Beverly has never been too particular about how it attained its objectives. It is reported that when Beverly moved to Arkansas it had dealings with both Bill and Hillary Clinton. It was supported by Clinton. In 1989 Clinton's attorney general claimed he was offered US $100,000 if he supported a US $81 million in tax-free revenue bonds - a handout to the company. The attorney general rejected this claiming it as "the arrogance of wealth and the arrogance of power." The deal collapsed.
This act of integrity was considered
"courageous" meaning politically unwise. An analyst said "Clark broke
every rule of good-ol'-boy, inside-the-family politics, the kind that
runs Arkansas." Soon after this Clarke opposed Clinton nominating
against him as the Democratic candidate for governorship. At this
time an analysis of Clarke's claims on the public purse was made. He
was found to have falsely charged the public purse for expenses. He
was hounded out of politics.
(Click here to go to report)
The material on this page presents the unfolding information available about the US $175 million criminal and civil fraud settlement in 2000 as well as the commencement of another fraud investigation in Jan 2001.
In these health care fraud actions the actual evidence of the crimes committed by corporate groups as well as many of the allegations are often concealed from the public. The matters are settled by secret negotiations and we learn only what the two parties agree to tell the public. The government bends over backwards to structure settlements and reduce fines in order to keep the companies in business. We should be suspicious that there is much more that we have not been told about.
How things have changed? In 1991 Tenet/NME paid nearly US $500,000, in the largest ever health care fraud. Then in 1992 it paid US $10 million in Texas, another record. Only four years later it paid US $379 million. This was soon followed by a US $325 fraud settlement with SmithKline Beecham - other laboratory corporations also settled for many millions. In 2000 Columbia/HCA paid US $840 million. Vencor is being prosecuted for US $1.4 billion.
These figures are becoming so large that it all becomes meaningless. Beverly's US $175 million sounds like peanuts but it is the largest ever in aged care. It is clear that it was let off lightly.
The only thing that has not changed is the leniency which regulators dealing with large companies display in dealing with senior staff who are never imprisoned and in enforcing the Medicare and Medicaid termination's required by the law. This differs markedly from the fate of individuals and small groups.
What few understand is that the sick and the frail have been the innocent vehicles used to implement this fraud and they get no benefit. They are the people who have really suffered from the fraud - the meat in the sandwich.
Included on this page are accounts of shareholder actions against the company and of the way some staff defrauded the company. The material is arranged by date of publication except for the defrauding of the company itself, which are put at the end.
I have not included the majority of the corporate denials and explanations on this page. I have devoted a separate page to corporate responses so that the patterns of response can be analysed.
Here to go to the corporate responses
to the fraud.
Several Nursing Home Companies Placed on
S&P CreditWatch Negative
PR Newswire November 3, 1998
OUTLOOK ( Beverly Enterprises Inc.): STABLE
Standard & Poor's expects Beverly to sustain its operating performance during the transition to the new Medicare PPS. The ratings and outlook do not factor in the unclear impact, if any, of a government investigation on the way the company allocates labor costs for Medicare reimbursement.
U.S. attorney investigating Vencor;
11/19/98 The Tampa Tribune November 19, 1998
The Justice Department has made similar inquiries at other large, for-profit health care companies. Beverly Enterprises Inc., the nation's largest nursing home chain, reported in its SEC filing this week that a federal grand jury in California is investigating its Medicare billing practices.
Two former Beverly employees were notified they are targets of the grand jury investigation, the company said in its report. That company's stock also has taken a hit with news of the investigations, dropping 35 percent in July. Material from Tribune wire services was used in this report. Vickie Chachere covers medicine and can be reached at (813) 259-7624.
Nursing home company's billing is
The Atlanta Journal and Constitution March 31, 1999
Shares of Centennial HealthCare, an Atlanta-based nursing home operator, fell sharply Tuesday after the company announced it received a federal subpoena for Medicare billing records.
Health-care fraud investigations have engulfed several national corporations. Columbia/HCA, the nation's largest hospital operator, has been under federal scrutiny for more than two years.
Two other long-term care companies, Beverly Enterprises and Vencor, have also been investigated on possible Medicare billing problems. The initiative is part of a crackdown on health-care fraud commonly known as Operation Restore Trust. The five-year campaign has produced hundreds of criminal convictions and billions of dollars in savings for taxpayers. Restore Trust also has provoked criticism of investigators' tactics.
Beverly Reaches Tentative Settlements of
Medicare Investigations; Postpones Announcement of Second Quarter
Business Wire July 27, 1999, Tuesday
Beverly Enterprises, Inc. (NYSE:BEV) today announced that it has reached a tentative understanding with the U.S. Department of Justice on potential settlements of the previously announced Federal investigations - - - - - .
Beverly to Take Big Charge Before Settling
The New York Times July 28, 1999
Beverly Enterprises, the nation's largest nursing home chain, said today that it would take a second-quarter pretax charge of $175 million to $225 million in anticipation of settling a Medicare fraud investigation.
The charge, which could equal Beverly's earnings for the last eight years, indicates the company expects to pay the largest financial penalty ever against a nursing home company for health care fraud.
Beverly is the subject of a grand jury investigation into whether it inflated bills for nurses' pay, part of a nationwide crackdown on Medicare fraud at nursing homes and hospitals. A settlement could ease investor uncertainty about the company, whose shares have declined nearly 60 percent since April 1998 because of the inquiry and slowing growth in Medicare payments.
"It takes one of the clouds off the name," said Joseph Chiarelli, an analyst at J. P. Morgan.
The potential fine, he said, "is in line with what we expected."
Shares of Beverly fell 43.75 cents, to $6.25.
