South Carolina Nursing Home Blog : South Carolina Nursing Home Lawyer & Attorney : Poliakoff & Associates Law Firm : Elderly Care, Senior Care

Numerous websites and news organizations have written about the recent settlement between the DOJ and Murray Forman, Rubin Schron, and Leonard Grunstein, owners and operators of hundreds of nursing homes through various entities such as Mariner, Sava Senior Care and Fundamental Long Term Care Holdings.  See articles and press releases here, here, here, here, here, here, here, here, here, here, here, and here.

What is incredible and disappointing about the settlement is the DOJ only made these criminals  pay $14 million but did not make them testify, admit guilt, payback the kickback, or take away their ability to continue owning and operating nursing homes.  What kind of penalty is $14 million when they have stolen millions more from Medicare and Medicaid?  Why did the DOJ make the now defunct Mariner pay but not their successor Sava Senior Care?   Why did they allow the Complaint to be dismissed before the settlement?  Why did they allow Forman and Grunstein, the masterminds behind the illegal scheme deny any responsibility or wrongdoing?  Why didn't they make Forman and Grunstein pay the kickback back to Medicaid and Medicare?

The settlement resolves the United States’ allegations that the defendants solicited and received kickback payments from Omnicare, Inc. (“Omnicare”), the nation’s largest pharmacy that specializes in dispensing drugs to nursing home patients.  

"As outlined in the government's complaint, Rubin Schron, Leonard Grunstein and Murray Forman tried to disguise an unlawful kickback payment," said Mary Louise Cohen, a Washington, DC, attorney with Phillips & Cohen LLP, which represents the whistle-blower. "Omnicare's $50 million payment for a small unit of Mariner Health Care -- which had less than $3 million in assets and only two employees -- just didn't add up without figuring out what else Omnicare was getting as part of the deal."

In a Complaint filed in March 2009 and unsealed in November 2009, the United States alleged that Omnicare, Mariner, Sava, Grunstein, Forman, and Schron conspired to arrange for Omnicare to pay $50 million in exchange for agreements by Mariner and Sava to use Omnicare’s pharmacy services for 15 years.   In 2004, Grunstein and Forman proposed that Schron provide financial backing for the acquisition of Mariner, which at that time was one of Omnicare’s largest customers. Grunstein and Forman attempted to arrange the Mariner acquisition so that Schron would have to contribute as little cash as possible. To achieve this end, Grunstein and Forman pursued a plan to sell to Omnicare the right to continue providing pharmacy services to Mariner, even though Forman was warned by lawyers that selling the right to provide pharmacy services would constitute an illegal kickback.

Grunstein and Forman thereafter arranged for Omnicare to pay them $50 million to purchase a  Mariner company that had only two employees and no tangible assets.  Omnicare paid $40 million of this amount up front, prior to actually acquiring the Mariner business unit, and simultaneously obtained new 15-year pharmacy contracts from Mariner and from Sava, a new nursing home chain that Grunstein and Forman created from Mariner. Grunstein and Forman illegally tied the new pharmacy contracts to Omnicare’s agreement to purchase the small Mariner business unit, and that the total $50 million purchase price for the business unit actually was a kickback by Omnicare to keep the future business of Mariner and Sava. In 2006, after the Government issued subpoenas concerning the transaction, the individual defendants created backdated documents in a further attempt to hide the kickback.

In November 2009, the United States and Omnicare entered into a $98 million settlement agreement that resolved Omnicare’s civil liability under the False Claims Act for paying kickbacks to keep the Mariner and Sava business.  So Forman and Grunstein coerced OmniCare to pay them a $50 million kickback and Omni had to pay $98 million but Forman and Grunstein and their companies only had to pay $14 million!?!

As part of the settlement, Mariner has entered into a corporate integrity agreement. This agreement provides for Mariner to put in place procedures and reviews to avoid and promptly detect conduct similar to that which gave rise to this matter. At the same time, OIG-HHS has reserved its rights to seek exclusions of Sava, Grunstein, Forman, and/or Schron from participation in Medicare, Medicaid, and all other Federal health care programs.

"I suspect that if you got [Grunstein, Schron and Forman] all in a room and asked them whose fault this was, they'd all be pointing at someone else," says one person familiar with the case. "And that's really what this transaction was about --setting up all these different entities and shells and moving pieces so that nobody had responsibility."

