidence that the operator diverted slightly more than $8 million in Medicare and Medicaid funds to personal use. The trial announcement describes land purchases for a planned hotel complex, a house for his former wife, cars, furniture and vacations. She also received a nursing-home salary despite never working at the homes.

The bank trail made the diversion visible. Administrators initially could see government payments arrive in their homes’ operating accounts and then move immediately into other accounts. The court traced Medicaid checks payable to the homes directly into the account of The Guild, a construction company the operator owned and managed.

The Guild’s employees also received pay through the nursing homes’ payroll. The operator told the payroll manager to calculate their wages in the homes’ system, then delete the entries so the system would not save them.

When employees and accountants pressed him to take a salary and properly account for expenses and profits, the business manager recalled his response:

His wife also participated in the accounting decisions. When the bookkeeper asked about grocery purchases passing through the corporate account, she directed the bookkeeper to classify them as shareholder loans. Personal purchases without supporting documentation went into that category, although the operator signed no loan paperwork.

She also earned real estate commissions on purchases funded with nursing-home money. In one purchase, the operator signed Medicaid checks payable to Moran Lake and Mount Berry directly over to the property sellers. The settlement documents listed his wife as the Re/Max broker receiving a commission.

That is why a nursing home’s accounts need to be read alongside the accounts of the businesses receiving its money. Operators, landlords, management businesses and service vendors can receive different payment streams. Leases, management agreements, supplier invoices and ownership records show what a payment was supposed to buy and who received it. In this case, the court followed actual transfers into construction and personal spending while care bills went unpaid.

Residents’ Own Money Went Into Operations

The operator also used resident trust funds to cover payroll and directed an administrator to use them for Wildwood’s power bill. Those accounts held residents’ personal money. Business managers could not balance the accounts, and the court described deposits made after state surveys discovered withdrawals.

The same residents who went without the care their government benefits had purchased also lost control of money held for their personal needs. The trust account, operating account and payroll account each showed a different part of that story.

Why the Court Found Worthless Care

The court found that the homes’ failures were so pervasive that the bundle of services had no medical value. Food shortages, sanitation failures, leaking roofs, missing supplies, staff shortages and safety problems formed a continuing pattern.

The payment connection was explicit. As the Justice Department explained, the operator obtained Medicare and Medicaid money through certifications and promises about the residents’ environment, nutrition, medical care and quality of life. The evidence connected those promises to how the homes actually operated and to the operator’s choices after administrators told him what was happening.

Witnesses testified that the homes had no problem obtaining payment from Medicare and Medicaid. The care money came in. Following it out explained why the freezer, the supply cupboard and the payroll account could still be empty.

How the Homes Collapsed

Complaints from families, staff and vendors reached Georgia regulators. The homes in Rome closed in June 2007, followed by Wildwood in September. The financial evidence and testimony from inside the homes explained how government payments could coexist with that collapse.

The court convicted the operator of conspiring to defraud Medicare and Medicaid, and the Justice Department announced the result on April 3, 2012. His wife, who also ran the homes, had pleaded guilty in December 2011 to concealing the health care fraud.

The same care-money diversion pattern appears in the government’s account of KBWB Operations, which operated as Atrium Health and Senior Living. The Justice Department described government care money diverted from residents in its Wisconsin nursing homes. Following both the care and the money reveals decisions that a clinical chart or a bank statement alone cannot explain.

What Evidence Is Needed to Prove Fraud?

Nursing home fraud evidence connects the care residents needed and received with the claims the government paid and the decisions of the people controlling the money. In these homes, supplier warnings, administrators’ messages, payroll records and bank transfers connected the shortages to the operator’s knowledge and spending.

A dietary employee could describe the prescribed supplement that never arrived. The supplier’s account could explain the stopped deliveries. An administrator’s dated fax could show that the operator knew exactly when the kitchen would run out. Together, those records explain why a resident’s diet failed and who had been told.

The clinical and billing records supply another part of the connection: resident assessments, nursing notes, orders, certifications and paid claims. Payroll, schedules, time records and agency invoices show the workforce available to deliver the care. Contracts and bank records then explain which business received the money and what happened to it. Our work is to connect the part you know to the payment and the decisions behind it.

That connection also matters when staffing records give a different picture from everyday care. In a separate case against HCR ManorCare, the government’s complaint alleged that facilities increased staffing during inspections and reduced it after surveyors left:

The allegation makes ordinary shift records valuable: they describe care on the days when no inspector is watching.

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

You Saw What the Care Money Failed to Buy

If you know why a nursing home’s vendors went unpaid, staff went without wages or care money left the business, talk with our whistleblower experts about what you saw. We build the case with you around the care, the payments and the people making those decisions, and bring in nursing home fraud whistleblower lawyers who understand both clinical and financial evidence. We stay beside you throughout the case, pressing to show where the care money went and what residents went without.