Under Federal law, a guilty plea to criminal health care fraud charges by any Beverly nursing home would likely cause its removal from Medicare for the elderly and the Medicaid Government health insurance program for the poor.
Medicaid and Medicare accounted for about 60 percent of Beverly's nursing home room-and-board revenue last year.
Beverly earns $60 million in a good year. A fine of $225 million would take four years to offset, Sean Egan, president of the Egan Jones debt-rating service, wrote in a report.
He said he did not think the Government would demand an agreement that would force Beverly out of Medicare. "This is bad enough," Mr. Egan said. "Eating up four years of profit is fairly large."
GAO Found Array Of Overcharges By
Providers Troubled Times in Nursing Homes
Albuquerque Journal August 1, 1999, Sunday
You've heard the story about the Pentagon's $640 toilet seats. But how about Medicare's $1,503 wheelchair cushions, its $45 gauze bandages and its $688-an-hour costs for occupational and speech therapy?
Congress' General Accounting Office documented those overcharges and more in reports about Medicare fraud and abuse in the nursing-home industry.
Beverly Enterprises of Fort Smith, Ark., the nation's largest nursing-home chain, announced last week it reached tentative agreement to settle federal investigations related to Medicare billings.
COMMENT:- Shareholders feel that they have been deceived and misused. They commence class actions. Note that President Boyd Hendrickson who is named in the suits resigned from Beverly in November 1999. Beverly refused to give reasons.
The Arkansas Democrat-Gazette August 04, 1999, Wednesday
WILMINGTON, Del. -- Directors of Beverly Enterprises Inc., the largest U.S. nursing home chain, were sued by a shareholder who claims they mismanaged the company and wasted corporate assets at the expense of stockholders.
Beverly said in late July it would take a second-quarter pretax charge against earnings of up to $ 225 million in anticipation of settling a Medicare fraud investigation with the U.S. Department of Justice.
In a suit made public Tuesday in Delaware Chancery Court in Wilmington, Beverly shareholder James Laurita says directors should have more closely overseen operations at Beverly's 600 facilities to avoid allegations of wrongdoing that included understaffing and falsely billing nursing hours.
"While the company built one of the nation's largest and most profitable nursing home chains, its business practices and quality of care at its facilities, known or recklessly ignored by [directors], was marginalized to maximize profits,"
Laurita says in the suit. He asks a judge to order Beverly to set up effective compliance programs, and to award damages and legal fees.
The suit "didn't come as a surprise to us," said Dan Springer, a Beverly spokesman. Shares of the Fort Smith-based company, which reported $ 2.81 billion in sales for 1998, rose 13 cents to $ 5.25. Shares rose to a 52-week high of $ 10.69 a year ago. (Bloomberg News)
Two shareholders sue Beverly officials
The Arkansas Democrat-Gazette August 18, 1999, Wednesday
Two Beverly Enterprises Inc. shareholders have filed similar lawsuits accusing the nursing-home chain's board members of willfully mismanaging the company for their own benefit. The shareholders' derivative suits, filed in Chancery Court of Pulaski County, accuse Chairman and Chief Executive David R. Banks, President Boyd Hendrickson and other executives and board members of intentional and negligent breach of fiduciary duty, constructive fraud and abuse of control.
By improperly billing Medicare for labor costs and then telling investors that Beverly was obeying the law and in good financial health, the company's board and executives "grossly mismanaged [Beverly] ... in violation of federal and state laws," the lawsuits charge.
Beverly Records Special Charges Totaling $
199 Million; Posts Second Quarter Loss
Business Wire August 20, 1999, Friday
In addition, Beverly would resubmit certain Medicare filings to reflect reduced direct labor costs. Under the tentative criminal settlement, if consummated, a Beverly subsidiary would pay a fine of approximately $ 5 million. This settlement would result in the exclusion of that subsidiary's nursing homes -- no more than 10 facilities -- from Medicare and Medicaid programs. The special charges related to these matters and taken during the 1999 second quarter include:
COMMENT:- The next report reveals the remarkable extent to which the government is prepared to manipulate the system of justice in order to keep companies operating and their senior staff out of goal.
Criminals are barred from Medicare so to help the company the criminal plea will be in the name of a few hospitals which Beverly will then sell. Beverly has not yet decided which hospitals. The company is being allowed to decide who is guilty of the crime - a number of proxy facilities to take the blame and suffer the punishment! A few more junior staff may similarly act as proxies for senior executives and go to prison on their behalf. This is what happened with Tenet/NME and Columbia/HCA.
Beverly says it will pay $ 175 million in
The Associated Press State & Local Wire August 21, 1999, Saturday, AM cycle
Beverly Enterprises Inc., the country's largest nursing home operator, says it will pay $ 175 million to the federal government to settle Medicare billing investigations.
The settlement, which is tentative, could mean as many as 10 of Beverly's nursing homes would be barred from federal health-care programs. The nursing homes affected have not been named.
The $ 175 million payment would be the largest by a nursing home company for a Medicare fraud investigation. It is worth more than Beverly's last five years of profits combined.
Beverly's stock closed up 25 cents Friday to $ 5.56 a share.
After the formal agreement is signed, Beverly must pay the federal government $ 30 million within 30 days. The remainder would be paid over the next eight years, deducted from the Medicare payments Beverly receives every two weeks from the government, the company said.
Under the tentative settlement, a Beverly unit would take responsibility for the criminal portion of the settlement and an accompanying $ 5 million fine, said Beverly spokesman Dan Springer. He said the company has yet to pick the unit.
The unit also will most likely run the nursing homes that will be barred from the federal health-care programs. Those homes could face hardship since Beverly has relied on Medicare and Medicaid to operate.
Last year, Medicare and Medicaid paid for 80 percent of Beverly's residents and accounted for 59 percent of patient revenues.