Rubin Schron, a New York real estate investor who along with National Senior Care Inc., bought Mariner Health Care Inc., which is at the center of the kickback scheme. -- Leonard Grunstein, a New York real estate attorney who was a partner with the law firm, Troutman Sanders. He was Schron's agent in the purchase of Mariner Health Care Inc. and in the alleged kickback scheme. -- Murray Forman, an associate of Grunstein's and Schron's who also is president of a Long Island school board. -- Mariner Health Care Inc., a Delaware corporation with headquarters in Atlanta, Georgia, that operates nursing homes and, according to the government's complaint in this case, is controlled by Schron. -- SavaSeniorCare Administrative Services LLC, a privately held Delaware company with headquarters in Atlanta, Georgia, also reportedly controlled by Schron. Sava affiliates lease and operate nursing homes.

This settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $2.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3 billion

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PRWeb summarized a story from the NY Post about punitive damages against a nursing home in New York.   The New York Post reported that in December 2009, a Brooklyn nursing home was found guilty of negligence in the case of a patient who developed numerous and avoidable bedsores while under the home’s care. The jury awarded the patient’s family close to $4 million for pain and suffering, plus an additional $15 million as punishment for trying to cover up the poor patient care.

Elder abuse is prevalent in nursing homes around the country, and with serious consequences for patients. Older adults who are victims of elder abuse are more than twice as likely to die prematurely as are adults who are treated properly, according to a study published in the August 5, 2009 issue of the Journal of the American Medical Association.

Mistreatment can take many different forms, including physical, emotional, psychological or sexual abuse; neglect; withholding food and water; or denying visits from family and friends.  Family members and friends of nursing home residents must be vigilant in looking for signs of possible abuse or neglect.  These can include personality changes, depression, anxiety, unexplained or unusual bruises and injuries, rapid weight loss, poor grooming, and potentially unsafe conditions.
The National Center on Elder Abuse defines institutional elder abuse as “any of several forms of maltreatment of an older person by someone who has a special relationship with the elder (a spouse, a sibling, a child, a friend, or a caregiver)” that occur in residential facilities for older persons, including nursing homes. Its website, www.ncea.aoa.gov, explains that “perpetrators of institutional abuse usually are persons who have a legal or contractual obligation to provide elder victims with care and protection (e.g., paid caregivers, staff, professionals).

Looking exclusively at falls, the Centers for Disease Control and Prevention noted that an average nursing home with 100 beds reports 100 to 200 falls each year, representing up to 75 percent of residents. Many falls were caused by environmental hazards like wet floors, poor lighting, incorrect bed height and improper wheelchair use.

A November 2009 report from the University of California, San Francisco, stated that 26 percent of the nation’s nursing facilities were cited in 2008 for poor quality of care, 44 percent of nursing homes failed to ensure a safe environment for residents, 36 percent had food sanitation regulations violations and 33 percent of facilities received deficiencies for failure to meet quality standards.

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Fox News ran a NY Post article on the verdict against a Brooklyn nursing home.  Brooklyn Queens Nursing Home will have to compensate the family of a 76-year-old patient neglected so badly that he left with more than 20 bedsores. The verdict of nearly $19 million, handed down by a jury, is the first in the state against a nursing home that includes punitive damages.

"It was horrible," said Margaret Whitehurst, who pulled her father, John Danzy, from the home after just nine months. "He walked in on two legs and a cane. He was 237 pounds. When we got him back, he was 148 pounds and he had holes all over his body."  She and her siblings moved Danzy, a retired truck driver and butcher, to another nursing home. He died as a result to an infection caused by the bedsores.

A Brooklyn jury deliberated two full days following the four-week trial before finding the Cypress Hills facility delivered substandard care.  The panel awarded $3.75 million for Danzy's pain and suffering, but tacked on $15 million in punitive damages, based in part  that the home had doctored records to try to cover up the neglect.

An FBI expert testified that about 100 different skin-check notes showing "G" for "good" had been penned over to show "B" for "broken" — an effort by the home to claim it hadn't missed the horrific sores.  "Someone went back and wrote B's over the G's to cover their tracks, so they falsified the records, he said. "We believe that once they found out they were being sued, they went back and said, 'How could we have G's here when they guy has 20 sores?' "

The nursing home restrained the Alzheimer's-stricken Danzy to keep him from wandering off, but left him alone for long periods.  Medical standards require that bedridden or restrained patients be moved every two hours to prevent such sores, but that Brooklyn-Queens only moved Danzy every four hours — if at all.

