l su4 alb - columbia law school · in the united states district court for the district of...

IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF MINNESOTA

United States of America and the )State of Minnesota ex rel. )Julie Scharber, Kirsten Bixby, )Barbara Shoemaker, Melissa Farr, ) ,A ^- , , f, ^ _ r I

and John Brockopp ) civil case No. /J'sc - / lut su4 alb I)\'lRelators/Plaintiffs, )v.)

)Golden Gate National Senior Care LLC )(d/bla Golden Living); )GGNSC AnoKa LLC ) FILED IN CAMERA AND(d/bla "Golden LivingCenter - Twin Rivers"); ) UNDER SEAL PURSUANTGGNSC Administrative Services, LLC; and ) TO 31 U.S.C. $ 3730ftX2)GPH AnokaLLC, )

)Defendants I JURY TRIAL DEMANDED

I

COMPLAINT

Defendants materially and knowingly failed to prevent harm to, and otherwise provide

requisite care for, the medically fragile and r.ulnerable elderly residents at its 56-bed Twin Rivers

nursing home facility in Anoka, Minnesota (County of Anoka), yet submitted billings to

Medicare and Medicaid and received payment in full as if the services had been properly

rendered and the Defendants had fulfilled its contractual obligations to the federal and state

government payors.

Julie Scharber ("Scharber"), Kirsten Bixby ("Bixby"), Barbara Shoemaker

("Shoemaker"), Melissa Farr ("Farr"), and John Brockopp ("Brockopp") (collectively

"Relators"), bring this Qui Tam action pursuant to the Federal False Claims Act,31 U.S.C. $

3729 et. seq., ("FCA"), and the Minnesota False Claims Act ("MFCA"), Minn. Stat. g l5C.0l et.

CANNE

ocT 24 2

u.s. DtsTRtqT COURT MPLS

seq. against Defendants Golden Gate National Senior Care LLC, and Golden LivineCenters I

CASE 0:12-cv-02711-JRT-SER Document 1 Filed 10/24/12 of 93

(dlbla Golden LivingCenter -Twin Rivers ("Twin Rivers")) to recover treble damages and

penalties arising from improperly billing, and receiving payment from, Medicare and Medicaid

for said inadequate care. In addition, Scharber, Bixby, Shoemaker, Farr and Brockopp file as

individual plaintiffs under 31 U.S.C. $ 3730(h) and Minn. Stats. $$ 15C.14 and 181.932 for

retaliation arising from their respective employment discharges by Defendants.

I. JURISDICTION AND VENUE

1. This Court has jurisdiction pursuant to 28 U.S.C. $ 1331 because this action

arises under federal law, in particular Title 31 U.S.C. S 3729 et. seq., the FCA.

2. Venue is proper in this district pursuant to 28 U.S.C. $$ 1391 and 1395(a), and

3l U.S.C. $ 3732(a)1 because the acts alleged in this Complaint occurred in the District of

Minnesota, County of Anoka, where Defendants owned and operated the Twin Rivers facility at

issue here.

3. This Court has supplemental jurisdiction pursuant to 28 U.S.C. $ 1367(a) over the

similar claims under the state law claims because they are so related to the federal FCA claims

that they form part of the same case or controversy under Article III of the United States

Constitution.

II. PERFECTION OF FILING AND STANDING TO REPRESENT THEGOVERNMENT

4. Relators are private persons who brought this action pursuant to 3l U.S.C. $

37300) on behalf of the United States, and pursuant to Minn. Stat. $ 15C.05(a) on behalf of the

State of Minnesota.

t 'oAny action under section 3730 may be brought in any judicial district in which the Defendants or, in the case ofmultiple Defendants, any one Defendants can be found, resides, transacts business, or in which any act proscribed bysection 37 29 occvrt ed."


5. This complaint was properly filed in camera and under seal, as required by 31

U.S.C. $ 3730(bX2) and Minn. Stat. $ 15C.05(d), and will remain under seal for at least sixty

days and shall not be served on the Defendants until the Court so orders. Pursuant to 31 U.S.C. $

3730(bX2), the Government may elect to intervene and proceed with the action within sixty days

after it receives both the complaint and the evidence submitted to it, or while the case otherwise

remains under seal. Pursuant to 31 U.S.C. $ 3730(cX3), upon a showing of good cause the

Government may also intervene after the case is unsealed and while the Relators themselves are

prosecuting the case.

6. Contemporaneous with the filing of this Complaint, Relators properly served a

copy of the Complaint and written disclosure of substantially all material evidence and

information upon the United States, as required by 31 U.S.C. $ 3730OX2), and upon the State of

Minnesota as required by Minn. Stat. $ 15C.05(e).

7 . Relators are not aware of any "public disclosure", as that term is used in the FCA

($ 3730(eX4XA)t) and MFCA (Minn. Stat. $ 15C.05(c)(3)), of the allegations forming the core

elements of the Counts asainst Defendants.

8. In the event there is found to be any such "public disclosure", Relators allege that

they are "original sources", as that term is used in the FCA ($ 3730(e)(4XB)3) and MFCA (Minn.

' This section was amended in effective March 23,2010. It formerly read:No court shall have jurisdiction over an action under this section based upon the public disclosureof allegations or transactions in a criminal, civil, or administrative hearing, in a congressional,administrative, or Government [General] Accounting Office report, hearing, audit, orinvestigation, or from the news media, unless the action is brought by the Attorney General or theperson bringing the action is an original source of the information.

It now reads:The court shall dismiss an action or claim under this section, unless opposed by the Government,if substantially the same allegations or transactions as alleged in the action or claim were publiclydisclosed - (i) in a Federal criminal, civil, or administrative hearing in which the Government orits agent is a party; (ii) in a congressional, Government Accountability Office, or other Federalreport, hearing, audit, or investigation; or (iii) from the news media, unless the action is broughtby the Attorney General or the person bringing the action is an original source of the information. .

Because the conduct alleged in this cases occurred both before and after the amendments, proper analysis of thissection will depend upon the date of any alleged public disclosure.


Stat. $ 15C.05(c)(3)), of the allegations or transactions forming the core elements of the Counts

against Defendants. In particular, as to events prior to March 23,2010, Relators had "direct and

independent knowledge of the information on which the allegations are based" through their

employment at Defendants; and "voluntarily provided the information to the Government before

filing" this action. As to events on and after March 23, 2010, Relators either: voluntarily

disclosed to the Government the information on which allegations or transactions in a claim are

based prior to a public disclosure under subsection (e)(a)(A); or have "knowledge that is

independent of and materially adds to the publicly disclosed allegations or transactions and

voluntarily provided the information to the Government before hling" this action.

9. For convenience and clarity, set forth below is a glossary of terminology and

acronyms used in this Complaint.

GLOSSARY

CHSF- Clinical llealth Status FormThe assessment Defendants Twin Rivers uses when residents are first admitted tothe facility. It requires a detailed examination and review of the resident'sphysical and mental condition. They are supposed to be completed within 24hours of the resident's arrival.

CMS- Centers for Medicare and Medicaid ServicesCMS is the federal agency that administers Medicare anddivision of HHS.

Itisa

' This section was amended effective March 23,2010. It formedy read:For purposes of this paragraph, "original source" means an individual who has direct andindependent knowledge of the information on which the allegations are based and has voluntarilyprovided the information to the Government before filing an action under this section which isbased on the information.

It now reads:For purposes of this paragraph, 'original source' means an individual who either (1) prior to apublic disclosure under subsection (e)(aXa), has voluntarily disclosed to the Government theinformation on which allegations or transactions in a claim are based, or (2) who has knowledgethat is independent ofand materially adds to the publicly disclosed allegations or transactions, andwho has voluntarily provided the information to the Government before filing an action under thissection.

Because the conduct alleged in this cases occurred both before and after the amendments, proper analysis of thissection will depend upon the date of any alleged public disclosure.


CNA- Certified Nurse AssistantCNAs provide assistance to RNs and LPNs and provide assistance in daily livingactivities to patients in nursing home or other facilities.

DON- Director of NursingThe DON at Twin Rivers is an RN who is responsible for managing all the othernurses at the facilitv.

FMAP- Federal Medical Assistance PercentageThe FMAP determines the amount of federal funds that are contributed to astate's Medicaid program. It is determined based on the per capita income of eachstate.

HHS- Department of Health and Human ServicesHHS is the federal agency that administers the Medicare program.

LPN- Licensed Practical NurseLPNs must complete a state-approved training program, most of which areoffered by vocational or technical colleges and last about one year. In general,LPNs provide basic bedside care, such as monitoring vitals.

MAR- Medication Administration RecordMARs are legal records kept by a nursing home facility that documents when andwhat types of medication are administered to a resident.

MDS- Minimum Data SetThe federally mandated process for assessing all nursing home residents thatreceive federal medical assistance. It provides a comprehensive assessment of theresident's medical condition.

MHCP- Minnesota Health Care ProgramMinnesota's Medicaid program.

PPS- Prospective Payment SystemA method of reimbursement under Medicare that derives the fixed pa5rmentamount from the classification of the service provided.

RN- Registered NurseRNs must have a nursing degree from a university or from a school of nursing.They also must pass a national licensing exam. In general, RNs providecomprehensive care and medical treatment for patients.

RUG- Resource Utilization GroupCategories of residents in nursing home facilities for the purposes of Medicarepayment.


TAR- Treatment Administration RecordThe TAR documents the treatment administered to a resident.

