11th Circuit Affirms Sentence And Fine In “Deplorable” Nursing Home Fraud

On June 19, in U.S. v. Houser, the United States Court of Appeals for the Eleventh Circuit affirmed a district court’s 240 month prison sentence and $7,000,000 restitution order to Medicare and Medicaid in a health care fraud case. Houser, the defendant, operated three Georgia nursing homes with a capacity of 404 residents. Approximately, 80% to 90% of the residents were Medicare or Medicaid patients. The court described the conditions within the homes as “barbaric” and “uncivilized.” Specifically, the homes suffered from a laundry list of structural problems, including: leaky roofs that caused damage to resident property and pools of stagnant water in bedrooms, lack of heating in the winter, and lack of air conditioning in the summer. Houser’s failure to properly fund the homes resulted in excessive problems within the homes, including: shortages of cleaning supplies that resulted in a strong odor of urine and feces, soiled linens in residents homes that went unwashed, accumulation of trash because of a failure to pay for trash removal services, and insufficient staffing due to a failure to promptly provide pay checks. Finally, Houser’s failure to properly fund the homes resulted in egregious medical failures for patients, including: lack of medications due to a failure to pay pharmacy bills, insufficient diaper supplies, insufficient laboratory services, and lack of food for residents. The conditions within the homes became so atrocious that staff began buying food and supplies with their personal assets in order to sustain the residents. The court calculated that the homes received approximately $32,914,304 from Medicare and Medicaid for the care of residents. Houser directed large portions of these payments to luxury homes, cars, and alimony payments. The government argued that the majority of the Medicare and Medicaid payments were delivered for services that Houser and his girlfriend, a director within the nursing homes, never delivered or substantially failed to deliver, and thus constituted a conspiracy to commit health care fraud.

            The court noted that a defendant commits health care fraud when they knowingly and willingly execute a scheme to defraud a health care benefit program in connection with the delivery of or payment for health care benefits, items, or services. Under federal law, nursing homes are required to provide services and activities to attain or maintain the highest practicable physical, mental and psychological well-being of residents. Further, federal law requires that nursing homes develop a plan of care which describes the medical, nursing, and psychological needs of the resident and how such needs will be met. The court held that Houser’s operation of the nursing homes not only resulted in severely substandard delivery of services, but in many cases the sheer lack of any services. Therefore, the district court’s sentence was supported by the great weight of evidence and the restitution order accurately reflected the losses suffered by Medicare and Medicaid.