Under the proposed settlement, the company says it would have to restate its Medicare-related costs for 1996, 1997 and 1998. If 1995 had been included, it might have badly harmed the federal funds it gets under a new Medicare payment system adopted Jan. 1.
Springer declined to say if Beverly's Medicare billing practices stayed consistent throughout the corporation during the eight years under investigation or if units allocated costs differently.
Beverly set to pay U.S. $175 million in
billing case Medicare could cast 10 nursing homes out
The Arkansas Democrat-Gazette August 21, 1999
FORT SMITH -- Beverly Enterprises Inc., the country's biggest nursing-home operator, will pay the federal government $ 175 million to settle investigations into its Medicare billing, the company said Friday. Also, as many as 10 of the company's nursing homes could be barred from federal health-care programs under the agreement, which remains tentative, Beverly said. Which homes will be affected has not been decided. The $ 175 million payment would be the largest by a nursing-home company for a Medicare fraud investigation. It is worth more than Beverly's last five years of profits combined. Beverly disclosed the settlement Friday in reporting its second- quarter earnings.
Springer said Beverly and federal authorities are discussing how many and which nursing homes might be barred from Medicare and Medicaid. He said "probably not more than 10" facilities would be affected, and likely fewer. The discussions center in part on finding facilities with other nursing-homes nearby to mitigate the inconvenience to the elderly or infirm Medicare recipients who would have to move, Springer said.
BEVERLY SAYS UP TO 10 NURSING HOMES FACE
WALL STREET JOURNAL August 23, 1999, Monday
Beverly Enterprises Inc says as many as 10 of its nursing homes will be banned from Medicare and Medicaid programs as part of a $200 million criminal and civil settlement with the federal government over billing improprieties
COMMENT:- The first real information about Beverly's fraudulent conduct comes not from the government which is acting on behalf of citizens but who shareholders who sue them. Interestingly this is not only for fraud but for understaffing. The top executives are accused directly - but we all know that the government would never prosecute them and put them in prison. The way pie in the sky decisions about money and care were made centrally is reminiscent of Tenet/NME and Columbia/HCA.
Suit claims Beverly falsified time sheets
to swindle Medicare Filing may offer look at investigation into
nursing home firm's practices
The Arkansas Democrat-Gazette September 13, 1999, Monday
Beverly Enterprises Inc. methodically falsified nursing records to defraud Medicare with the help of the nursing home giant's top executives, a civil filing in U.S. District Court charges. The filing, which amends an October 1998 shareholders' lawsuit, could offer a first glimpse into the federal government's year-long investigation of Beverly's Medicare practices. That inquiry is expected to cost the company $ 199 million under a tentative settlement announced last month.
Based on interviews with former employees, filings in other court cases, Securities and Exchange Commission documents and other sources, the class-action lawsuit provides extra support for its initial claim that Beverly duped investors by inflating its Medicare revenues.
A Beverly spokesman declined to comment on specific allegations, saying such lawsuits are common when companies make negative disclosures. The lawsuit, brought by Little Rock attorney Steven E. Cauley, aims to recover shareholder losses that occurred when shares of the nursing home company tumbled on news of the government investigation.
The amended complaint, filed in Little Rock on Thursday, charges that Beverly instructed its nurses to fill out time sheets without regard for whether the patients were enrolled in Medicare.
Later, nursing-home officials would decide how much of that time to bill to Medicare, basing the decision not on reality but "to assure that Beverly received the amount of revenues from Medicare that corporate headquarters had budgeted for the facility," the lawsuit says.
Several top Beverly executives, motivated at least in part by fat incentive plans, took part in the practice, the suit alleges. Among others, the suit names David R. Banks, chairman and chief executive; Boyd W. Hendrickson, president; Scott M. Tabakin, chief financial officer; and Pamela H. Daniels, controller.
The lawsuit centers on the company's participation in Medicare, the federal government's health plan for the elderly and infirm.
Though Medicare paid for only 11 percent of the company's patients in 1998, the program has long helped nursing homes compensate for low payments from Medicaid, the joint federal-state health plan for the poor. (Since Jan. 1, Medicare has changed how it pays nursing homes and no longer reimburses them directly for nursing care.) Medicare fraud allegations are not new for the industry or for Beverly.
In mid-1998, Beverly announced that federal investigators were reviewing the way it allocated Medicare nursing costs -- an investigation later broadened to include a criminal inquiry. And Columbia/HCA Healthcare Corp., the nation's largest hospital operator, also faces charges of Medicare fraud.
But federal investigators have kept their findings secret. The class-action suit, perhaps for the first time since Beverly announced its tentative settlement with federal investigators, describes in detail how such Medicare fraud might have been carried out in the chain.
Beverly by design charged the federal health plan without regard to the amount actually spent on Medicare patients, the suit says. Much of the case focuses on daily nursing sign-in sheets filled out by nurses.
The lawsuit says that nurses were told to fill out their total time on the sheets in pencil, without dividing time between Medicare and non-Medicare patients. "The Director of Nursing then allocated their time based on a 'targeted number of weighted hours' for Medicare patients that was provided by the facility administrator," the lawsuit says. "The facility administrator was given this target by Beverly's regional administrator, who in turn received directives from the Corporate Vice President responsible for that section of the country."
In describing how the plan allegedly worked at one Beverly facility, the lawsuit says a regional corporate official received her target hours from William Mathies, executive vice president of Beverly Enterprises. Mathies reports to Banks, the chief executive.
"None of the persons who determined the 'targeted number of weighted hours' had any knowledge of the time actually spent by the nurses on patient care," the complaint continues, "and the hours allocated on these time sheets bore no relationship to the actual number of hours the nurses spent on care for Medicare patients compared to non-Medicare patients."