TCU- Temporary Care UnityTCU is the area of Defendants Twin Rivers for residents that are recovering fromsurgery or an injury and will not be permanent residents of the facility.

TMA- Trained Medical AidTMAs assist the nursing staff in caring for residents and distributing medication.

III. PARTIES TO THE ACTION

10. Relator Julie Scharber ("Scharber") is a citizen of the United States and resident

of the State of Minnesota, County of Sherbume. She has over 24 years of experience in geriatric

healthcare. Scharber is a Registered Nurse ("RN") who was employed by Defendants at Golden

LivingCenter Twin Rivers in Anoka, MN ("Twin Rivers") as a RN from 2003 to 2010. She

previously worked at Twin Rivers from 1986 to 1998 when it was operated by Beverly

Enterprises, Inc ("Beverly Enterprises"). From 1988 until 1998, Scharber also worked at the

Osseo Healthcare Nursing Home, which was also owned and operated by Beverley Enterprises.

Other relevant work experience includes Green Acres nursing home in North Branch, Minnesota

(19S5 to 1987) and, since 2009, her ownership and operation of Home Life Care Providers in

Princeton, Minnesota, which provides in-home care for patients.

I 1. Relator Kirsten Bixby ("Bixby") is a citizen of the United States and resident of

the State of Minnesota, County of Anoka. Bixby is a Licensed Practical Nurse ("LPN") who was

employed by Defendants and worked at Twin Rivers as a LPN from August 2008 through July

2010. Bixby's duties at Twin Rivers included responsibilities as the charge nurse / floor nurse

for the transitional care unit. Bixby received her RN degree in May, 2010. Previously, Bixby

worked at Southdale Pediatrics clinic in Edina, Minnesota as an LPN from 2007 to 2008. Other

relevant experience includes Homeward Bound, Inc. in Brooklyn Park, MN as lead caregiver


(2005), and CSI Ergonomics in Minneapolis, Minnesota providing direct care to

developmentally disabled individuals (2003 to 2004).

12. Relator Barbara Shoemaker, flWa Barbara Krois, ("Shoemaker") is a citizen of the

United States and resident of the State of Minnesota, County of Anoka. Shoemaker is a Certified

Nursing Assistant ("CNA") who was employed by Defendants and worked at Twin Rivers as a

CNA and in the Medical Records department from March 2001 through November 2010. Other

relevant experience includes work as a CNA at Home, Health and Hospice in Roseville,

Minnesota (1999 to 2001) and at HealthEast Homecare in St. Paul (1990 to 1999), and as a

receptionist at the U.S. Coast Guard base medical clinic in Ketchikan, Alaska (1986 to 1989).

13. Relator Melissa Farr ("Farr") is a citizen of the United States and resident of the

State of Minnesota, County of Hennepin. Farr is a CNA who was employed by Defendants and

worked at Twin Rivers as a CNA from Septernber 2007 through July 2010. Other relevant

experience includes work as a CNA at Home Lifecare Providers in Anoka, Minnesota (since

April 2010), at Windyacres Assisted Living in Forest Lake, MN (2006 to 2007) and as an

independent contractor (2005). Farr also worked as a credit collections specialist for Allina

Medical Clinic (2000 to 2004).

14. Relator John Brockopp ("Brockopp") is a citizen of the United States and resident

of the State of Minnesota, County of Wright. Brockopp is a CNA who was employed by the

Defendants and worked at Twin Rivers as a CNA from January 2009 through February 2010.

15. At all relevant times, Defendant Golden Gate National Senior Care LLC was a

for-profit Delaware Limited Liability Company headquartered in Fort Smith, Arkansas. On

March 10, 20Il Golden Gate National Senior Care LLC announced it was moving its

headquarters to Dallas-Fort Worth, TX, which move was completed later that year. At all


relevant times Defendant Golden Gate National Senior Care LLC was registered with the

Minnesota Secretary of State as a foreign company, and also held the Minnesota assumed name

Golden Living. For ease of reference, Golden Gate National Senior Care LLC will be referred to

at times hereafter as "Golden Living."a

16. As is tlpical in the nursing home industry, the ownership of a facility is split into

three primary companies: the licensee that provides care and collects revenue; a management

service provider; and the land and building owner. Ancillary service companies providing

therapy and other services are also common. Hence, also registered with the Minnesota

Secretary of State are the following companies wholly-owned or affiliated with Golden Living:

GGNSC Administrative Services LLC (the management service provider); GGNSC Clinical

Services LLC; and Golden Gate Ancillary LLC. In addition, and for each of the 28 Golden

LivingCenters operated in Minnesota there is a "GGNSC fiocation] LLC" which: 1) is registered

as the Medicare/Medicaid provider (i.e. nursing home licensee), and which holds the "Golden

LivingCenter flocation]" assumed name under which each does business; and 2) a "GPH

[location] LLC" which owns the land and building. Nationwide, Golden Gate National Senior

CaTLLC operates over 300 Golden LivingCenter facilities in 21 states.

17. Relevant to the present case, the nursing home licensee registered as the

MedicareAvledicaid provider for "Golden LivingCenter - Twin Rivers," located at 305 Fremont

St., Anoka, Minnesota 55303, is Defendant GGNSC Anoka LLC, a Delaware limited liability

company headquartered in Fort Smith, Arkansas, and which is registered as a foreign company

with the Minnesota Secretary of State. GGNSC Anoka LLC, also holds the Minnesota assumed

' [Golden Living was formerly known as Beverly Enterprises, Inc., which was also headquartered in Fort Smith,Arkansas. In 1995 [999?], Beverly Enterprises, Inc. settled a Medicare fraud FCA case in which BeverlyEnterprises, Inc. allegedly committed $460 million of healthcare fraud against the United States and various states.The case was settled with the United States Government for $170 million, at which time it was required to enter intoa Corporate Integrity Agreement with a duration of at least 5 years. Beverly Enterprises, Inc. was acquired byGolden Living in March 2006.1


name "Golden LivingCenter - Twin Rivers." For ease of reference, GGNSC Anoka LLC will be

referred to at times hereafter as "Twin Rivers."

18. At all relevant times, Twin Rivers was a nursing home facility that offered long

term and temporary care. Twin Rivers held itself out as a skilled nursing facility providing care

in compliance with state and Federal agencies, including Medicare and Medicaid, and was

certified as a Medicare and Medicaid provider (Medicare Provider # 245298; Medicaid Provider

# tlbld). Twin Rivers represented that available care included pain management, wound care,

physical therapy, and general quality oflife services such as recreation and social activities.

19. As is typical in the nursing home industry, the licensee here, Twin Rivers, does

not own the land or buildings, and does not perform many of its own management or other

functions. It merely hires nurses, CNAs and other care-givers, and collects the revenue.

20. As designed by the corporate parent, Golden Living, Twin Rivers' revenue is then

siphoned-off to sister companies, primarily in the form of rent to the landholder, GPH Anoka

LLC, and management fees to GGNSC Administrative Services LLC. Upon information and

belief, Twin Rivers also paid fees to GGNSC Clinical Services LLC, and to Golden Gate

Ancillary LLC. Upon information and belief based upon Relators' observations, Golden

Living's affiliate, Aegis Therapy, also provided occupational, physical and other therapy services

to Twin Rivers residents and received payment both directly from Twin Rivers and also from

Medicare and/or Medicaid. Upon information and belief based upon Relators' employment at

Twin Rivers, Golden Living's affiliate, Ascera Care, provided hospice services to Twin Rivers

residents and received pa5rment both directly from Twin Rivers and also from Medicare and/or

Medicaid.

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21. Upon information and belief based upon Relators' employment at Twin Rivers,

cash was swept out of the GGNSC Anoka LLC bank account on a regular and frequent basis.

The end result of the foregoing structure and practices was to leave Twin Rivers as an operating

shell lacking sufficient financial assets or sufficient control over day-to-day operations to deliver

the required services to its residents.

22. Defendant GPH Anoka LLC is a Delaware limited liability company

headquartered in Fort Smith, Arkansas, and is registered as a foreign company with the

Minnesota Secretary of State. Since March 14,2006 it has owned the land and buildings located

at 305 Fremont Street, Anoka, Minnesota, County of Anoka, comprising two parcels with

Property ID Numbers 0l-31-25-43-0050 and 01-31-25-43-0044. Upon information and belief

based on Relators' employment at Twin Rivers, at all relevant times it received substantial rent

from Defendant Twin Rivers.

23. Defendant GGNSC Administrative Services LLC is a Delaware limited liability

company headquartered in Fort Smith, Arkansas, and is registered as a foreign company with the

Minnesota Secretary of State. Upon information and belief based on Relators' employment at

Twin Rivers, at all relevant times, it received substantial fees from Defendant Twin Rivers for

the provision of management and other services.

IV. SUMMARY OF ALLEGATIONS

24. Since Golden Living took over the facility in 2006 until the present (hereinafter

the "relevant period"), Defendants submitted or caused to be submitted false or fraudulent claims

to the Medicare and Minnesota Medicaid programs for services at the Twin Rivers nursing

facility that: a) failed to prevent harm to residents, as mandated by federal Medicare/Medicaid

nursing home regulations that comprise Twin Rivers' contract with the government; b) failed to

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provide requisite services in furtherance of satisfying the harm prevention mandates; c) failed to

promote the maintenance or enhancement of the quality of life of the residents of Twin Rivers as

required by federal Medicare/Medicaid nursing home regulations; and/or d) were otherwise not

eligible for coverage under Medicare and Medicaid's general exclusion of services that are not

"reasonable and necessary," in that they were: not provided or rendered; were deficient; were

inadequate, substandard, and of a quality that failed to meet professionally recognized standards

of health and/or custodial care, often resulting in actual harm or the risk of harm; or otherwise

worthless. Upon information and belief the foregoing misconduct is ongoing and continues to

this day.

