Nursing Homes Settle Allegations with DOJ for $3.61 Million; Proactive Steps to Avoid Trouble

The Department of Justice (DOJ) recently settled a False Claims Act (FCA) complaint against the American Health Foundation (AHF), an affiliated entity, AHF Management Corporation, and three affiliated nursing homes for $3.61 million. The three nursing homes are: Cheltenham Nursing & Rehabilitation Center, The Sanctuary at Wilmington Place and Samaritan Care Center and Villa. The settlement resolved allegations related to “grossly substandard skilled nursing services from 2016 to 2018.”

Alan C. Horowitz, Esq., RN

The Settlement Agreement explicitly stated it was not “an admission of liability by the Defendants.” Frequently, parties to a lawsuit, including a False Claims Act (FCA) claim, will settle to avoid the expense and resources involved with protracted litigation that can drag on for years. In this case, the 140-page FCA complaint was filed on June 14, 2022, and settled three years later, on June 2, 2025.

FCA Overview

The FCA was originally known as the “Lincoln Law” because it dates back to 1863 during the Civil War when Lincoln’s Union government paid for faulty items such as substandard equipment and even sick horses. Essentially, it allowed the federal government to sue a person or entity who fraudulently received money from the government for goods or services that were either defective, not delivered or otherwise fraudulent.

An interesting aspect of the FCA is the whistleblower provisions, which allow a private individual, known as a “relator” to sue on behalf of the government. Should they prevail, the whistleblower can recover up to 25 percent of the government’s penalty, which could be a multimillion-dollar amount.

The legal notion that substandard care or “worthless services” is tantamount to a FCA violation is not a new concept. For more than 25 years, the DOJ has used that theory as the legal fulcrum in FCA violations.

Allegations

The DOJ claimed that each of the three nursing facilities provided nursing services that “were non-existent, grossly substandard, or in violation of the standards set forth in the Nursing Home Reform Act.” The DOJ alleged inadequate staffing, a failure to adhere to infection control protocols, unnecessary medications given to residents, verbal abuse, failure to provide necessary psychiatric care for some residents, and a failure to have updated care plans and assessments, among other problems.

In addition to the $3.61 million, the defendants agreed to enter into a chain-wide Corporate Integrity Agreement (CIA) for a five-year period. That too is an expensive proposition and requires ongoing monitoring for the duration of the CIA.

In a press release announcing the $3.61 million settlement, the DOJ stated that, “Nursing homes are expected to provide their residents, which include some of our most vulnerable citizens, with quality care and to treat them with dignity and respect.” It added that “The Department will not tolerate nursing homes — or their owners or managing entities — abdicating these responsibilities and seeking taxpayer funds to which they are not entitled.”

Proactive Strategies for Providers

Providers can implement several proactive measures to avoid finding themselves a defendant in an FCA case.

1. As part of compliance requirements, begin with a comprehensive facility assessment to ensure they fully understand the physical, psychological, and emotional needs of every resident.
2. Develop comprehensive care plans and updated as needed, with consistent, meaningful input from the interdisciplinary team (IDT).
3. Leverage the Quality Assessment and Assurance (QAA) committee, which is part of the QAPI program. The importance of the committee’s role cannot be overstated. Although regulations require that the QAA committee meet quarterly and as necessary, the QAA committee should spring into action any time a concern arises.
4. Recall that QAPI is both retrospective and prospective in its approach. Deploy auditing and monitoring tools with feedback loops to gauge the effectiveness of the QAA committee’s recommendations.
5. Maintain compliance and ethics programs that promote quality care and prevent violations, as required by the regulations. Senior personnel should be responsible for overseeing the program. Formal written policies and procedures, along with effective monitoring and auditing systems, are required. The program should be reviewed annually and revised as necessary.

In addition to these guidelines, the HHS Office of Inspector General (OIG) has provided excellent guidance for nursing home compliance plans. In December 2024, the OIG released its voluntary Nursing Facility Industry Segment-Specific Compliance Program (Nursing Facility ICPG) as an update to its 2008 guidance. The Nursing Facility ICPG focuses on quality-of-care issues as well as billing and coding concerns.

FCA liability can extend to the management company and facility owners — as the current case underscores. The governing body, medical director, administrator, and director of nursing all have key roles, but they are not the only ones responsible for ensuring that quality care is rendered to all residents. Apart from the clinical realm, the submission of claims for reimbursement should be meticulous.

The current State Operations Manual (SOM) is 873 pages. While providers are not expected to know what is on every page, they should be familiar with the Requirements of Participation for skilled nursing facilities. After all, they are responsible for being in substantial compliance with those regulations. Vulnerable residents who entrust their lives to providers should be able to rest assured that the provider’s staff is familiar with the regulations governing their care.

Not all facilities have the luxury of a robust compliance and ethics program, especially at a time when staffing is a challenge. Still, an external consultant may be a tremendous resource. Quality Improvement Organizations (QIO) are a valuable resource that should not be overlooked.

There is no place for substandard care in nursing facilities. Residents deserve better. Fortunately, most people who work in nursing facilities are dedicated, compassionate, hardworking professionals (including CNAs) who are eager to provide quality care. All they need is adequate resources and committed leadership. The tools and resources for quality care are available. They just need to be used.

Alan C. Horowitz

Alan C. Horowitz, Esq., is principal at Alan C. Horowitz & Associates and a member of the IASC Editorial Advisory Board. He focuses his legal practice on regulatory compliance and risk management for skilled nursing homes, hospices and home health agencies and manages cases where the Centers for Medicare and Medicaid Services (CMS) has imposed an enforcement action.

He is a former partner at Arnall Golden Gregory LLP, and also served as assistant regional counsel Office of the General Counsel, U.S. Department of Health and Human Services. As counsel to CMS, he was involved with hundreds of enforcement actions and successfully handled appeals before administrative law judges, the HHS Departmental Appeal Board and in federal court. He also has clinical healthcare experience as a registered respiratory therapist and registered nurse. He can be reached at AlanHorowitzLaw.com.