A prominent South Florida nursing-home chain has agreed to pay a record $17 million fine after authorities discovered that the company doled out illegal payments to doctors for referrals of Medicare patients.
Federal authorities on Tuesday announced the settlement with Plaza Health Network, a company originally known as Hebrew Homes Health Network.
The company’s executive director, William Zubkoff, resigned as part of the settlement. Plaza Health also agreed to undergo federal monitoring for five years and revamp its hiring practices.
“The Department of Justice will not allow healthcare decisions for elderly Medicare patients to be influenced by kickback payments to physicians,” Miami U.S. Attorney Wifredo Ferrer said in a statement on Tuesday.
Plaza Health was founded more than six decades ago as a convalescent home for elderly Jewish people and war veterans. Since then, the company has grown to include eight nursing and rehabilitation centers.
“We welcome the conclusion of the recent government investigation and have fully cooperated with the relevant authorities throughout this long process,” current chairman Ron Lowy said in a statement issued Tuesday.
“The individuals associated with the business procedures that were the focus of the investigation are no longer affiliated with Plaza Health Network and we feel it is important to note that the high quality of care at Plaza Health Network has never once been compromised.”
The settlement also resolves a whistleblower suit filed by the company’s former chief financial officer, Steven Beaujon.
He filed the suit under a provision of the law that allows a private individual to sue on behalf of the government. Beaujon will collect $4.25 million as part of the settlement.
According to federal authorities, Plaza operated a “sophisticated kickback scheme” between 2006 and 2013, hiring doctors to supposedly serve as “medical directors.” But the positions were in reality “ghost positions” that existed solely so the doctors would refer patients to the company’s facilities.
“Illegal inducements paid to physicians in exchange for patient referrals will not be tolerated,” said Deputy U.S. Assistant Attorney General Benjamin C. Mizer of the Justice Department’s civil division. “Medicare funds should be used to provide care for our senior citizens, not as an inducement to physicians to refer business.”
Beaujon's lawsuit alleged that the scheme was led by Zubkoff, the board of directors and former chairman Russell Galbut, a real-estate developer.
The suit also alleged that Plaza Health submitted false claims to Medicaid and Medicare for therapy services that were never provided or charged at inflated cost. Beaujon also alleged that the company inflated the value of Plaza's real estate assets to get low-interest government loans.