25. During the relevant period, Defendants knowingly directed and approved of the

billings by Twin Rivers to the Medicare and Minnesota Medicaid programs, and knowingly

accepted and approved of the receipt by Twin Rivers of Medicare and Minnesota Medicaid

funds, despite knowing that the services failed to meet the contracted-for standards of custodial

care and/or health care.

26. During the relevant period, Defendants made or caused to be made false records

that were material to false or fraudulent claims submitted to the Medicare and Minnesota

Medicaid progmms.

27. The foregoing was done by Defendants acting in conspiracy with one another, or

at the very least in coordinated and concerted action with one another, and for the purpose of

maximizing their profits at the expense of patient care and the government fisc.

V. APPLICABLE LAWS

A. TIIE FALSE CLAIMS ACTS

ll


28. The federal FCA and the Minnesota FCA make it unlawful for any person to

directly or indirectly deceive the government in order to receive, retain or avoid returning

govemment money or property, or conspire to do any of the foregoing. See 31 U.S.C. $ 3729 et....

"..... .rA -.

seq., and Minn. Stat. l5C.0l et seq.. The FCA and MFCAs are in pari material for each other.

Relators allege liability under four of the FCA's seven liability provisions.

29. First, through May 19, 2009,31 U.S.C. $ 3729(a)(1) imposed liability when a

person" knowingly presents, or causes to be presented, to an officer or employee of the United

States Government ... a false or fraudulent claim for payment or approval." From and after May

20, 2009, that section was renumbered and amended to impose liability when any person

"knowingly presents, or causes to be presented, a false or fraudulent claim for payment or

approval." 31 U.S.C. $ 3729(a)(1)(A).

30. Second, through June 6, 2008, 31 U.S.C. $ 3729(a)(2) imposed liability when a

person "knowingly makes, uses, or causes to be made or used, a false record or statement to get a

false or fraudulent claim paid or approved by the government." From and after June 7, 2008,

that section was renumbered and amended to impose liability when a person "knowingly makes,

uses, or causes to be made or used, a false record or statement material to a false or fraudulent

claim." 31 U.S.C. $ 3729(aXlXB).

31. Third, through May 19, 2009,31 U.S.C. $ 3729(a)(7) imposed liability for a

"reverse" false claim when a person "knowingly makes, uses, or causes to be made or used, a

false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or

property to the govemment." From and after May 20,2009, that section was renumbered and

amended to impose liability when a person "Knowingly makes, uses, or causes to be made or

used, a false record or staternent material to an obligation to pay or transmit money or property to

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the Government, or knowingly conceals or knowingly and improperly avoids or decreases an

obligation to pay or transmit money or property to the Government." 31 U.S.C. $ 3729(a)(1XG).

32. Fourth, through May 19, 2009, 3l U.S.C. $ 3729(aX7) imposed liability for

"conspiracy" as to any person who "conspires to defraud the Government by getting a false or

fraudulent claim allowed or paid." From and after May 20,2009, that section was renumbered

and amended to impose liability when a person "conspires to commit a violation of subparagraph

(A), (B), (D), (E), (F), or (G)." 31 U.S.C. $ 3729(a)(1XC).

33. As defined under 31 U.S.C. $ 3729(b), "knowing" and "knowingly" means that a

person: (1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth

or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the

information.

34. Under 31 U.S.C. $ 3729(c), a "claim"5 includes "any request or demand, whether

under a contract or otherwise, for money or property which is made to a contractor, grantee, or

other recipient if the United States Government provides any portion of the money or property

which is requested or demanded, or if the Government will reimburse such contractor, grantee,

or other recipient for any portion of the money or property which is requested or demanded." 31

U.S.C. g 3729(c). Under this language, Medicaid and Medicare claims submitted to Federal or

State agencies are claims presented to the federal govemment and therefore give rise to liability

under the FCA.

35. Under the FCA, "the term 'material' means having a natural tendency to influence, or be

capable of influencing, the payment or receipt of money or property." 3l U.S.C. 5 3729(a)(D.

5 In order to avoid confusion with the meaning of "claim" under the FCA, Relator will avoid using that term in itsother sense to refer to a legal claim, instead using the terms "cause of action" or "count."

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36. The FCA enforces certain principles that apply when one deals with the

government. These include the fact that caveat emptor is replaced by a duty to "tum square

comers" and be honest and forthright with the government, and to deliver goods and services

precisely according to the specifications mandated.6 This principle is reflected in the fact that,

except for recent amendments to two of the liability provisions, the FCA does not require

materiality and mandates penalties of not less than $5,500 and not more than $11,000 per

occunence. 31 U.S.C. $ 3729(a). In addition, when the misconduct results in the government

payrng more than the value it received, then that difference is subject to mandatory trehling. Id.;

U^L v. Bornstein,423 U.S. 303, 316-17 and n.13 (1976) (FCA damages are the difference in

value between what the government paid and what it received).

37. Actions may be brought under this section within six years of when they accrue.

31 U.S.C. $ 3731(bxl). This statute of limitations, however, is tolled by the Wartime

Suspension of Limitations Act ("WSLA") during times of war or armed conflict. 18 U.S.C. $

3287, applied in U.S. v. BNP Paribas, et al., No. H-lI-3718,2012 U.S. Dist. LEXIS 110293

(August 6, 20t2) (tolling statute of limitations in civil FCA action arising from ineligibility

o Caveat emptor does not apply when dealing with the govemment. As stated long ago by Justice Holmes, "[m]enmust tum square corners when they deal with the government." Rock Island, Arkansqs & Louisiana rR.R. v. UnitedStates,254 U.S. 14l, 143,41S.Ct.55,65 L.Ed. 188 (1920); seealso Fed. Crop Ins. Corp.v. Merrill,332U.S.380,385 (1947) (setting out the fact that "'Men must turn square corners when they deal with the Government,' does notreflect a callous outlook. It merely expresses the duty ofall courts to observe the conditions defined by Congress forcharging the public treasury"). This principle is codified in the government acquisition term of art known as "costand pricing data," l0 U.S.C. S 2306a(hXl) and 4l U.S.C. $ 3501, which requires affirmative disclosure of allrelevant information. Important here, the principle is also widely applied in FCA actions. See, e.g., U.S. v. Rogan,5 17 F.3d 449, 452 (7th Cir. 2008); U.S. ex rel. Compton v. Midwest Specialties, Inc., 142 F . 3d 296,302-305 & n.4(6th Cir. 1998) (setting out that "parties that contract with the government are held to the letter of the contract -irrespective of whether the contract terms appear onerous from an ex post perspective, or whether the contract'spurpose could be effectuated in some other way" and thus "the 'square-corners' rule applies fully in the FalseClaims Act context"),following United States v. Aerodex, Inc., 469 F.2d 1003, 1007 (5th Cir. 1972) (noting that

'o[t]he mere fact that the item supplied under contract is as good as the one contracted for does not relievedefendants of liability")(emphasis added); U.S. v. Rivera. 55 F.3d 703,709 (lst Cir. 1995) (setting out that "[b]yattaching liability to the claim or demand for payment [under (aXl), the [FCA] encourages contractor [sic] to 'turnsquare corners when they deal with the government"'), quoted andfollowed by Machado v. Sanjurjo,559 F.Supp.2d167 , 174 (D. Puerto Rico 2008); United States v. Bourseau, No. 03-cv-907 ,2006WL2961 105, * 1 & n.l (S.D. Cal.2006).

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under the Supplier Credit Guarantee Program ("SCGP"), on the grounds that the United States

remained at war in 2005 when the misconduct occurred).

38. In addition, the liable defendant must also pay the Relator's attomeys' fees,

expenses and costs. 3l U.S.C. $ 3730(dxl) and (2). Furthermore, defendants may also be liable

to an employee-relator for retaliation, constructive discharge or other unfavorable treatment in

connection with Relator's efforts to stand up for the govemment's rights. 31 U.S.C. $ 3130(h).

Actions may be brought under this section within three years of when they accrue. 31 U.S.C. $

3 r 30(hx3).

B. MEDICARE AND MEDICAID

1. The Medicare Proqram Generally

39. Title XVII of the Social Security Act,42 U.S.C. $$ 1395, et seq., established the

Health Insurance for the Aged and Disabled Program, commonly known as Medicare. Medicare

is a federally funded health insurance program administered by the Secretary of the Department

of Health and Human Services ("HHS"), an agency of the United States, through the Centers for

Medicare and Medicaid Services ("CMS").

40. The Medicare program reimburses health care providers for specified health care

services furnished to certain targeted populations, including persons who are over age 65 and

persons who are disabled.

4I. The Secretary of HHS has broad statutory authority to "prescribe such regulations

as may be necessary to carry out the administration of the [Medicare] insurance programs. ..- 42

u.S.c. $ l3eshh(a)(l).

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42. The Secretary also has the power to formulate rules for the administration of the

Medicare programs, through the issuance of manual instructions, interpretive rules, statements of

policy, and guidelines of general applicability.42 U.S.C. $ 1395hh(c)(l).

