Watermark Retirement Communities: The Receiving Side of Home Health Referrals
In the Watermark home health referral settlement, Watermark Retirement Communities agreed to pay $4.25 million to resolve allegations that it solicited and received a kickback through the sale of home health agencies in exchange for patient referrals. The alleged benefit came through an acquisition, with Medicare business on the other side of the deal. For someone who knows how a retirement community chooses its home health providers, the case reaches a familiar decision: who gets access to the residents, and what the company expects in return.
Watermark is a senior living operator based in Tucson, Arizona. When the U.S. Attorney’s Office for the District of New Jersey announced the settlement on August 31, 2023, it described a company managing 79 retirement homes nationwide. The home health operator on the purchasing side was BAYADA.
An Agency Purchase With a Referral Purpose
The government alleged that BAYADA purchased two of Watermark’s home health agencies in Arizona to induce referrals of Medicare beneficiaries living in Watermark communities. The alleged arrangement centered on eight retirement homes in Arizona, Connecticut, Delaware, Florida and Pennsylvania, where the companies’ operations overlapped.
The geography explains the commercial point. The agencies being sold were in Arizona. The alleged referral opportunity reached retirement communities across five states. Buying the agencies was allegedly a way to obtain business from the seller’s wider residential operations. For a reader on the facility side, the relevant relationship is between the transaction and the residents subsequently directed to the buyer for home health care.
Watermark’s alleged role was to solicit and receive the benefit and facilitate the referrals. BAYADA’s alleged role was to provide the benefit through the acquisition and receive the Medicare business. In its announcement of the BAYADA resolution, the Justice Department specifically explained that the Anti-Kickback Statute reaches asset purchases intended to induce referrals.
We see the absurdity in the alleged bargain: a resident’s care decision treated as part of the return on an acquisition. The seller gets the purchase, and the buyer gets access to the seller’s residents. The patient becomes part of the deal.
How the Referrals Reached Medicare Claims
The United States alleged that Watermark caused BAYADA to submit false Medicare claims for services provided to beneficiaries referred through the kickback transaction. The alleged claims ran from January 1, 2014, through October 31, 2020. That connection between the business deal, the referral and the bill is the center of the False Claims Act case.
A home health agency supplies skilled nursing and therapeutic services on a visiting basis. In the Medicare workflow, the referral brings the patient to the agency, a practitioner certifies eligibility, and the agency assesses the patient and delivers care under a plan. Visit records, claims and payment records follow.
For this allegation, the facility’s referral information connects the seller’s side of the transaction to the agency’s patient admissions. The agency’s claims then connect those patients to the request for Medicare payment. A person involved in negotiating the acquisition may know what business the parties expected it to generate. Someone handling referrals may know how the choice of provider was communicated. Someone at the agency may see which residents became patients and which services were billed.
We bring those views together when evaluating a referral case. The clinical account explains the care. The commercial account explains how the provider obtained the business. The Watermark allegation makes the latter part of the Medicare payment story.
The patient has a stake in that distinction. The government’s stated concern was that financial interests could influence healthcare referrals that should serve patients’ interests. Our focus is on the decisions behind the referral: what the businesses arranged and how that arrangement reached the people receiving care.
The Same Whistleblower Case Reached Both Companies
BAYADA agreed to a $17 million settlement announced on September 8, 2021. Watermark’s later resolution addressed the alleged recipient side of the same transaction. Both came from the same whistleblower action in the District of New Jersey.
The person who brought the case was BAYADA’s former director of strategic growth, a role held from 2009 through 2016. The case came from inside the operator’s growth business. For someone who works on acquisitions or referral relationships, that role is a reason to look closely at the alleged bargain between the companies.
The later government announcement described the case as producing recoveries exceeding $21.25 million. The agency purchaser and the retirement-community operator had separate settlement obligations, each tied to its alleged role in the referral arrangement.
For a facility insider, that is the significance of the later settlement. The government’s case followed the alleged referral bargain back to the business receiving the acquisition benefit.
What Evidence Is Needed to Prove Fraud?
For an alleged acquisition-for-referrals arrangement, we look for evidence connecting the transaction, the referral decisions and the resulting Medicare claims. Your knowledge of why the companies made the deal can be as important to understanding the allegation as the agency’s account of the care it billed.
The acquisition team may know what business the purchaser expected from the seller. Facility staff may know how residents reached the provider, while agency staff hold the admissions, visit and billing records. We compare those records with the referral information to understand how the alleged arrangement reached Medicare.
The Centers for Medicare & Medicaid Services’ claims-processing manual describes the billing workflow that leads to a remittance showing what Medicare paid after adjustments. We connect the referral to the claim and payment, so an account of the transaction also explains the government money at issue.
You may know the commercial discussions without handling claims, or the referral process without having negotiated the acquisition. We work with the part you understand and bring in home health fraud whistleblower lawyers to assess how it fits the wider case. The value of your account is in what it explains about the business decisions behind the records.
How Much Can a Medicare Fraud Whistleblower Receive?
A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. For the BAYADA resolution, the Justice Department announced that the former strategic-growth director would receive more than $3 million from the purchaser’s settlement. The later Watermark announcement provided for a separate share from that company’s settlement. The awards came from the same person’s whistleblower case, with each tied to a different company’s resolution.
The role behind those awards matters here: the person who brought the case knew the home health operator from inside its growth business. If the connection between a purchase and a referral stream is what you recognize, that is a conversation worth having with our whistleblower experts.
You Know How the Referrals Were Arranged
If you know what a home health acquisition was meant to buy, or how a retirement community directed residents to the buyer, speak to one of our Whistleblower Experts about the referral arrangement. We work alongside you to build your strongest home health whistleblower case around those decisions and bring in home health fraud whistleblower lawyers who understand acquisitions and referral payments. From the first conversation through the case, we stay on your side of the table.