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The Herald-News had an article about a recent jury verdict against Rosewood Care Center.  The jury awarded $51,000 and attorney's fees.    Resident Catherine Taylor died after suffering a huge bedsore that ate through her skin to the bone causing her death.  Taylor, who was 88 when she died in December 2004, was a resident of Rosewood in July and August 2004, On Aug. 19, 2004, Taylor, a former teacher, was taken to Provena Saint Joseph Medical Center and six days later "underwent a procedure to remove bedsores and treat bone infections brought on by her confinement to her bed and her exposure to urine and other bodily fluids during (her) care," according to the complaint against Rosewood.

"She had a hole in her backside the size of my fist," said Scott Pyles, the other attorney representing Taylor's estate.  And Pyles said the bedsore was the fault of the nursing home staff.

"Rosewood screwed up on 8/18 (2004)," he said. "Everybody who testified in this case has told you about it, and it caused Catherine Taylor's death."

"We feel vindicated that we proved that they did something wrong," said Frank Cservenyak, one of the attorneys representing Taylor's daughter, Mary Pat Barney, who was acting as the administrator of her mother's estate.

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 Louisville Courier-Journal had an article about the recent jury verdict against ResCare Inc. A jury in Albuquerque, N.M., returned a damage award of about $54 million against ResCare Inc. over the rape of a disabled male resident in one of the company’s group homes.  After a three-week trial, the jury unanimously found ResCare negligent, Bettinger said. The company was ordered to pay nearly $5 million in actual damages and more than $49 million in punitive damages.

Carl Bettinger, an attorney for the plaintiffs, said the incident occurred a few weeks after ResCare fired nine of the 12 employees of its group home in Roswell, N.M., because they failed or refused drug testing. Bettinger said in an interview that ResCare’s now-defunct New Mexico subsidiary “scrambled” to hire new staff for the home. One of the new hires had been fired from his last job, where he had been found kissing a male resident, Bettinger said. ResCare didn’t call that employer to check on the new worker before hiring him.

The man worked one night at the ResCare facility. That was the night the resident was abused, Bettinger said.  No eyewitnesses came forward.  Physical evidence was lost when the resident was showered the next day.

The award surpasses the $36.6 million profit earned in all of last year by ResCare, one of the nation’s largest providers of residential care to persons with disabilities.

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Ventura County Reporter had an article about the recent verdict involving abuse of a resident in a nursing home.  A  jury compensated the family of a 71-year-old stroke victim who filed an elder abuse lawsuit against the Fillmore Convalescent Center.  The trial, which featured a videotape of the woman being abused, lasted 22 days. The jury deliberated for two days before announcing the verdict: $2.75 million in actual damages and $5 million in punitives.  The verdict splits liability among three defendants: the center, 40 percent; owner Eduardo Gonzalez, 40 percent; and Garcia, 20 percent.

Johnson said he offered to settle the case with the center in July for $500,000.   “They never offered me one dime,” he said. “They never offered to go to mediation, nothing. There was a lot of arrogance.”

In 2006, Maria Arellano, 71, was a resident with brusies of unknown origin that family members discovered during a visit. They complained to management but the nursing home refused to  investigate. So the family set up a hidden video camera on a side table in her room.

The camera caught employee Monica Garcia slapping Arellano, pulling her around by the hair, bending her neck, fingers and wrists, and treating her violently in a shower chair.  During the ordeal at the center, the Arellano family met another resident, Daniel Sanchez, 83, who was staying across the hall. His family suspected he, too, was being abused.

“The Sanchez family, they found bruises and hair pulling,” said Johnson, who’s filed a lawsuit on the family’s behalf that is slated for trial in January. “Mr. Daniel Sanchez has since died. They (Arellano and Sanchez) were both stroke victims who were non-verbal.”

About two weeks ago, Fillmore Convalescent received a five-star rating, the highest, from the Nursing Home Compare system, run by the Centers for Medicare and Medicaid Services.

“The five-star rating doesn’t always reflect what’s going on today or what went on yesterday,” Stein said.

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Mother Jones had an article explaining the practical problems with the Medicare Secondary Payer Act which allows the government to take money from settlements of victims of neglect and abuse.