2. The Medicaid Proeram Generallv

43. Title XIX of the Social Security Act,42 U.S.C. $$ 1396, et seq. established the

Grants to States for Medical Assistance Programs, known as Medicaid. Medicaid is a federal

and state-funded health insurance program administered by the states.

44. The federal government and the states share the cost of Medicaid claims. The

federal government reimburses the state at a percentage called the federal medical assistance

percentage ("FMAP") that is calculated for each state according to a formula based on per capita

income. The FMAP is designed so the federal government pays a larger portion of Medicaid

costs in states with lower per capita income relative to the national average, and vice versa for

states with higher per capita incomes. FMAPS are recalculated and published annually between

October 1 and November 30 in the Federal Register. Minnesota's FMAP is currently 50o%. To

qualifu for these federal matching funds, each state must submit a plan to the Secretary of the

Department of Health and Human Services for approval. See 42 C.F.R. $$ 430 Subpart B and

488.303.

45. Submission of claims to Medicaid and pa5rments by Medicaid to providers

implicates both the Minnesota and federal FCAs because the pa5iments of those claims are 50o/o

State of Minnesota funds and 50Vo federal matching funds.

3. Medicare and Medicaid Processes Applicable to Long-Term Care Facilities

il. Overview

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46. On the whole, the Medicare and Medicaid statutes, regulations, Provider Benefit

Manual, State Operations Manual, and other documents constitute the terms of a unilateral

contract between the government and the provider. Under these programs, the provider

repeatedly agrees to abide by the terms of that contract and to only submit claims that are eligible

for reimbursement by virtue of providing services that conform to the specifications set forth in

those documents. Consistent with the "square corners" doctrine, the government underscores the

importance of complying with these terms by denoting them as conditions of payment. The

provider also repeatedly certifies compliance with all applicable laws.

47. The following sections detail the process of becoming a provider, the necessary

applications and agreements, the submission of claims, and follow-up annual submissions. At

each step along the way, the provider repeatedly acknowledges and agrees that Medicare and

Medicaid require, as a condition of both participation and payment, full compliance with all

applicable statutes and regulations (which, for LTCs are at 42 C.F.R. $ 483 and Minnesota

Administrative Rules Ch. 4658). The providers also submit various certifications of actual

compliance with those terms.

48. As a result of the representations made in such Medicare and Medicaid

documents, including its certifications of present and future compliance with applicable federal

health care laws, and the certifications made in its annual cost reports, Twin Rivers was

permitted to participate in those programs. That participation resulted in substantial Medicare

payments to Defendants for all years from and after 2006.

49. Statutes and regulations governing the Medicare and Minnesota Medicaid

programs require health care providers to be certified as Medicare and Medicaid providers and

T7


that they maintain - as a prerequisite to receiving payment under the programs - substantial

compliance with all the pertinent rules and regulations governing the programs.

50. Amongst other things, health care providers must assure that all services for

which they submit claims for Medicare and Medicaid payment are "of a quality which meets

professionally recognized standards of health care." 42 U.S.C. $ 1320c-5(AX2); 42 U.S.C. $

1320a-7b(aX1) and (3) (criminal penalties for submitting false claims when provider knows it

has no continued right to receive payment); 42 U.S.C. $ 1320a-7ftX6XB) (provider can be

excluded from participation in Medicare for submitting claims for inadequate care).

51. The services must also be o'reasonable and medically necessary," 42 U.S.C. $

1395y(a)(l)(A), and an efficient use of resources (i.e. govemment funds), 42 U.S.C. $ 1320c-

s(a)(1).

52. The Defendants failed to provide care and services that met MedicaidAvledicare's

requirements, yet submitted claims to those programs for payment in full. As to each such claim,

the government did not receive the value it bargained and paid for, and Defendants are liable

under the FCA.

b. Provider Application and CMS Certification.

53. In order to be reimbursed by Medicaid or Medicare, health care providers must be

certified as a Medicaid and/or Medicare provider. This is done by demonstrating that they meet

certain conditions of participation, i.e. that they are theoretically capable of rendering covered

services that meet the government's standards. 42 U.S.C. $$ 1395n(a), 42 C.F.R. $ 488 at

Subpart E - Survey and Certification of Long-Term Care Facilities.

18


54. The certification process begins upon the provider's submission of a CMS Form

855-A Medicare Healthcare Provider/Supplier Enrollment Application (hereafter "Provider

Application"), which puts providers on notice that "payment ... is conditioned upon

compliance with all applicable conditions of participation." In the Provider Application

provider agrees, as an inducement to the government in order to receive certification, that

the

the

conditions of participation are material to the govemment's obligation to pay and agrees to

comply with them, stating:

I agree to abide by the Medicare laws, regulations, and program instructions that

apply to this provider. The Medicare laws, regulations, ild instructions are

available through the Medicare contractor. I understand that payment of a claimby Medicare is conditioned upon the claim and the underlying transaction

complying with such laws, regulations and program instructions (including,but not limited to, the Federal anti-kickback statute and Stark law), and on theprovider's compliance with all applicable conditions of participation inMedicare... I will not knowingly present or cause to be presented a false orfraudulent claim for payment by Medicare, and will not submit claims withdeliberate ignorance or reckless disregard of their truth or falsity." (Emphasis

added.)

By virtue of this acknowledgment and agreement, all claims submitted by the provider

carry with it an implied certification of compliance with those conditions. Furthermore,

the Provider Application also constitutes an ongoing express certification of compliance.

55. CMS uses different nomenclature in different care settings and, for LTCs, all of

the mandates are labeled as "requirements," rather than "conditions," that must be met for both

participation and payment. 42 C.F.R $ 483, Subpart B "Requirements for Long Term Care

Facilities"; See also, CMS State Operations Monual ("SOM"), $ 1014 (2004) (noting language).

The meaning, however, is the same. 42 C.F.R. $ 483.1(b) ("the requirements that an institution

must meet in order to qualiff to participate as a SNF in the Medicare program, and as a nursing

facility in the Medicaid program") (italics added); SOM $ l0l4 ("A provider ... cannot begin to

19


have its services covered and reimbursed by Medicare until it is found, via the certification

process, to be in compliance with all federal requirements, including in substantial

compliance with the requirements for SNFs and NFs") (italics added).

56. In order to be certified and maintain that certification, the SNF must pass

inspections conducted by CMS, a task it delegates to each State Medicaid agency. 42 U.S.C. $

1395i-3(g) and $ 1396r(a);42 C.F.R. $ 488 Subpart E (Survey and Certification of LTCs) and

Subpart F (Enforcement of Compliance for LTCs). The specific requirements that a nursing

facility must meet in order to qualify for participation in, and receive taxpayer dollars from, the

Medicare and Minnesota Medicaid programs are set forth at 42 C.F.R. $ 483. These requirements

"serve as the basis for survey activities for the purpose of determining whether a facility meets

the requirements for participation in Medicare and Medicaid." 42 C.F.R. $ 483.1(b). In

connection with the survey process, the SOM addresses each regulation set forth in 42 C.F.R. $

483 governing LTCs, and provides detailed outlines of what the inspectors are to look for in

order to achieve certification compliance.

57. Even after certification, the LTC undergoes surveys at least every 15 months, or

in response to complaints. If the sampling reveals deficiencies, then the surveyors may impose

various fines, prospective denial of Medicare/lMedicaid reimbursement until certification

compliance is achieved, or even de-certification. 42 U.S.C. $ 1395i-3(g) & (h), and $ 1396r(9)

& (h); 42 C.F.R. $ 488 Subpart F. The field surveyors do not, however, have the power and

authority to recoup payments already made, which can only be done by the Department of

Justice ("DOJ") directly or through a qui tam action, or if the DOJ authorizes the Department of

Health and Human Services' Office of the Inspector General ("OIG") to do so under the Civil

20


Money Penalty Provision, 42 U.S.C. g 1320a-74 whose treble damages, penalties and other

provisions closely mirror the FCA.

58. States are responsible for certifying the compliance of nursing facilities with the

reqtiitHrients of the Act and regulations enacted pursuant thereto. Compliance,l:-.*:t"*tn"O

through periodic surveys. 42 U.S.C. $ 1396r(gxl)(A); 42 C.F.R. $ 488.303.

59. The State of Minnesota's Medicaid program is called Medical Assistance and is

administered by the Minnesota Department of Human Services through Minnesota Health Care

Programs ("MHCP").

60. To be reimbursed by Medicaid, a provider must enter into a provider agreement

with Minnesota Medical Assistance. Medicaid providers like the Defendants must submit claims

for payment through MHCP, and MHCP will make the payments directly to the provider.

61. During the relevant time period, Medicaid reimbursed nursing home facilities on a

o'per diem" basis, which was lower than the Medicare per diem rate.

62. MHCP is responsible for surveying nursing facilities in Minnesota, including

Twin Rivers, on a periodic basis to ensure compliance with federal and state law and regulations.

These surveys may occur more frequently where there are complaints or other triggering events.

63. Facilities that are not in compliance with the applicable federal and state laws and

regulations are subject to prospective sanctions, including but not limited to denial of payment or

termination of the right to provide services. 42 C.F.R. $ 488 at Subpart F - Enforcement of

Compliance for Long-Term Care Facilities with Deficiencies. Such prospective sanctions,

however, do not preclude actions by or on behalf of the government to recover some or all of the

funds previously paid on the grounds that the government did not receive the full benefit of the

bargain it paid for.

2l


c. Provider Agreement and Health Insurance Benefit Agreement.