The lawsuit also contends that Medicare records show Beverly's costs are far greater than those of other nursing homes in the same regions or states. Caring for Medicare patients is usually somewhat costlier than caring for non-Medicare patients, the lawsuit acknowledges. But it argues that in 1995 the gap between Medicare and non-Medicare costs for Beverly nursing homes was 43 percent to 66 percent greater than average in California, Georgia, Idaho, Illinois, Kansas and at least five other states.
Furthermore, the lawsuit says, "[s]ince Beverly consistently inflated its Medicare Nursing Costs, the Company was able to artificially increase the amount of overhead it recouped from Medicare as well."
Fort Smith-based Beverly is the nation's largest nursing home operator, with operations from coast to coast.
Shareholder files lawsuit against Beverly
The Associated Press State & Local Wire December 1, 1999
Officers of Beverly Enterprises have received millions of dollars in bonuses and stock options while causing the nursing home giant's stockholders to lose money, according to a lawsuit filed Wednesday.
The suit was filed in U.S. District Court by Alfred Badger Jr., who identified himself as a Massachusetts stockholder.
The lawsuit accuses the defendants of reckless and gross mismanagement of Beverly during the past several years, by causing the company to violate Medicare and securities laws. The lawsuit also says the $175 million payment to the government will wipe out all of the company's earnings for the last eight years.
"Because under federal law a nursing home operator that pleads guilty to criminal healthcare fraud charges can be removed from the Medicare health insurance plant for the elderly and the Medicaid program for the poor, Beverly may suffer even more damaging penalties as Medicaid and Medicare accounted for about 60 percent of Beverly's nursing home room-and-board revenue last year," the lawsuit said.
"While Beverly has suffered hundreds of millions of dollars in damages and its public shareholders have suffered over $1 billion in lost market capitalization of the company, Beverly's executive officers have received millions in improper and wasteful annual incentive bonuses and other stock options and awards based on Beverly's falsified and artificially inflated financial results during 1990-97 as part of their scheme to illegally overcharge Medicare/Medicaid by hundreds of millions of dollars and violate the federal securities laws," the suit said.
COMMENT:- The nursing home industry, riddled with fraud has the temerity to try to change compliance program conditions. Instead of being put out of business and into prison they are let off with non-punitive and luke warm compliance programs.
Here for the corporate responses to
Nursing Home Industry Critical of Proposed
Corporate Compliance Program
Health Care Fraud Litigation Reporter January 2000
With a primary focus on prevention of fraud and abuse, the OIG outlines an array of internal controls and procedures for nursing facilities to utilize in the development and implementation of an effective compliance program. The draft guidance was issued after the OIG solicited comments and recommendations on a proposed program last year.
The draft guidance targets five specific compliance risk areas for nursing facilities:
COMMENT:- Note how Beverly and the department selected 10 proxy nursing homes. They have now miraculously become the actual homes, which indulged in the crimes. -- words miraculously create a new reality - the one they want.
Note all the rhetoric from government departments - obviously designed to cover up the fact that the US $175 million fine was much less than the original fraud (claimed to be US $460 million) - this was simply a pat on the wrist.
In cases like this the government is entitled to claim, not only the sum defrauded but triple damages to act as a penalty and deterrent. This is the norm. Vencor is facing triple damages amounting to US $1.4 billion. Why is Beverly treated with kid gloves? Is this because of their political links - perhaps with Clinton who comes from their home state?
Beverly Pays $175 Mln for Medicare
Reuters Thursday February, 2000
SAN FRANCISCO (Reuters) - Beverly Enterprises Inc.(NYSE:BEV - news), thenation's largest chain of nursing homes, finalized a deal on Thursday to pay $175 million to resolve charges it defrauded the Medicare system by improperly charging the government for millions of dollars in patient care costs.
Under the plea agreement, which is subject to court approval, Beverly will pay $170 million in a civil settlement and a Beverly subsidiary, Beverly Enterprises-California Inc., will pay $5 million in fines and plead guilty to mail fraud and false statement charges.
The Beverly case had been jointly pursued by the Justice Department, the U.S. Attorney's Office for Northern California and the Department of Health and Human Services.
It stems from charges that 10 Beverly-California nursing homes improperly charged the Medicare program, which provides health care for the elderly, for the salaries of staff not fully engaged in caring for Medicare-covered patients.
Beverly-California ``fabricated nursing cost figures based on set formulas designed to maximize profits while avoiding detection by Medicare auditors,'' the government's sentencing memorandum said.
``The phony cost figures were backed by false documents, such as phony nurse sign-in sheets, that appeared to support Beverly's claims for payment,'' it said.
Officials said there was no precise figure for how much money Beverly allegedly defrauded, but that it was believed to be ``in excess'' of the $175 million settlement.
``(The settlement) was based on an ability-to-pay issue,'' Alwyn Cassil, a spokeswoman for the Health and Human Services Office of Inspector General, said. ``We felt that this was the best way to continue to serve the Medicare community.''
Cassil added that the settlement's requirement that Beverly-California sell the 10 homes was unprecedented, and a sign of how seriously officials intend to crack down on nursing home fraud within the Medicare system.
``We want Beverly to bear the burden, we don't want the patients to bear the burden,'' Cassil said, adding that the sale would have to take place within 120 days to HHS-approved qualified buyers.
Under the settlement, Beverly will reimburse the government $170 million, of which $25 million will be paid within 30 days. Beverly will pay the balance over an eight-year period, interest-free, by accepting pro rata reductions in its periodic interim Medicare payments totaling $145 million.
Beverly Enterprises stock ended up 1/8 at 3-3/4 on the New York Stock Exchange.