In 1995, Sumaya Coury was driving her 81-year-old mother, Mollie Coury, back to Los Angeles after a trip to San Diego to play bingo. Sumaya's Cadillac slammed into the car of a drunk driver who'd parked and passed out in the middle of the five-lane 210 freeway, east of Pasadena. Mollie's legs were crushed; doctors thought she'd never walk again. But after weeks in hospital, she regained her mobility, and eventually put the accident behind her. Then, 13 years later, in the fall of 2008, Medicare sent Mollie some staggering news: She owed $66,000 for what the agency said were medical expenses related to the accident. If she didn't pay within 60 days, the Treasury Department would seize her Social Security checks until the money was repaid.

After the accident, Coury had received about $20,000 from her daughter's insurance policy for medical bills, permanent impairment, and pain and suffering. This settlement subjected her to  Medicare Secondary Payer Act, created decades ago to prevent Medicare from paying medical expenses that were the responsibility of private insurers or other parties. Here's how it works: If a Medicare recipient gets in a car crash or is injured by a defective pacemaker, the government picks up the hospital tab. But if that person receives a payment from a legal settlement, insurance policy, or jury award that covers accident-related medical bills, Medicare is entitled to its money back.

Reimbursements saved taxpayers nearly $7 billion in 2008, according to the Centers for Medicare and Medicaid Services (CMS). In recent years, Congress has pushed Medicare to aggressively pursue debts from injured elderly people who have won compensation through lawsuits or liability insurance.

Coury actually got snared in Medicare's net twice, the first time in 2002, when the agency began seizing her only income, a $498 monthly Social Security check, for nearly three years until she repaid more than $16,000 (her settlement minus some legal fees). After that, she thought her troubles were over. But in 2008, Medicare returned for more. Its $66,000 bill not only failed to recognize that Coury had already repaid what she owed; it also far exceeded the $20,000 she'd received from her daughter's insurance company in the first place. Eventually, Sumaya, a former accountant, discovered that Medicare had included every procedure Mollie had undergone since her accident, including unrelated care like open-heart surgery and treatment for emphysema.

Sumaya, who was herself battling lung cancer, tried repeatedly to straighten out the problem. Instead, Medicare stopped paying her mother's medical bills. Mollie so feared visiting the doctor that when she suffered internal bleeding from complications from a hiatal hernia, she refused to go to the hospital and nearly died. "It's like a nightmare," says Sumaya. "They should be paying her for all the harassment."

Medicare's debt recovery program has not been a model of efficiency. The Government Accountability Office discovered that during the 2001 fiscal year, other parties were responsible for nearly $2 billion in outstanding Medicare debts, but the Centers for Medicare and Medicaid Services had only referred about $47 million for collection. In the 2003 fiscal year, the agency employed more than 50 collection contractors, yet recouped just 38 cents for every dollar it spent trying to gather old debt from employer-sponsored health plans. During that same period, eight of those contractors didn't process a single case, yet still received a total of $1.8 million.

Congress pressed CMS for improvements. So in 2006, the agency consolidated collection activities into one massive contract, worth $72.5 million in the first two years. Under a law permitting the government to grant no-bid contracts to Native American corporations, it awarded the deal to Chickasaw Nation Industries, based just outside of Oklahoma City. The contract gave the firm $32.5 million the first year and $40 million the second. (Michael Webb, CNI's head of business development, says the agency granted the sole-source contract based on work the company was already doing handling medical records for the Indian Health Service.) It was CNI that sent Coury her $66,000 bill. However, agency officials said mistakes were inevitable in a system that processes more than 300,000 new liability claims and more than a million pieces of correspondence every year.

According to CMS officials, the Chickasaws have stepped up Medicare recoveries, but errors persist.  The issue was headed to the Supreme Court, but in 2003, Congress passed the Medicare drug benefit and included a small provision that officially put the onus on lawyers to make sure Medicare got its money.

Medicare often can't tell them just how much their clients owe. When it does, it's often spectacularly wrong.   After forcing plaintiffs' lawyers to serve as Medicare's debt collectors failed to produce the desired results, Congress passed new debt-collection measures as part of the 2007 SCHIP reauthorization. Starting next year, insurance companies must report any settlements or judgments involving Medicare beneficiaries to CMS. If a Medicare beneficiary fails to reimburse the agency for health care costs it paid, the agency can punish the insurance company with double damages.

Take the case of 87-year-old Hannah Cohen, who was hit by a car in 2005. She sued the driver and got an $18,000 settlement in December 2007. Knowing that the feds were more aggressively pursuing such payments, the driver's insurance company had a policy of making Medicare a payee on any settlement check for plaintiffs older than 62. But Cohen, an Israeli citizen, was ineligible for Medicare, and therefore owed nothing. Still, it took more than a year—and a lawsuit—for Cohen's lawyer to extract her money from the insurance and Medicare bureaucracy. Cohen's lawyer has another similar case pending.