64. After being certified, all providers must execute a "provider agreement" with CMS

and receive a "provider number." 42 U.S.C. $ 1395cc(a). GLC-Twin River was assigned

Medicare provider number 245298 and a Medicaid provider number, and thus at all relevant

times, Twin Rivers was a "provider" with written agreements with the Medicare and Minnesota

Medicaid programs.

65. As a certified Medicare and Medicaid provider, Defendant Twin Rivers would

have signed the Medicare and Medicaid provider agreements.

66. Upon information and belief based upon the Medicare Provider Agreement form,

as a prerequisite to enrolling in and receiving payment from the Medicare program, Twin Rivers

would have expressly certified the following: "I am familiar with and agree to abide by the

Medicare or other federal health care program laws, regulations and program instructions that

apply to my provider/supplier type. . . . I understand that payment of a claim by Medicare or

other federal health care programs is conditioned on the claim and the underlying transaction

complying with such laws, regulations and program instructions (including the anti-kickback

statute and the Stark law), and on a provider/supplier being in compliance with any applicable

conditions of participation in any federal health care program."

67. Upon information and belief, as a Medicaid provider, Twin Rivers' would have

executed the Minnesota Health Care Program ("MHCP") Provider Agreement, which contained

similar certifications. In particular, atparagraph 8 of the Provider Agreement Twin Rivers would

have agreed to "Assume full responsibility for the accuracy of claims submitted to DHS in

accordance with the certification requirements of 42 CFR 455.18 and Minnesota Statutes

2568.27, subd.2."

22


68. In order to qualif' for Medicare andlor Medicaid pa5rments, a nursing home must

also sign a Health Insurance Benefit Agreement, Form CMS-1561 ("CMS-l561). 42 U.S.C. $

l395cc. Health Insurance Benefit Agreement. Through the one-page CMS-1561, a provider

expressly agrees to conform with the applicable Code of Federal Regulations within Title 42,

including the regulations implementing the Nursing Home Reform Act, 42 C.F.R. g 483, as a

pre-requisite to payment. The following language of the Health Insurance Benefit Agreement

expressly makes compliance with Federal regulations a pre-requisite for payment:

fn order to receive payment under title XVIII of the Social Security Act 142 U.S.C. $1395cc], fName of the nursing home inserted here] as the provider of services, agrees toconform to the provisions of section of [sic] 1866 of the Social Security Act andapplicable provisions in 42 CFR fwhich includes the NHRA's implementing regulationsn quality of carel. (Emphasis added).

69. Upon information and belief, as a Medicare and Medicaid certified provider Twin

Rivers would have sisned a Form CMS-I561.

70. e. a"juif"d in a later sectio n, 42C.F.R. $ 483.01 et seq.sets forth detailed

regulations governing coverage for nursing facilities. In Form CMS-1561, the provider

acknowledges and contractually agrees that those regulations define what the government is

bargaining and paying for. By virtue of this acknowledgment and agreement, all claims

submitted by the provider carry with it an implied representation or certification of compliance

with those requirements, giving rise to liability under 31 U.S.C. $ 3729(a)(l) for presenting a

'ofalse or fraudulent claim." Furthermore, the Provider Agreement also constitutes an ongoing

express certification of compliance giving rise to liability under 31 U.S.C. $ 3729(a)(2) for

making a false record or statement material to a false or fraudulent claim.

d. Claims.

23


71. Upon information and belief, in addition to the provider agreements, Twin Rivers

also completed an Electronic Data Interchange ("EDI") Enrollment Form in order to bill

Medicare electronically.

72. In the EDI Enrollment Form, the provider agrees to "be responsible for all

Medicare claims submitted to CMS by itself, its employees, or its agents," and that it would

"submit claims that are accurate, complete and truthful."

73. Through the EDI Enrollment Form, the provider also acknowledges "that all

claims will be paid from Federal funds, that the submission of such claims is a claim for payment

under the Medicare program, and that anyone who misrepresents or falsifies or causes to be

misrepresented or falsified any record or other information relating to that claim as required by

this Agreement may, upon conviction be subject to a fine and/or imprisonment under applicable

Federal law."r Title XIX of the Social Security Act includes 42 U.S.C. $ 1396r.

74. Twin Rivers submitted its claims for payment to Medicare electronically on a

form known as a "UB-92 HCFA-1450" (between July 1,2004 and May 2007) or a "UB-04

CMS- 1450' (between May 2007 and December 31, 2008). The 1450 forms, which are

substantively identical, contain various certifications on their reverse side, including the

certification that ooThis claim, to the best of my knowledge, is correct and complete . . . ."

75. CMS selects private insurance companies to administer claims submitted to the

Medicare program, and to act as its agents. Pursuant to written agreements, these private

insurance companies are authorizedto receive and review claims for reimbursement and to make

pa5rments to providers on behalf of CMS. Typically, the entire process is done electronically.

76. In general, to receive reimbursement from Medicare, the provider must submit a

claim for reimbursement which includes the identity of the patient, the provider number, the

24


service provided, and the medical necessity for the service rendered. The provider must certify

that the information is accurate and complete.

77. The Minimum Data Set ("MDS") form must be completed and submitted to the

government for all nursing home residents that receive reimbursement from Medicare or

Medicaid. 42 C.F.R. $ 483.315. In the MDS, the Defendants must provide the government with

an accurate and comprehensive assessment of each resident's functional capabilities, identi$

health problems and formulate a resident's individual plan of care. The level of care provided

then translates into one of the RUGs which determines the per diem amount paid by CMS for

that resident.

78. MDS assessments are required to be completed by nursing homes for all residents

within 14 days of admission or a significant change in condition, and thereafter at least annually.

42 C.F.R. $ 483.20(bxi), (ii) & (iii). A separate Quarterly Assessment is also required. 42

C.F.R. $ a83.20(c). The SNF is required to periodically update the MDS during Part A

coverage, or upon a change in condition. This ensures that the per diem amount stays aligned

with the level of care provided.

79. MDS assessments are transmitted electronically by nursing homes to the MDS

data base in their respective states, and then the information is captured into the national MDS

database at CMS.

80. MDS assessments are signed by the individuals who completed all or a portion of

the form, and contain the following certification:

'oI certify that the accompanying information accurately reflects residentassessment or tracking information for this resident and that I collected orcoordinated collection of this information on the dates specified. To the best ofmy knowledge, this information was collected in accordance with applicableMedicare and Medicaid requirements. I understand that this information is used asa basis for ensuring that residents receive appropriate and quality care, and as a

25


basis for payment from federal funds. I further understand that payment of such

federal funds and continued participation in the government-funded health care

programs is conditioned on the accuracy and truthfulness of this information, and

that I may be personally subject to or my subject my organization to substantial

criminal, civil, and/or administrative penalties for submitting false information. Ialso certify that I am authorized to submit this information by this facility or on its

behalf."

At all times relevant to this action, Defendants prepared and submitted MDS assessments of the

residents in their care, which did not always accurately reflect the residents' true medical

condition. But for the submission of false MDS assessments, the government would not have

reimbursed Defendants for the substandard care received by the Defendants' residents.

81. Specifically as to SNFs, Medicare Part A pays up to 100 days/year of services

provided to a beneficiary at a skilled nursing facility ("SNF")7. Since 1999, Medicare Part A

pays SNF services using a prospective payment system ("PPS"), under which it pays a "per

diem" rate based on which Resource Utilization Group ("RUGs") accurately reflects the patients'

conditions and care needs. The original 44 RUG classifications was increased to 53 on January

1,2006, and then to 66 on October 1, 2010. The greater the care needs, the higher the RUG level

and the higher the per diem.

82. In contrast, Medicaid pays a fixed per diem regardless of differences in the level

of care provided. Medicaid pays LTCs on a prospective basis based on a rolling census provided

by the facility.

83. As explained further below, Defendants submitted false or fraudulent claims to

the Medicare and Medicaid programs for services that: failed to prevent harm or the risk of harm;

were not rendered; or were deficient, inadequate, sub-standard; were wholly or partially

worthless; did not promote the rehabilitation objectives of transitional care residents; did not

7 The term "skilled nursing facility" ("SNF') is a Medicare term of art reflecting the fact that that program only

pays for higher levels of skilled nursing care. In contrast, Medicaid pays for lower levels of nursing and custodial

care, and thus that program uses the term "nursing facility" ("NF").

26


promote the maintenance or enhancement of the quality of life for the residents; and/or were so

profoundly lacking in quality and quantity so as to fail to meet professional nursing standards

recognized and required by state and federal regulations.

e. Supporting Documentation of Care.

84. When claims are submitted they must not only comply with the requisite standard

of care, there must also be documentation of the care given and the quality of that care, including

complete, accurate, readily accessible, and systematically organized clinical records. 42 C.F.R. $

483.750). Where care is provided by a team around the clock, such documentation is essential to

ensuring each resident receives their required care and that no enors occur.

f. Cost Report And Settlement Summarv.

