Yesterday, the United States Attorney’s Office for the Southern District of New York announced its second False Claims Act settlement involving allegations of illegal disenrollment of nursing home residents from their Medicare Advantage plans. The settlement serves both as a further warning to nursing home operators not to engage in such conduct, and as a notice to potential whistleblowers that such claims may be viable and lead to monetary awards under the qui tam provisions of the False Claims Act.
Medicare Advantage plans may offer some extra benefits – like vision, hearing, and dental services – that Original Medicare does not cover. Additionally, certain Medicare Advantage Plans charge lower out-of-pocket costs to beneficiaries than Original Medicare. It is well known within the nursing home industry, however, that Medicare Advantage plans pay less per day than Original Medicare pays for care in a skilled nursing facility (SNF). Moreover, Medicare Advantage plans themselves generally determine whether ongoing SNF care is necessary, whereas Original Medicare generally relies on the SNFs and associated physicians to make those determinations. Consequently, nursing home operators often find it easier to keep Original Medicare beneficiaries in their facilities for longer and more lucrative lengths of stay.
According to the settlement agreement announced yesterday, Morris Park, a SNF in the Bronx, allegedly “disenrolled residents from their self-selected Medicare Advantage Plans and enrolled them in Original Medicare without obtaining the consent of the residents or their authorized representatives” and “offered to reduce or waive the co-payments that would be owed by residents in order to induce them to switch to Original Medicare.” The government further alleged that Morris Park disenrolled residents who did not have the mental capacity to consent to disenrollment.
The Morris Park settlement appears to have been the product of a self-disclosure by the facility itself, but an earlier settlement of similar allegations was the product of a False Claims Act qui tam lawsuit that a whistleblower initiated. In June 2022, the same U.S. Attorney’s Office announced a $7.85 million settlement of Medicare Advantage disenrollment allegations involving another Bronx nursing home, Plaza Rehab. According to the announcement of that settlement, the operator of the facility “exerted pressure on PLAZA REHAB CENTER staff to increase the number of residents enrolled in Original Medicare in order to increase Medicare reimbursements. PLAZA REHAB CENTER staff disenrolled many residents from their self-selected Medicare Advantage Plans and enrolled them in Original Medicare without obtaining the consent of the residents or their authorized representatives.”
Under the False Claims Act, the Plaza Rehab whistleblower presumably received between 15% and 25% of the settlement amount.