Business owners and investors who enter the healthcare industry are likely motivated by the potential for financial gain. In many cases, investors and owners of nursing home facilities can not only join a market that will likely result in a profit but may also help their communities.
Those who are interested in taking this step are wise to do so carefully. There are rules and regulations that guide these arrangements and investors are wise to complete due diligence before they enter this market. A misstep when it comes to these rules can result in more than just financial penalties — it can lead to allegations of criminal wrongdoing.
How could investing in a nursing home lead to allegations of fraud?
In a recent case, New York officials accused owners of a nursing home of using Medicare funds to pay for third party businesses to provide assistance to help meet management or staffing needs. Although these areas of the business likely needed assistance, the government claims the nursing home overpaid for the services for their own financial gain. The government states the owners and investors of the nursing home also had ownership interests in the third party businesses that provided these services. The AG’s office also states the group overpaid for rental of the property for the site to a company owned by the same investors.
The New York Attorney General is pushing for these owners to repay the funds and is also working to bar these same individuals from owning nursing homes in the future.
Depending on the details, those involved could face allegations of fraud. In another example, the NY AG’s office successfully petitioned for an order from the State Supreme Court to force nursing home owners to provide records. The agency states that in this case, much like the one above, the owners may have misused government funds. If so, they could be looking for evidence to build a case for a violation of the Antikickback Statute (AKS).
What happens if the government builds a case for an AKS violation?
The AKS can come with criminal penalties. If the government secures a conviction, penalties can include thousands of dollars in fines and potential imprisonment. Thorough due diligence and regular internal audits can mitigate the risk of these costly mistakes.
Attorney John Rivas is responsible for this communication