85. At the end of each year, providers must submit separate Cost Reports to Medicare

and Medicaid reporting all Medicare revenue and properly reporting "allowable" costs against

that revenue. The Medicare version is entitled Skilled Nursing Facility and Skilled Nursing

Facility Healthcare Complex Cost Report Certification And Settlement Summary. The Cost

Reports contain certifications that the information reported is complete, truthful and accurate and

that the services were provided in compliance with all applicable laws. In particular, it states:

MISREPRESENTATION OR FALSIFICATION OF ANY INFORMATIONCONTAINED IN THE COST REPORT MAY BE PUNISHABLE BY CRIMINAL,CNIL AND ADMINISTRATIVE ACTION. FINE AND/OR IMPROSONMENTUNDER FEDERAL LAW. FURTHERMORE, IF SERVICES IDENTIFIED INTHIS COST REPORT WERE PROVIDED OR PROCURED THROUGH THEPAYMENT DIRECTLY OR INDIRECTLY OF A KICKBACK OR WEREOTHERWISE ILLEGAL, CRIMINAL, CryIL AND ADMINISTRATIVE ACTION,FINES AND/OR IMPRISONMENT MAY RESULT.

CERTIFICATION BY OFFICER OR ADMINISTRATOR OR PROVIDER(S)I HEREBY CERTIFY that I have read the above statement and that I haveexamined the accompanying electronically filed or manually submitted cost reportand the Balance Sheet and Statement of Revenue and Expenses . .. and that to thebest of my knowledge and belief it is a true, correct and complete statement

27


prepared from the books and records of the provider in accordance withapplicable instructions, except as noted. I further certify that I am familiarwith the laws and regulations regarding the provision of health care services,and that the services identified in this cost report were provided incompliance with such laws and regulations.

Forms CMS 2540-96 (forms and instructions are found in the Provider Reimbursernent

Manual, Part II (http://www.cms.gov/Regulations-and-Guidance/Guidance/Ivlanuals/Paper-Based-

Manuals-Items/CMSO2l935.html),last accessed August 12,2012); (Form CMS 2540-96 has

been in use from 1996 through20ll perhttp.llwww.cms.gov/Research-Statistics-Data-and-

Systems/Files-for-Order/CostReports/index.html?redirect=/CostReports/) ; see also CMS 2540- I 0

(bold added). The Medicaid version can vary from state to state, but are generally required to

contain similar certifi cations.

86. Upon information and belief Twin Rivers submitted costs reports to Medicare

and Medicaid for each year from and after 2006, and in so doing made the requisite certifications

to those programs.

87. Since Cost Reports include express certifications of compliance with the

substantive laws and regulations governing the provision of healthcare services, if the services

substantively violated those laws then the certification is false and gives rise to liability under 3l

U.S.C. $ 3729(a)(7) for making a false record or statement in order to retain funds otherwise

belonging to the government.

88. In addition, the parent company of a chain facility such as Twin Rivers is also

required to file a CMS Form 287 Home Office Cost Report. That Form contains the following

certification:

MISREPRESENTATION OR FALSIFICATION OF ANY INFORMATIONCONTAINED IN THE COST REPORT MAY BE PUNISHABLE BY CRIMINAL,CTVIL AND ADMINISTRATIVE ACTION, FINE AND/OR IMPROSONMENTUNDER FEDERAL LAW. FURTHERMORE. IF SERVICES IDENTIFIED IN

28


THIS COST REPORT WERE PROVIDED OR PROCURED THROUGH THEPAYMENT DIRECTLY OR INDIRECTLY OF A KICKBACK OR WEREOTHERWISE ILLEGAL, CRIMINAL, CNIL AND ADMINISTRATIVEACTION, FINES AND/OR IMPRISONMENT MAY RESULT.

CERTIFICATION BY OFFICER OR ADMINISTRATOR OR PROVIDER(S)

I HEREBY CERTIFY that I have read the above statement and that I have examinedthe accompanyrng statement of allowable Home Office costs (and equity capital ifapplicable), the allocation thereof to the chain components, and the other supportingschedules for the period ... To the best of my knowledge and belief, they are true andcorrect statements from the books and records of the Home Office in accordance withapplicable instructions, except as noted (attach a staternent with exception ifnecessary).

Form CMS 287-05 (http://www.cms.eov/Regulations-and-Guidance/Guidance/Manuals/Paper-

Based-Manuals-Items/CMS02l935.html,last accessed August 12,2012) (bold added).

89. Upon information and belief, the parent company here, Golden Living, executed

and filed a cost report to Medicare and Medicaid for each year from and after 2006, and in so

doing made the requisite certifications to those programs.

4. Substantive Medicare And Minnesota Medicaid Laws Governing NursingFacilitv Services

a. Generally

90. As part of the Omnibus Reconciliation Act of 1987 ("OBRA '87"), Congress

enacted the Nursing Home Reform Act, 42 U.S.C. $$ 1395i-3 , 1396r et seq. (Medicaid) ("the

Act"), which took effect on October I,1990. It is important to note a terminology distinction. In

particular, a Medicare-certified nursing home is referred to as a "skilled nursing facility"

reflecting the more highly skilled nursing services covered following a qualifoing 3-day hospital

stay; whereas a Medicaid-certified nursing home is referred to simply as a "nursing facility"

reflecting that program's coverage of lower skilled nursing services and long-term custodial care.

References intended to cover both Medicare and Medicaid services often use the term "lons-term

29


care" ("LTC") facility. Implementing regulations are promulgated at 42 C.F.R. $ 483.01 et seq.

and apply equally to both Medicare and Medicaid services.

91. A Medicare "skilled nursing facility" is defined in the Act at 42 U.S.C. $ 1395i-

3(a) as and institution which:

(1) is primarily engaged in providing to residents -(A) skilled nursing care and related services for residents who require medical

or nursing care, or(B) rehabilitation services for the rehabilitation of injured, disabled, or sickpersons, and is not primarily for the care and treatment of mental diseases;

(2) has in effect a transfer agreement (meeting the requirements of section1395x(l) of this title) with one or more hospitals having agreements in effectunder section l395cc of this title: and

(3) meets the requirements for a skilled nursing facility described in(b), (c), and (d) of this section.

92. Medicare also requires limits SNF coverage to residents whose condition is either

improving or declining. Once the resident's condition stabilizes, then coverage must shift to

private insurance or Medicaid.

93. Twin Rivers is a Medicare "skilled nursing facility" as defined by the Act.

94. A Medicaid "nursing facilitl' is defined in the Act at 42 U.S.C. $ 1396r(a) as an

institution which:

(1) is primarily engaged in providing to residents -(A) skilled nursing care and related services to residents who require medicalor nursing care,(B) rehabilitation services for the rehabilitation of injured, disabled, or sickpersons, or(C) on a regular basis, health-related care and services to individuals whobecause of their mental or physical condition require care and services (above

the level of room and board) which can be made available to them onlythrough institutional facilities, and is not primarily for the care and treatmentof mental diseases;

(2) has in effect a transfer agreement (meeting the requirements of section1395x(1) of this title) with one or more hospitals having agreements in effectunder section 1395cc of this title; and

(3) meets the requirements for a skilled nursing facility described in subsections(b), (c), and (d) of this section.

30


95. Twin Rivers is a Medicaid o'nursing facility'' as that term is defined by the Act.

96. Subsections (b), (c), and (d) referenced in the foregoing definitions set forth

identical requirements concerning "Requirements relating to provision of services,"

"Requirements relating to residents' rights," and "Requirements relating to administration and

other matters," respectively. Each of these subsections are also addressed in detail in the

implementing regulations at 42 U.S.C. $$ 483 (provision of services detailed throughout), 483.10

(resident rights) 483.7 5 (adminishation).

97. Subsections (b) and (d), and the corresponding regulations, are relevant to this

action. As a baseline, the Act mandates that nursing facilities services oomust meet professional

standards of quality," 42 IJ.S.C. $$ 1395i-3(b)(A) and 1396r(bXA), and "must operate and

provide services in compliance with all applicable federal, state and local laws and regulations

(including the requirements of section 1320a-3 of this title [disclosure of ownership]) and with

accepted professional standards and principles which apply to professionals providing services in

such a facility ... [and] must meet such other requirements relating to the health, safety, and

well-being of residents or relating to the physical facilities thereof as the Secretary may find

necessary." 42 U.S.C. $$ 1395i-3(dX4XA)&(B) and 1396r(d)(a)(A) &(B).

98. Significantly, Congress and CMS departed from their usual deference to state

regulation of the practice of the healing arts, see Mikes v. Straus, 274 F.3d 687 (1st Cir. 2001),

and in this care setting defined specific care objectives and measurable harm-prevention

outcomes in order to address prior gross neglect of residents in this industry. While the harm-

prevention mandates which are the focus of this action impose a higher standard than the

3l


ordinary "reasonableness" standard embodied in state common law governing the healing arts,8

they do not regulate how the facility and its professionals are to do their job, but rather set forth

clearly defined and easily measurable outcomes to be delivered. For FCA purposes, the

touchstone remains whether the government received the benefit of its bargain which, in this

case, is measured by whether Twin Rivers fulfilled its obligation to prevent harm or the risk of

harm to its residents. See, U.S. ex rel. Aranda v. Comm. Psychiatric Center of Oklahoma, Inc.,

945 F.Supp. 1485, 1488 (W.D. Okla. 1996) (FCA liability for failure to prevent harm to

residents, including sexual assaults).

99. As a backdrop to the harm-prevention mandates, Subsection (b) starts by

pronouncing that each "resident has a right to a dignified existence." 42 C.F.R. $ 483.10 It then

addresses the "quality of life" to be provided, requiring that a facility "must care for its residents

in such a manner and in such an environment as will promote maintenance or enhancement of

the quality of life of each resident." 42 U.S.C. $$ 1395i-3(bxlXA) and 1396r(bx1XA), and 42

C.F.R. $ 483.15. As interpreted, "the standard of care is indeed at the heart of the agreement

between the parties [since] when caring for the infirmed it is not the end product result that is

crucial, it is the dignity and quality of life provided through the care process." U.,S. v. NHC

Healthcare Corp., 163 F.Supp.2d 1051, 1055 (W.D. Mo. 2001) ('NHC.I1") (quotations and

citations omitted); accord, NHC I, ll5 F.Supp.2d 1149,1155 (for LTC facilities the 'oheart of the

bargain" is the "complete care" of the residents in the manner required by specific regulations).