COMMENT:- More information comes out. Once again it was a whistleblower who took action and government then joined the action. The amount allegedly defrauded US $460 million. Beverly paid US $175 million.
Note that " Federal prosecutors will not charge individuals under the terms of the plea agreement." Perhaps this should be seen within the context of the pardons Clinton recently granted to a number of criminals whom he was thought to owe.
The shareholder actions described the direct involvement of senior staff in the crime. The government declined to explain why individuals were not charged but the case documents reported in the article strongly suggest that they were involved. Instead the company blamed "renegade employees" and claimed they had only settled to avoid the cost of litigation.
Note that "HHS blocked nearly 3,000 individuals or companies from participating in Medicare, Medicaid, or other federal health programs". None of these are the big corporations which were responsible for the lions share of the fraud.
There are enough loose ends here to fill a large garbage bin.
Nursing home pleads guilty to defrauding
federal Medicare program
San Jose Mercury News February 4, 2000, Friday
SAN JOSE, Calif. Beverly Enterprises Inc., the nation's largest nursing-home chain, pleaded guilty Thursday to defrauding the federal Medicare program out of hundreds of millions of dollars in a six-year, cross-country corporate scheme that included two South Bay facilities, one in Sunnyvale and another in Los Gatos.
Under a plea agreement with federal prosecutors, Beverly Enterprises will pay a $170 million civil penalty and a $5 million criminal fine, as well as divest itself of 10 nursing homes implicated in the Medicare fraud scandal. In addition to the HylondS Health Care and Rehabilitation Center in Sunnyvale and Terreno Gardens facility in Los Gatos, Beverly will have to relinquish its facility in San Francisco.
The $170 million settlement is one of the largest the Justice Department has obtained for Medicare fraud.
The federal investigation arose out of a whistle-blower suit filed by a former Beverly executive who maintained the chain's falsification of charges for nursing services cost the Medicare program as much as $460 million between 1992 and 1998.
Domenic Todarello, the former executive, is to receive nearly $30 million of the overall settlement as a result of provisions in a federal whistle-blower law designed to recover fraud against the government. His Arizona lawyer was unavailable for comment Thursday.
At a brief hearing in San Francisco federal court, U.S. District Judge Thelton Henderson approved the agreement, which called for the nursing home chain to plead guilty to felony charges of fraud and making false statements to the federal government.
Federal prosecutors will not charge individuals under the terms of the plea agreement.
The Arkansas-based nursing-home chain, noting that it changed its Medicare-charging policies as of 1998, down played the settlement, defending its record in the nursing-home business. In court papers filed Thursday, the chain stressed that the charges were not connected to the conduct of "senior management," attributing the questionable conduct to renegade employees.
Washington, D.C., attorney Mark Biros said after the court hearing that Beverly Enterprises agreed to the plea deal to "avoid the cost of litigation."
"Obviously, something happened," Biros said. "But whatever did, it didn't warrant (individuals) being prosecuted criminally, and that says a great deal about the government's case."
Assistant U.S. Attorney Leslie Caldwell declined to comment on why no individuals were prosecuted. But in court papers, federal prosecutors painted a picture of the nation's largest nursing-home chain systematically defrauding the Medicare program in annual reports submitted to Medicare, particularly in California.
In a sentencing memo filed Thursday, federal prosecutors alleged that Beverly calculated its nursing costs based on its targeted revenue projections and budget, rather than actual time worked by nursing staff. The government further alleged that Beverly went to great lengths to cover up its billing practices, creating phony ""nursing sign-in sheets" to falsely record hours worked by nurses.
Overall, Beverly operates 500 nursing homes in 32 states. Five of the 10 nursing homes specifically targeted in the investigation were in California, where Beverly has had a checkered past with regulators. At one point during the 1980s, California put the chain on probation as a result of widespread reports of neglect in its facilities, including those in Los Gatos, Santa Clara and Santa Cruz.
Officials say Beverly's care has improved in recent years, avoiding problems with regulators.
Assistant U.S. Attorney Gail Killefer said Beverly Enterprises had to divest itself of the 10 homes specified in the federal charges in part because they would no longer be eligible for Medicare as a result of the company's felony conviction.
The state Department of Health Services district licensing office in San Jose said it had been instructed recently to issue new licenses to the Los Gatos and Sunnyvale homes. But Albert Quintero, the district manager, said he did not know if it was directly related to Beverly Enterprises' plea agreement with the government.
In addition to California, Beverly will have to divest itself of homes in Washington, Kansas, Georgia and South Carolina. June Gibbs Brown, inspector general for the U.S. Department of Health and Human Services, said in a prepared statement that her office would closely monitor the transition ""to assure that residents are protected and that qualified operators are found to purchase the facilities."
"We want to make certain that Beverly bears the burden of its wrongdoing, not the patients," Brown added.
The Profiteers of Elder Care
The New York Times February 12, 2000,
The case in Brooklyn is part of a national pattern of exploiting programs intended to care for the old. In 1998 the Inspector General of the Federal Health and Human Services Department said that 90 percent of the nation's community mental-health centers were improperly billing for acute care while in fact merely providing recreation for mostly healthy patients.
The practice of bilking Medicaid and Medicare programs has been sadly commonplace. The Justice Department announced just last week that Beverly Enterprises, the nation's largest nursing-home chain, had agreed to pay $175 million and relinquish 10 of its homes for defrauding Medicare, the biggest such settlement ever. This pattern of waste and greed devours money badly needed for the care of older Americans.
COMMENT:- Beverly's conduct is simply part of an industry wide phenomenon. Without whistle blowers very little of it would have been exposed. Few other countries allow Qui Tam court actions - the law which allows whistleblowers to act in the public interest.