After all of Sumaya Coury's calls and letters, in March, a contractor working for Medicare wrote to say that her mother, who is now 95, now owes only $18,378.40—a little more than the amount she repaid four years ago. Sumaya hired a lawyer to deal with the mess. One day, she says, she complained to an employee of the Chickasaw contractor that the situation was "totally bizarre." The woman replied, "Oh no, it's not. It happens every day."
 

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The Madison Record had an article about a recent nursing home jury verdict.  The jury awarded Emons $5,000 his claim of wrongful death and $15,000 for what he claimed was a violation of the Nursing Home Care Act.   Clifford Emons sued the nursing home on behalf of the estate of Jane Schwartz.   According to court documents, Jane Schwartz fell while at the Alton facility, breaking her wrist and hip. It took the jury less than two hours to deliberate in a negligence suit against Rosewood Care Center of Alton.  The jury only had to consider what damages to award after Madison County Circuit Judge Andy Matoesian struck the defendant's pleadings on the negligence issue and directed the verdict on the liability issues for the plaintiff.

It is the second verdict this year against the Rosewood Care Center chain in Madison County. Another negligence suit against the nursing home's Edwardsville location went to trial earlier this year in Madison County Circuit Judge David Hylla's courtroom.  That suit was also brought on behalf of an estate, by plaintiff Paul Graves on behalf of his deceased father. The jury in the Graves' suit found for Paul Graves and awarded damages totaling about $150,000 over his father's fractured hip.

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The Herald-Review.com had an article about Certified Health Care Management Inc (which was the company that once managed Prairie View Care Center nursing home) and Dr. Carl Johnson.  They recently agreed to settle a lawsuit filed after a resident of the home died because of injuries he received there. The $700,000 settlement went to the estate of Donald McCormick Jr., who was only 43 years old when he died Nov. 24, 2002.   According to Levin & Perconti, the Chicago law firm that filed the lawsuit, McCormick was admitted to Prairie View on March 19, 2002. The firm said he suffered impairments and was dependent on nursing home staff for all activities of daily living.

McCormick's impairments also made him unable to communicate his needs to nursing home staff, and from his admission until his discharge on May 12, 2002, he became severely malnourished, dehydrated and developed a massive bed sore.  The wound became so bad that it exposed a bone, and the injuries were caused by the nursing home and a doctor's failure to provide adequate medical and personal care, leading to his death.

Case documents indicated that Certified Health Care Management agreed to pay $600,000 to McCormick's estate, and Johnson agreed to pay $100,000. The lawsuit was filed in Cook County because that's where the nursing home's management company is located.

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I am happy to report that Moody & Warner, P.C., an employment law firm in New Mexico, specifically Whitney Warner, got a verdict in federal court against various Fundamental/THI entities last week in a wrongful discharge case. Significantly, the verdict was against multiple THI/Fundamental entities because the jury found that they operated as a “single employer.” I think this is extremely important to all of us who try to hold these parent entities accountable.

Mr. Prendergast had been treated horribly by his employer THI/Fundamental entities which includes Fundamental Long Term Care Holdings, Fundamental Clinical Consulting, Fundamental Administrative Services, THI of Baltimore, Inc. and local operators in an elaborate corporate scheme. These entities are represented by Lori Proctor. This case was about the maintenance director, Mr. Prendergast, who was fired after “corporate” decided he was too concerned for the health of the residents, and complaining about unsafe and unsanitary practices such as having to paint over mold in the bathrooms, delays in approvals for repairs, and otherwise being aware and willing to talk about how dangerous and run down this facility was.   These kind of unsafe and unsanitary practices will lead to dangerously high infection rates.  The facility has thankfully been closed down.  

The Tenth Circuit weighs four factors in considering “whether two nominally separateentities constitute an integrated enterprise or single employer: (1) interrelations of operations; (2)common management; (3) centralized control of labor relations; and (4) common ownership andfinancial control.”   Here is the Order denying Defendants' Motion for Summary Judgment on the "single employer" rule or "integrated entity" enterprise.

Whitney Warner is a phenomenal lawyer who put a tremendous amount of thought and effort into this case.   Although this does not represent a huge damages award, the significance of this verdict is invaluable.

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