8. Woodstock Care Center v. Thompson,363 F.3d 583, 590 16ft Cir. 2003) (LTC regulations requiring prevention ofharm, to which LTC facility consented upon participation in Medicare and Medicaid, set higher standard than

"reasonable care" at common law); see, McCqin v. Beverly Health and Rehqbilitation Serv. Inc.,2002WL 1565526(E.D. Pa. 2002) (residents are intended beneficiary of federal LTC facility regulations' harm preventionrequirements which thus supportedper se negligence claim); Clermont Nursing and Convalescent Center v. Leavitt,142 Fed.Appx. 900, 904 (6'Cir. 2005) (affirming civil monetary penalties and holding that regulatory obligation to

promote healing and prevent infection ofpre-existing pressure sores, and prevent new pressure sores requiredfacility to go beyond what seemed reasonable and furnish whatever was necessary to achieve mandated

outcomes)(prevention of"accidents" includes assaults from otherresidents and elopement, and harm need not occur

to find facility permitted risk of harm).

32


100. Subsection (b) then states that the "facility must provide services [Medicaid adds:

'and activities'] to attain or maintain the highest practicable physical, mental and psychosocial

well-being of each resident in accordance with a plan of care which . . . describes the medical,

nursing, and psychosocial needs of the resident and how such needs will be met." 42 U.S.C. $$

l39si-3(bX2XA) and 1396r(bX2)(A),42 C.F.R. $ 483.25.

b. The Harm Prevention Mandates

101. The OBRA '87 rezulations delineate at least five areas in which LTCs must do

whatever is necessary to prever, n"t-. These mandates impose a higher standard than the

ordinary o'reasonableness" standard embodied in state common law governing the healing arts,

giving t'rse to per se liability. Supra, n.7. The harm prevention mandates are as follows:

i. Mistreatment, Neglect and Abuse. "The facility must develop and implementwritten policies and procedures that prohibit mistreatment, neglect, and abuse ofresidents." 42 C.F.R. $ a83.13(c) (bold added).'

ii. Pressure sores. Based on the comprehensive assessment of a resident, the facilitymust ensure that --

(1) A resident who enters a facility without pressure sores does not developpressure sores unless the individual's clinical condition demonstrates that they were

unavoidable; and(2) A resident having pressure sores receives necessary treatment and services to

promote healing, prevent infection and prevent new sores from developing.42 C.F.R. $ a83.2s(c) (bold added).

iii. Accidents. The facility must ensure that --(1) The resident environment remains as free of accident hazards as is possible; and

(2) Each resident receives adequate supervision and assistance devices to preventaccidents.

42 C.F.R. $ 483.2s(h) (bold added).

iv. Medication Errors.OBRA regulations mandate that:

n Ordinary decency toward another human life has supported FCA liability even in other care settings that lack

such a specific codification of the principle, finding that it violated Medicare,Medicaid's general coverage

exclusions. (J.5. ex rel. Aranda v. Community Psychiatric Centers of Oklahoma, Inc., 945 F.Supp. 1485 (W.D. Okl.

1996) (FCA claim stated based upon psychiahic facility's failure to prevent abuse, including sexual assaults, to

adolescents in custodial care).

aaJJ


Each resident's drug regiment must be free from unnecessary drugs" including"excessive dose (including duplicate drug therapy),"

42 C.F.R. $$ 483.250Xi)

The facility also must ensure that --(1) It is free of medication error rates of five percent or greater; and(2) Residents are free of any significant medication errors.

42 C.F.R. $ 483.2s(m) (bold added).

v. Infection Prevention. The facility "must establish and maintain an infection controlprogrilm designed to provide a safe, sanitary, and comfortable environment and to helpprevent the development and transmission of disease and infection." 42 C.F.R. $ 483.65

(bold added). This also includes prevention of urinary tract infections. See 42 C.F.R. $

483.2s(d).

I02. At all relevant times, Defendants failed to consistently and diligently provide

whatever services were necessary to comply with the foregoing harm-prevention mandates. As a

result, residents were at risk of suffering injury and death, and in fact residents did sustain

injuries - including amputations and death.

c. Other Mandates Supporting llarm Prevention

103. The OBRA '87 regulations also set forth several mandates that support the

foregoing harm prevention mandates. For example, they mandate proper nutrition and hydration

which are essential for the prevention of pressure sores, the healing of wounds, and maintaining

a healthy immune system. These supporting mandates include, without limitation:

i. "Activities of Daily Life. Based on the comprehensive assessment of theresident, the facility must ensure that - A resident's abilities in activities of dailylife do not diminish unless circumstances of the individual's clinical conditiondemonstrate that diminution was unavoidable. This includes the resident's abilityto-

(1) Bathe, dress, and groom;(2) Transfer and ambulate;(3) Toilet;(4) Eat; and(5) Use speech, language or other functional communication systems."

42 C.F.R. $ 483.2s(a).

34


ii. "Nutrition. Based on a resident's comprehensive assessment, the facility mustensure that a resident --

(1) Maintains acceptable parameters of nutritional status, such as bodyweight and protein levels, unless the resident's clinical conditiondemonstrates that this is not possible; and(2) Receives a therapeutic diet when there is a nutritional problem."

42 C.F.R. $ 483.2s(i).

iii. "Hydration. The facility must provide each resident with sufficient fluidintake to maintain proper hydration and health." 42 C.F.R. $ 483.25(l).

iv. "Urinary fncontinence. Based on the resident's comprehensive assessment,the facility must ensure that --

(1) A resident who enters the facility without an indwelling catheter is notcatheteized unless the resident's clinical condition demonstrates thatcathetenzation was necessary; and(2) A resident who is incontinent of bladder receives appropriate treatmentand services to prevent urinary tract infections and to restore as muchnormal bladder function as possible."

42 C.F.R. g 483.25(d) (bold added).

v. "Special Needs. The facility "must ensure that residents receive propertreatment and care for the following special services:

(l) Injections;(2) Parenteral and enteral fluids;(3) Colostomy, ureterostomy, or ileostomy care;(4) Tracheostomy care;(5) Tracheal suctioning;(6) Respiratory care;(7) Foot care; and(8) Prostheses."

42 C.F.R.$ 483.25(k).

I04. At all relevant times, Defendants failed to consistently and diligently provide the

services necessary to comply with the foregoing mandates designed to help prevent harm. As a

result, residents were placed at risk of sustaining injuries and death, and in fact sustained injuries

and death.

d. Administration: Governing Body, Management, Medical Director

35


105. In order to ensure that the foregoing mandates

impose certain oversight structures that create accountability

balances. 42 C.F.R. $ 483.75.

met, the regulations also

a system of checks and

106. 42 C.F.R. $ 483.75 is grounded in the statutory mandates of Subsection (d) which

require that a "facility must be administered in a manner that enables it to use its resources [i.e.

govemment funds] effectively and efficiently to attain or maintain the highest practicable

physical, mental, and psychosocial well-being of each resident (consistent with requirements

established under subsection (f)(5) of this section)!' 42 U.S.C. $$ 1395i-3(dxl)(A) and

1396r(b)(1)($; a2 C.F.R. $ 483.75 (emphasis added).

I07. The facility must be "licensed under applicable State and local law," comply with

Federal, State and local laws and professional standards, and also meet the applicable provisions

of other HHS regulations. 42 C.F.R. g a83.75(a), (b) and (c).

108. Of key importance is the requirement for a governing body. The regulations

require:

(1) The facility must have a governing body, or designated persons functioning as agoverning body, that is legaily responsible for establishing and implementingpolicies regarding the managernent and operation of the facility; and

(2) The governing body appoints the administrator who is -(i) Licensed by the State where licensing is required; and(ii) Responsible for management of the facility.

42 C.F.R. $ 483.75(d) (italics added). Hence, the governing body has ultimate responsibility for

the policies and management of the facility. See, Estate of Canavan v. National Healthcare

Corp., 889 So.2d 825 (Fla. Ct. App. 2004) (imposing personal injury liability upon nursing

facility owner because he acted as the governing body pursuant to 42 C.F.R. $ 483.75(d)).

109. Upon information and belief based upon the Relators' knowledge of the corporate

structure and observation of the chain of command at Twin Rivers, at all relevant times Golden

ate

and

36


Living appointed the Administrator and was thus the de facto Goveming Body with the

foregoing legal responsibilities.

1 10. The second part of the required system of accountability is the Administrator. As

indicated above, the Administrator must fuIfil1 the residents' plans of care by providing, or

arranging for the provision of, nursing and related services and medically-related services that

attain or maintain the highest practicable physical, mental, and psychosocial well-being of each

resident, pharmaceutical services, and dietary services that assure that the meals meet the daily

nutritional and special dietary needs of each resident. 42 U.S.C. $ 1396r(b)(4)(Axi)-(iv); 42

C.F.R. $ 483.75(9)(1) ("The facility must employ on a full-time, part-time or consultant basis

those professionals necessary to carry out the provisions of these requirements").

