Vanguard Healthcare pays $18 million to allegations of substandard care

by Ben Vernia | March 11th, 2019

Tennessee-based nursing home company Vanguard Healthcare, LLC, has agreed to pay $18 million to resolve government allegations that the company provided substandard care, the Department of Justice announced on February 27. According to DOJ’s press release:

The Department of Justice announced today that Brentwood, Tennessee-based Vanguard Healthcare LLC, and related Vanguard companies (Vanguard) agreed to pay more than $18 million in allowed claims to resolve a lawsuit brought by the United States and the State of Tennessee against them for billing the Medicare and Medicaid programs for grossly substandard nursing home services.  Vanguard Healthcare and several related Vanguard companies that have reorganized in bankruptcy agreed to pay more than $5.1 million towards the settlement, and two Vanguard entities that are liquidating in bankruptcy have agreed to $13.5 million in allowed claims in bankruptcy. The settlement agreement also resolves claims brought by the United States against Vanguard’s majority owner and CEO, William Orand, and Vanguard’s former director of operations, Mark Miller, who agree to pay $250,000 as part of this settlement.

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The United States and Tennessee filed suit against several Vanguard companies, Miller, and Orand, alleging that they were responsible for five Vanguard-owned skilled nursing facilities submitting false claims to Medicare and Medicaid for nursing home services that were grossly substandard or worthless.  In particular, the United States and Tennessee alleged that the five Vanguard nursing facilities failed to administer medications as prescribed; failed to provide standard infection control, resulting in urinary tract infections and wound infections; failed to provide wound care as ordered; failed to take prophylactic measures to prevent pressure ulcers, such as turning and repositioning; used unnecessary physical restraints on residents; and failed to meet basic nutrition and hygiene requirements of residents.  The lawsuit further alleged that the defendants were responsible for the submission of hundreds of preadmission forms by these facilities to TennCare, Tennessee’s Medicaid Program, which contained forged nurse or physician signatures.

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Vanguard is a holding company that owns a chain of subsidiary skilled nursing facilities, including Boulevard Terrace Rehabilitation and Nursing Center in Murfreesboro, Tennessee; Glen Oaks Health and Rehabilitation in Shelbyville, Tennessee; and Manchester Health Care Center in Manchester, Tennessee.  Vanguard previously operated three additional facilities in Tennessee, including Crestview Health and Rehabilitation in Nashville; Imperial Gardens Health and Rehabilitation in Madison; and Poplar Point Health and Rehabilitation in Memphis.  In addition, Vanguard Healthcare owned Elderscript Services, LLC, in Tupelo, Mississippi, which provided pharmacy services to the Vanguard skilled nursing facilities.The United States’ claims were brought under the False Claims Act, which imposes treble damages and penalties on those who submit false claims for federal funds. The settlement resolves the governments’ claims that Vanguard, Orand, and Miller caused the Boulevard, Crestview, Glen Oaks, Imperial, and Poplar Point facilities to improperly bill Medicare and Medicaid for worthless nursing home services during the period from 2010 to 2015.  The settlement also resolves the governments’ claims that Vanguard, Orand, and Miller caused the Boulevard, Crestview, Glen Oaks, Imperial, and Poplar Point facilities to submit preadmission forms with forged signatures to TennCare in order to be reimbursed by Medicaid from 2012 to 2014. Tennessee’s claims were brought and settled under the Tennessee Medicaid False Claims Act, which prohibits conduct similar to the False Claims Act.

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Due to the filing of bankruptcy proceedings by the Vanguard entities, the United States anticipates that the total government recovery in this case will ultimately exceed $6 million.  Contemporaneously with the settlement announced today, the reorganized Vanguard corporate defendants and Orand further agreed to enter into a chain-wide, quality of care Corporate Integrity Agreement with the United States Department of Health and Human Services, Office of Inspector General, which will remain in effect for five years.  The CIA requires a government-selected quality of care monitor to be retained by Vanguard, along with other heightened compliance obligations that are designed to ensure that Vanguard implements and maintains systems to address the quality of resident care.

The case arose from a government investigation, rather than from a whistleblower’s qui tam suit.

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