East Coast nursing home chains settle Kickback allegations

East Coast nursing home chains settle kickback allegations - chicagotribune.com

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Without admitting wrongdoing, two East Coast nursing home chains and their principals agreed to pay the federal government and state Medicaid programs a total of $14 million to settle a whistle-blower lawsuit alleging Medicare and Medicaid fraud, the Justice Department announced Friday.

Adam Resnick, a Chicago businessman, brought the fraud allegations in a 2006 civil lawsuit filed in Boston federal district court. The U.S. Justice Department intervened in December 2008.

Resnick is a self-described addicted gambler who last year completed a 25-month federal prison sentence for his role in a $10 million check-kiting scheme that led to the collapse of Universal Federal Savings Bank, in the Pilsen community. With the help of a bank insider and an accountant, prosecutors disclosed, Resnick wrote bogus checks to cover his seven-figure losses at casinos and through bookies.

Resnick recently published a cautionary autobiography titled, "Bust: How I Gambled and Lost a Fortune, Brought Down a Bank — and Lived to Pay For It."

The agreement announced Friday does not establish what share Resnick will claim of the $14 million, but his attorneys said they expect him to get $1 million to $2 million. He plans to apply the bulk of it to pay down the roughly $10 million restitution he still owes for his role in the bank collapse.

"I really appreciate the tenacious work the government attorneys did on this case," Resnick said in a written statement. "If nursing homes take kickbacks, decisions they make about drugs for their residents ultimately may be based on financial benefits to the nursing homes rather than medical benefits for their patients."

The case settled Friday is among a cluster of federal whistle-blower lawsuits involving Omnicare Inc., the nation's largest supplier of drugs to nursing homes. Without admitting wrongdoing, Omnicare paid $19.8 million in November to settle an earlier portion of Resnick's whistle-blower lawsuit.

Friday's settlement arises from government allegations that the Atlanta-based Mariner Health Care Inc. and SavaSeniorCare Administrative Services LLC nursing home chains solicited kickback payments from Omnicare in exchange for agreements by Mariner and Sava to continue using Omnicare's pharmacy services for 15 years. The companies deny wrongdoing.

"Nursing home residents and their families are entitled to make health care decisions free from the distortions caused by illegal kickback schemes," said Tony West, assistant attorney general for the Justice Department's Civil Division.