Jury Awards $38 Million in Nursing Home Whistleblower Case

Nursing Home Chain Agrees to Pay Penalties and Fines for Overbilling and Poor Patient Care

Whistleblowers in two different states testified that a nursing home chain with 146 facilities in the United States had systematically engaged in fraud, inflating therapy bills and billing Medicare for services that were never performed. The company was also accused of providing substandard care. In a deal worked out with the federal government, Extendicare Health Services, Inc., and its subsidiary Progressive Step Corporation, have agreed to pay $38 million in damages–$10 million for overbilling and $28 million for poor patient care.

Tracy Lovvorn worked as the director of rehabilitation for five nursing homes Extendicare ran in eastern Pennsylvania. She says that she discovered that the company was submitting false claims for payment in 2009, and reported her findings to her supervisor, only to be fired in response. She then filed a lawsuit in federal court in Philadelphia. In response to her lawsuit, the U.S. Attorney in Philadelphia launched a four year investigation of Extendicare and its operations.

As part of its agreement with the federal government, Extendicare will participate in a five year compliance review, where the Inspector General of the U.S. Department of Health and Human Services will monitor the company’s performance, as well as its Medicare claims.

Shortly after this action was settled, Extendicare, a Canadian company, announced that it was divesting itself of all its U.S. facilities. They were acquired by Formation Capital, LLC, a health care focused investment firm in Georgia.

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