Govt's False Claim Recoveries Rise
AP Online February 25, 2000
Private citizen whistleblowers have helped the government recover more than $3.5 billion from companies that allegedly defrauded the taxpayers, thanks to a surge in health care fraud and a law encouraging private citizens to report false claims.
Almost half that $3.5 billion has come in the last 21/2 years as big health care cases have been resolved, the Justice Department reported Thursday.
Almost half of all the private whistleblower cases and more than half of the total recovered money involve health care fraud.
The law's private whistleblower provisions ''have provided a remarkable return for the taxpayers of this country,'' Ogden said. The department's recovery of more than $3.3 billion ''demonstrates that the public-private partnership encouraged by the statute works and is an effective tool in our continuing fight against the fraudulent use of public funds.''
Beverly Enterprises Inc., the nation's largest operator of nursing homes, agreed to pay $170 million to settle allegations it defrauded Medicare by fabricating records to make it appear nurses were devoting much more time to Medicare patients than they actually did.
COMMENT:- This company with its dreadful record for care gets the kid glove to spare it "financial hardship"
Vencor Faces $1 Billion Claim; U.S.
Seeking Medicare Repayments
The Washington Post March 14, 2000, Tuesday, Final Edition
Last month, Beverly Enterprises Inc., the nation's largest operator of nursing homes, settled charges that it defrauded Medicare by agreeing to pay $ 175 million--most to be deducted from future Medicare payments. The government said it settled for less than half the alleged loss to taxpayers to avoid causing "financial hardship" for the company. Though troubled, Beverly has not filed for bankruptcy protection.
COMMENT:- Note the chest thumping to cover up government's embarrassment. Contrast with the excuses in articles above.
Industry Focus: Federal Government Cracks
the Whip on Health Care Fraud
Preventing Business Fraud April 2000
The Department of Justice (DOJ) recently announced that nursing home and home health operators Beverly Enterprises, Inc. will pay a total of $ 175 million to settle charges that it overbilled the Medicare program from 1992 to 1997. The settlement is the largest ever paid by a nursing home in a Medicare fraud investigation. ''I hope this serves as a cautionary tale to any others who would consider engaging in fraud,'' said Sen. Charles Grassly. He added that he was ''glad to see aggressive enforcement action against unacceptable conduct in the nursing home industry.''
In a separate statement, deputy attorney general Eric Holder, Jr. said: ''This case should put the nursing home industry on notice that we will use every available tool, including criminal prosecution, to hold accountable those institutions that care for our nation's most vulnerable citizens.''
The punishment: A fine and a mandatory compliance program. The settlement calls for Beverly Enterprises to pay $ 170 million in civil penalties and for its subsidiary, Beverly Enterprises -California, Inc., to plead guilty to mail fraud and false statements charges. The subsidiary also will pay a $ 5 million criminal fine and divest itself of 10 nursing homes in California, Georgia, Kansas, Washington, and S. Carolina. Based in Ft. Smith, Ark., Beverly Enterprises operates 563 nursing homes in 32 states and is the nation's largest nursing home chain.
Specifically, the settlement requires Beverly to pay $ 25 million within 30 days of the effective date of the agreement. Beverly, accepting a reduction in its payment from the Medicare program, will pay the balance of the settlement amount over eight years, with equal pro-rata amounts, until a total of $ 145 million is paid. Medicare will withhold more than $ 18 million annually by withholding over $ 697,000 from each of the 26 interim payments made to Beverly each year.
Further, the settlement includes a corporate integrity agreement that requires Beverly to submit to extensive monitoring by the Department of Health and Human Services Office of Inspector General. This includes contracting with an independent professional organization to review its costs and to report policies, procedures, and practices on an annual basis. The compliance agreement stands for nine years or for the period of time Beverly remains obligated by the payment terms of the settlement agreement, whichever is shorter, but not less than five years.
Wrongdoing reported by employee. The government investigation was initiated after Domenic Todarello, an employee of Beverly from 1992 to 1995 filed a False Claims Act qui tam action in an Arizona federal court. In his complaint, Todarello alleged that Beverly had submitted false claims, records, and statements to officials and other employees and agents of Health Care Financing Administration for the purpose of obtaining payment under the federal Medicare and Medicaid programs. (Note: The settlement agreement provided that Todarello receive 17% of the civil recovery, plus an additional $ 103,000 to cover expenses, costs, and attorneys' fees.)
The government determined that in 1992 Beverly began charging Medicare for the salaries of nurses caring for non-Medicare patients. Under the Medicare program, nurses' salaries are reimbursable costs; however, Medicare only reimburses for costs of caring for Medicare patients. If a nurse spends part of the workday caring for both Medicare and non-Medicare patients, Medicare only pays that portion of the salary attributable to caring for Medicare patients.
Instead of billing for the actual time spent on Medicare patients, ''Beverly fabricated nursing cost figures based on set formulas designed to maximize profits while avoiding detection by Medicare auditors,'' said the DOJ. ''The phony cost figures were backed by false documents, such as phony nurse sign-in sheets'' that appeared to support Beverly's claims for payment.
A final caution. Nancy-Ann DeParle, administrator of the HCFA, said that this ''settlement and criminal pleas show that we will find, stop, and punish fraudulent conduct that robs taxpayers and beneficiaries alike.''
Federal Budget Reflects Emphasis on Fraud Prevention
Numerous provisions designed to crack down on health care fraud, waste, and abuse are included in the Department of Health and Human Services (HHS) fiscal year 2001 budget. White House Health Care Policy Advisor Chris Jennings told reporters that the new budget would set aside more than $ 19 billion over 10 years to fight health care fraud. The budget plan addresses a new initiative to improve Medicare contractor performance, funding to implement the president's initiative to improve nursing home quality, and various measures to trim current waste in Medicare payment policy.
