LAW360: Texas Nursing Home Settles Negligent Care Claim For $5M

By Jess Krochtengel

Law360, Dallas (October 19, 2017, 6:25 PM EDT) — A nursing home operator has paid $5 million to settle claims it billed Medicare and Medicaid for subpar services at a Texas nursing home and rehabilitation facility, after a whistleblower alleged the company provided negligent care, the U.S. Department of Justice announced Thursday.

Health Services Management Inc. did not admit liability as part of the settlement and denies wrongdoing. The company, which owns and operates nursing homes throughout Texas and other parts of the country, was accused of billing Medicare and Texas Medicaid for services never provided to patients at its Huntsville Health Care Center skilled nursing facility and for providing substandard treatment.

Whistleblower Susan Anthony, the former marketing director at the Huntsville nursing home, alleged in a 2015 lawsuit that she witnessed patient abuse and neglect, including failure to bathe patients and change their clothes, patients not being taken to the bathroom and patients not being properly diagnosed and treated when they had infections. She alleged nursing home executives changed grievance reports to cover up mistreatment and hid other reports of patient complaints.

Texas and federal prosecutors investigated her claims and concluded that from Jan. 1, 2013, to Dec. 31, 2015, Huntsville had billed Medicare and Medicaid for services that were either not provided or that were so substandard and deficient they were considered worthless and potentially harmful to specific patients, according to the settlement.

“It’s disturbing when a nursing home company accepts Medicare and Medicaid money to care for vulnerable nursing home residents and in return provides substandard care, as alleged in this case,” C.J. Porter of the U.S. Department of Health and Human Services‘ Office of Inspector General said in a statement. “We will continue to hold nursing homes accountable to give residents the quality health services, and living conditions, taxpayers pay them to provide.”

As part of the settlement, HSM also agreed to enter into a corporate integrity agreement with the DHHS-OIG.

“We take seriously the care of our most vulnerable citizens, the elderly and infirm,” Abe Martinez, acting U.S. attorney for the Southern District of Texas, said in a statement. “When providers accept federal funds for reimbursement, they have a duty and responsibility to provide the best care possible to the patient, especially when those patients are elderly and at times incapacitated.”

Sean McKenna of Greenberg Traurig LLP, an attorney for HSM, told Law360 on Thursday that HSM “made a business decision to resolve allegations brought by a former employee” and is pleased to put the litigation behind it.

“HSM looks forward to continuing to provide quality services to its residents at its many facilities,” McKenna said.

Texas will receive about $1.05 million for the state Medicaid portion of the settlement amount.

Anthony will be paid $1 million under the settlement.

Her complaint against HSM also alleged retaliation, claiming she was mistreated on the job and eventually fired after she reported concerns about patient treatment at the Hunstville nursing home to executives at HSM. Joel Androphy of Berg & Androphy, who represents Anthony, told Law360 on Thursday there will be a separate settlement of the retaliation claims.

“This was never about the money,” Androphy said. “Both of us were concerned about putting a stop to the issues that were going on at that facility.”

McKenna confirmed that HSM and Anthony have reached a confidential resolution of the retaliation claims.

Anthony was represented by Joel Androphy and Janis Gorton of Berg & Androphy.

The U.S. was represented by Jill Ondrejko Venezia of the U.S. Department of Justice. Texas was represented by Susan J. Arenella of the Texas Attorney General’s Office.

HSM was represented by Sean McKenna of Greenberg Traurig LLP.

–Editing by Alyssa Miller.