The U.S. Attorney's Office, in collaboration with the Massachusetts Attorney General’s Office, has filed a complaint under the federal and Massachusetts False Claims Acts against 19 skilled nursing facilities (SNFs) in Massachusetts and Connecticut. The lawsuit targets their management companies, RegalCare Management Group, LLC and RegalCare Management 2.0, along with owner Eliyahu Mirlis, executive Hector Caraballo, and Stern Therapy Consultants.
Skilled nursing facilities provide transitional care post-hospitalization. They receive reimbursements from federal healthcare programs like Medicare and Medicaid for necessary services provided to patients. The False Claims Acts prevent the submission of false claims for payment from these government programs.
The complaint alleges that between 2017 and 2023, RegalCare engaged in fraudulent billing practices directed by Mirlis and Caraballo with assistance from Stern Therapy Consultants. The alleged scheme resulted in substantial financial damages to Medicare and Medicaid.
It is claimed that RegalCare billed Medicare for high-level rehabilitation therapy services not clinically needed by patients at its SNFs in Massachusetts and Connecticut. Caraballo allegedly ensured patient records supported these billings through unauthorized alterations without proper assessment or clinician consultation. Additionally, it is alleged that RegalCare instructed its third-party billing company to charge Medicare before completing necessary clinical documentation.
Stern Therapy Consultants are accused of conspiring with RegalCare by scheduling unnecessary therapist services to justify high-level billing. When therapists refused to perform such services, they reportedly faced employment threats from Stern managers.
United States Attorney Leah B. Foley stated: “As alleged, these defendants drained Medicare and Medicaid of millions of dollars and put vulnerable patients at risk – making them undergo unnecessary, and sometimes painful, services.”
Massachusetts Attorney General Andrea Joy Campbell emphasized the partnership with the U.S. Attorney's Office saying: “My office will continue to work aggressively to protect our elders and hold companies accountable that seek to harm them or violate our false claim laws.”
Roberto Coviello of the U.S. Department of Health and Human Services added: “Taxpayers who fund the Medicare and Medicaid programs expect skilled nursing facilities to bill those programs honestly and accurately.”
The complaint also accuses RegalCare of inflating claims submitted to MassHealth for long-term care services not required by patients across various locations in Massachusetts.
This lawsuit follows a whistleblower filing under the qui tam provisions of the False Claims Acts allowing private citizens to sue on behalf of governments potentially sharing any recovery.
The announcement was made by U.S. Attorney Foley alongside AG Campbell and HHS-OIG SAC Coviello. Handling this case are Assistant U.S. Attorneys Steven Sharobem, Andrew Caffrey, Olivia Benjamin, Diane Seol from the Affirmative Civil Enforcement Unit along with Assistant Attorney General Scott Grannemann from the Medicaid Fraud Division.
Currently, these allegations remain unproven as no liability determination has been made.