From the desk of the President. President Clinton released reports showing the administration netted returns of $ 500 million to the federal government in 1999 and prevented substantial fraud. ''The more cases we win, the more criminals we convict, the clearer the message becomes,'' the President said in a weekly radio address. Of the $ 500 million netted, almost $ 369 million was returned to the Medicare trust funds. In addition, a Health Care Financing Administration (HCFA) report said it has prevented $ 5.3 billion from being inappropriately paid to providers in late 1998 and early 1999. Further, HHS blocked nearly 3,000 individuals or companies from participating in Medicare, Medicaid, or other federal health programs as a result of fraud, loss of license, or other professional misconduct.
Funding more fraud fighters. The budget addresses Medicare intermediaries and carriers who contract with HCFA to pay hospitals, physicians, and other health care providers for service provided under Medicare fee-for-service and to ensure that the provider claims are proper. An HCFA official said that about $ 48 million of the contractor funding would be used to establish a cadre of 100 ''fraud fighters'' in the offices of Medicare contractors. The additional personnel and funds would support financial management computer systems to track payments and prevent claims processors and auditors from defrauding the program.
CASE: Regulations: Compliance Program
Guidance for Nursing Facilities
Health Care Fraud Litigation Reporter April 2000
The U.S. Department of Health and Human Services' Office of Inspector General (OIG) has issued the final compliance guidance for nursing facilities directed at the prevention of fraud and abuse. Compliance Program Guidance for Nursing Facilities, Federal Register, P. 14289-14306 (Mar. 16, 2000); see Health Care Fraud LR, January 2000, P. 10.
The guidance is being issued "to help the industry understand the government's expectations for a well-run compliance program," said Inspector General June Gibbs Brown. She urged nursing facilities to specifically focus on conducting background checks of potential employees and contractors.
FOR-PROFIT NURSING HOMES: REAL CRISIS IS
THE ORLANDO SENTINEL May 3, 2000
The Sentinel's recent editorial "Strike a balance" portrayed Florida's for-profit nursing homes as an industry in crisis. What the editorial neglected to mention, however, is that the "crisis" was created by the industry's own greed, corruption and fraud.
In 1995, the Governmental Accounting Office reported that Americans were being robbed blind by the nursing-home industry. Taxpayers were being charged for care that was never delivered, and shell companies had been set up for the sole purpose of bilking the government.
Here is just a small sample of the industry's abuses that have come to light recently:
In February, Beverly Enterprises was forced to repay $175 million of the $460 million that the government alleged it stole from taxpayers.
At the Coalition to Protect America's Elders, we believe that Florida has a responsibility to crack down on the worst nursing homes and set a new, higher standard of care in all of them. In addition, we must take the national lead in providing new alternatives such as at-home care and other services that have proven cost-effective.
As terms of a legal settlement, Beverly is reimbursing the federal government $170 million and paying another $5 million in criminal fines because of a government claim that it overpaid Beverly $240 million in Medicare funds from 1992 to 1998. The company plead guilty to mail fraud and making false statements to investigators in the case.
JUSTICE RECOVERS RECORD $1.5 BILLION IN
FRAUD PAYMENTS :::: HIGHEST EVER FOR ONE YEAR PERIOD
FOR IMMEDIATE RELEASE THURSDAY, NOVEMBER 2, 2000
WASHINGTON, D.C. - The United States collected a record $1.5 billion in civil fraud recoveries during the past fiscal year - an increase of almost 50% above the largest previous annual recovery in 1997, Attorney General Janet Reno announced today.
Health care fraud cases once again topped the list of annual recoveries, totaling more than $840 million. This amount included the largest civil fraud recovery ever - a $385 million settlement with Fresenius Medical Care to resolve sweeping allegations of wrongdoing by its kidney dialysis subsidiary. The Department also recovered $170 million from Beverly Enterprises, Inc., the largest nursing home operator in the United States, for alleged false billings to Medicare involving over 400 nursing homes around the country.
"Health care fraud imposes enormous costs on American taxpayers and decreases the quality of care provided to patients," said Assistant Attorney General David W. Ogden of the Department's Civil Division.
For-profit nursing home chains -- a failed
Dec 2000 -- Jim Wilkes
Earlier this year, for example, Beverly Enterprises, a publicly traded chain that operates more than 60 homes in Florida, pleaded guilty to fraud and agreed to pay a settlement of $175 million after the government claimed that they stole more than $460 million.
The title, date and source of this article
were not included. It was in Jan 2001
As the waves crashed along Tajiguas Beach on a recent morning, Mary Hochman walked out onto the sand, took out a .38-caliber revolver and shot herself in the heart.
The 52-year-old night nurse at a local convalescent home was broke and was broken-hearted after months of bitter dispute with her employer. It all began when she tried to report that a nurse's aide hit an 81-year-old man who suffers from dementia.
But when Hochman told state regulators in March about the beating allegation, infuriating her supervisors, Hochman claimed she was verbally reprimanded and she never returned to work.
Her death, the note and the journal have sparked a state Department of Justice investigation into a facility that public records show has widespread problems, and focused attention on the health care practices of her former employer the largest nursing home in Santa Barbara County.
A team of attorneys is planning to file two separate lawsuits against Beverly La Cumbre, one on behalf of more than a dozen patients and their families and the other on behalf of at least two former employees who say that, like Hochman, they were fired or punished for blowing the whistle on abuse and neglect at the facility. "There seems to be a pattern of disrespect for state regulations, their own internal policies and the patients," said attorney Brenton Horner, one of the three lawyers preparing the cases. "It's profit over care."
COMMENT:- The following letter speaks for itself.
VanMeter sentenced to 3 years
By BARBARA HOBEROCK World Capitol Bureau 12/19/00
I am perplexed. VanMeter and Smart are going to prison for three years because VanMeter back dated documents for Smart to save Smart a few thousand dollars.
Beverly Enterprises, admitted wrongfully billing Medicare for $460 million dollars. Some of the fraudulently billing was for 'ghost employee's.' BE backed their wrongful billing with phony nurses sign in sheets, so BE knew they were cheating Medicare and they admitted to the false billings. Yet no one at Beverly went to jail. In fact, DHHS IG required Beverly to return only $175 million of the $460 million they had fraudulently billed. Can anyone explain why some go to prison for stealing thousands and others who steal millions don't end up behind bars? Could the answer be the amount of money BE gives to our politicians in comparison to what VanMeter and Smart contributed?
I'd like an answer to this question.
COMMENT:- Beverly pleaded guilty to fraud as described above. Reported below (Jan 2001) is what seems to be another fraud investigation. It is starting in the facility where Hochman (above) blew the whistle before committing suicide. One wonders if the leniency shown in the previous settlement has got agents fired up.
State investigators seize Beverly
La Cumbre records ::: Nursing home
faces abuse, fraud allegations
NEWS-PRESS STAFF WRITER 1/24/01
Special agents from the state Department of Justice seized hundreds of documents and electronic files from Beverly La Cumbre on Tuesday, searching for evidence of criminal abuse, neglect and Medi-Cal fraud at the embattled convalescent hospital.
The agents obtained a search warrant from Santa Barbara Superior Court Judge Joseph Lodge, the latest step in a Department of Justice investigation that began in September.
Starting at 7 a.m., six special agents from the Office of the Attorney General Bureau of Medi-Cal Fraud carried boxes to cars parked behind the nursing home at 3880 Via Lucero.
"We're going to take all of this and start analyzing to see what we have," said Senior Assistant Attorney General Thomas Temmerman, who traveled from Sacramento to serve the search warrant.
Temmerman said agents were examining only patient and employee records and did not interview residents.
"Beverly La Cumbre has consistently complied with the law and we are not aware of any wrongdoing that would have precipitated this action," Springer (corporate spokesman) said. "We have no understanding as to what is behind their investigation."
The agents were tight-lipped about the details of the investigation. The facts are contained in an affidavit sealed by Judge Lodge. The Department of Justice and the Santa Barbara County District Attorney's Office requested that the document be sealed because it is part of an ongoing criminal investigation. The District Attorney's Office assisted in serving the search warrant.
"We will be looking at evidence seized in the search warrant," said Deputy District Attorney Tracy Grossman. "It has been brought to our attention and it is a serious matter."
Officials with the Department of Justice said that agents are looking for information on specific cases, many of which have been reported by the News-Press in recent months.
The investigation began the week after the News-Press reported the story of Mary Hochman, a nurse at Beverly La Cumbre who left behind a suicide note and a journal claiming that she was told to cover-up incidents of abuse and neglect at the hospital.
Eight civil lawsuits -- with allegations ranging from abuse and neglect to wrongful employee termination -- have been filed against the nursing home since September.
see under care for more about this hospital
News briefs from Southern California
The Associated Press State & Local Wire January 24, 2001
*SANTA BARBARA, Calif. (AP) - State agents have seized hundreds of documents from Beverly La Cumbre, the largest nursing home in Santa Barbara County, as part of an investigation into criminal abuse, neglect and Medi-Cal fraud.
The action Tuesday morning was the latest step in a state Department of Justice investigation that began in September. Investigators will now sift through the documents to determine if criminal charges should be pursued against the corporate owners of the 189-bed nursing home.
State investigators learned of allegations of abuse and neglect at the facility from the state Department of Health Services, which regulates nursing homes in the state.
Beverly executive pleads innocent to
The Associated Press State & Local Wire June 22, 1999
A former executive with Beverly Enterprises, the nation's largest long-term health care company, has pleaded innocent in Municipal Court to charges he embezzled $ 50,000.
Charles Henderson, 31, of Fort Smith, was charged with theft by deception after the company discovered it was being billed for services not performed, police spokesman Sgt. Jeff Barrows said.
Attorney ordered to pay $760,000 to
The Associated Press State & Local Wire November 30, 1999
The former senior attorney for Beverly Enterprises Inc. must pay $760,000 to the company for diverting money for his own use, a federal judge said.
Ronald Grant already is serving a 21-month federal prison sentence after pleading guilty to wire fraud and making false statements to the Internal Revenue Service.
U.S. District Judge Jimm Hendren ruled against Grant on Monday in a lawsuit brought by Beverly, ordering Grant to pay $252,983 in compensatory damages and $505,966 in punitive damages.
Grant, 45, of Tulsa, Okla., was responsible for handling Beverly's professional negligence cases throughout the nation. He was fired in March 1996 after an internal investigation.
The Fort Smith-based nursing home company - the nation's largest - filed the lawsuit last year. It accused Grant of diverting $110,000 from a $375,000 lawsuit settlement in a 1994 California case. The lawsuit says Grant used the money to buy a house in Fort Smith.
Update August 2003
Beverly Enterprises Charge Leads to
Reuters July 30, 2002
Future earnings could also be impacted by the result of an investigation involving Beverly's Fresno, California-based home medical equipment business unit, MK Medical.
The company said the extent of potential overpayments, penalties or fines cannot be determined until the independent audit is complete. But they could have a material adverse effect on Beverly's results of operations, the company said.
Attorney General's office reaches $1.5
Arkansas News Bureau March 5, 2003
It comes nearly five months after Fort Smith-based Beverly reached a $77.5 million settlement with federal government on Medicare reimbursement issues dating back to 1996. The settlement reached with the state had nothing to do with the $77.5 million Medicare settlement, Jackson said.
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