1 11. The Administrator must do so, in part, by adhering to the requirement that

facilities maintain sufficient staff "to provide nursing and related services to attain or maintain

the highest practicable physical, mental, and psychosocial well-being of each resident, as

determined by resident assessments and individual plans of care." 42 C.F.R. $ 483.30 and $

483.75(gX1) ("The facility must employ on a full-time, part-time or consultant basis those

professionals necessary to carry out the provisions of these requirements"). Hence, staffing must

be adjusted based on occupancy level, acuity mix, and the residents' actual daily needs. As

alleged in more detail below, this was not done. Instead, staffing was based on pre-determined

budgets from the corporate parent, Golden Living.

ll2. Dana Johnson served as the Administrator of Twin Rivers from at least 2006 until

she was terminated and escorted out of the building on May 26,2010. Thereafter, Shane Roche

served as the interim Administrator/Executive Director.

a-JI


113. In addition to the Governing Body and the Administrator, the third part of the

required system of accountability, and checks and balances, is the Medical Director. 42 C.F.R. $

483.75(i). That section mandates:

(1) The facility must designate a physician to serve as the medical director.(2) The medical director is responsible for -

(i) Implementation of resident care policies; and(ii) The coordination of medical care in the facility.

Hence, the Medical Director's roles interlock with those of the Governing Body and the

Administrator.

Il4. At all relevant times Dr. Robert Sonntas served as the Medical Director of Twin

Rivers.

e. Minnesota Regulation of Nursing llomes

115. At the state level, Minnesota Administrative Rules provide requirements for

nursing home facilities. All facilities must comply with Federal, state and local laws, and comply

with professional standards for providing services in nursing homes. Minn. Stat. $ 1444.04;

Minn. Admin. Rule 4658.0015.

116. Federal law requires states to certify that nursing facilities are in compliance with

federal statutes and regulations.42 U.S.C. $ 1396r(g)(1XA); 42 C.F.R. $ 488 Subparts E & F.

Il7. All residents must receive adequate and proper nursing care based on their

individual needs. Minn. Admin. Rule 4658.0520. Nursing home facilities must complete a

comprehensive resident assessment and plan of care for each resident. Minn. Admin. Rule

4658.0400. They must provide residents with nutritious food which supplies their nutrition needs

as determined by the comprehensive assessment. Minn. Admin. Rule 4658.0600. The nursing

home facility must provide medical care to their residents from a physician and have physicians

38


available 24 hours a day. Minn. Admin. Rule 4658.0705. Medications must be distributed

properly and as prescribed. Minn. Admin. Rule 4568.1320.

118. At all relevant times, the Minnesota Department of Health was responsible for

performing surveys to determine whether a nursing home facility met the requirernents for

participation in Medicare and Medicaid. 42 C.F.R. $ 483.1; 42 C.F.R. $ 488 Subparts E & F.

ll9. The Defendants failed to provide care and services that met Minnesota's

requirements for the necessary standard of care. Each and every violation of the acceptable

standard of care under the Minnesota regulations was a violation of the conditions of

participation in the Medicare and Medicaid programs. Each claim submitted for payment was

false, fraudulent, and in violation of the FCA.

SPECIFIC ALLEGATIONS

I20. From at least 2006 through the present, Defendants provided deficient,

inadequate, and substandard services and care to the residents of Twin Rivers resulting in death,

serious injury, and the risk of serious injury or death, thereby breaching clear contractual

mandates requiring the prevention of harm or the risk of harm to nursing home residents, and

also amounting to substantially diminished or worthless services in violation of state and federal

statutes, regulations, and their Medicare and Medicaid Provider Agreements.

T2I. Defendants knew, should have known, or acted in reckless disregard that residents

of Twin Rivers suffered physical and mental harm due to neglect and receiving diminished care

and services. At all times relevant to this action. Defendants' failure of care was in violation of

the FCA and MFCA.

I. OWNERSIIIP AND MANAGEMENT PRACTICES THAT LED TO SYSTEMICPROBLEMS CAUSING DEATHO INJURY' AND/OR THE RISK OF DEATH ORINJURY IN VIOLATION OF THE CLEAR MANDATES TO PREVENT IIARM

39


A. Golden Living and Twin Rivers Intentionally Deceived State Surveyors Aboutthe Quality of Services Provided to Residents

I22. Shortly prior to the annual surveys, Golden Living personnel, including but not

limited to Amy Richards and Marion Owens, would arrive at Twin Rivers. The Golden Living

personnel would work together with Twin Rivers' Administrator (Dana Johnson for most of the

relevant period), the DON (including Terry Blumer who was a Golden Living employee), Mary

White the Patient Care Manager who handled Medicare, and other top management personnel to

meticulously review resident medical records.

I23. During these medical record reviews, or "charting parties" as they were called,

Relators observed that gaps in the MARS would be filled-in with fabricated information, which

could only serve the purpose of making it appear as if residents received their medications every

day, and on-time. Entries in the medical charting they did not like were whited-out, which is

contrary to law which requires an enoneous entry to simply be crossed-out and initialed by the

original author of the entry. Relator Bixby was outspoken about the impropriety and illegality

of the practice and expressed her views to Mary White and other Twin Rivers management

personnel.

I24. During the survey itsel{ the residents' MARs and treatment records were made

inaccessible, and Twin Rivers staff were instructed that if a surveyor requested a resident's

medical record, the staff person was to turn that request over to the Golden Living i Twin Rivers'

upper management team that "handling" the medical records. Relators observed that when such

a request was made, the upper management team would take the medical record into a closed

room with them, where they would rernain for an extended period of time before inviting the

surveyors in for a supervised review ofthe record.

40


125. Also prior to surveys, a group of special nurses from Golden Living, known as the

66CRC" would swafin into the facility and work the floor. They would also conduct 'omock

surveys" and interview residents prior to the real surveyors arriving. The residents thought they

were real surveyors and would disclose the substandard or lack of care and services they had

endured, unaware that the information would not reach the real surveyors. When the real

surveyors arrived, the residents thought they were simply conducting follow-up inspections and

saw no need to recount the care issues they had already disclosed to the mock surveyors. The

CRC team also stayed until the survey was completed, providing additional assistance on the

floor to "put on a good show" for the surveyors.

126. Relator Scharber, who was employed at Twin Rivers at the time Golden Living

acquired the facility, observed that the quality of the care deteriorated dramatically after the

acquisition and that the first full year after the acquisition,2007, was a "nightmare."

B. Golden Livine Set Twin Rivers' Budsets. Resultine in Insufficient StaffineLevels. and also Cut Twin Riverso Budget As Punishment For the Ensuing Harmto Residents

127. Upon information and belief based upon Relators' knowledge of the facility and

the chain of command to the ultimate parent company, Golden Living set the major budgets for

Twin Rivers, including labor. As a result, staffing levels were driven by predetermined budgets

rather than the actual needs of the residents in violation of legal mandates. 42 C.F.R. $ 483.30

and $ a83.75(g)(1). This usurped the role of the Administrator, and elevated profits over

compliance with Medicare's and Medicaid's harm prevention and other care mandates.

128. As a direct result of Golden Living's practices, Twin Rivers consistently did not

have enough staff working to provide the required level of care to the residents of Twin Rivers.

41


129. Furthermore, staffing was predictably decreased further in the weeks following

regulatory surveys. This is because during surveys and/or re-surveys, staffing at the facility was

increased in order to "put on a good shof' for the regulators. The increased staffing was

accomplished by Golden Living bringing in trained nurses employed as regional or district

manages, including without limitation, Amy Richards and Marion Owens. Twin Rivers'

Management also scheduled existing staff to work additional shifts during the survey period, and

always assigned Relators Scharber and Shoemaker to work the unit being closely observed by

the surveyors. Because these practices increased Twin Rivers' labor costs during the survey

period, after the survey was completed staffing was decreased below pre-survey levels for a

sufficient period of time to offset the additional costs. For example, during such times Relator

Scharber would be on duty with only one nurse. In other words, keeping costs within pre-

determined limits drove staffing decisions, rather than the needs of residents as required by

applicable regulations. This policy and practice put residents at risk of harm.

130. In addition, Golden Living had a rule or policy requiring that certain issues be

reported to it, such as pressure sores that were Stage II or higher. Filing such reports, however'

resulted in Golden Living cutting the facility's budget as punishment. Hence, not only did

Golden Living precipitate the resident harm in the first place through insufficient budgets, it then

tried to shift the blame to the facility and compounded the problem with further budget cuts.

131 . In addition to the wealth of allegation herein about dozens of avoidable pressure

sores and other harm, including death, to residents precipitated by the understaffing, Bixby

documented numerous specific occasions where there was not enough staff to ensure all

residents were able to be properly cared for.

42


I32. Bixby's regular responsibilities as a LPN included checking vitals, charting, doing

injections and treatments, communicating with doctors, entering orders, discharging patients,

doing labs, and dealing with other issues as they arose - such as admitting new patients.

133. The systemic understaffing at Twin Rivers resulted in additional duties and

responsibilities being thrust upon Bixby, regardless of the adverse impact on the care that could

be provided.

134. For example, on lll3/2009 there were no Trained Medical Aides ("TMA")

working and only three nursing aides working. Thus, in addition to her regular duties, Bixby had

to pass out medications, help on the floor, and be the floor nurse. No help was given to her by

Defendants' management. On 211012009 there again was no TMA, and Bixby had to serve as the

floor nurse because someone did not make it in to work. Management did not give her any help.

Again, on 3117/2009 and 3/3012009 there was no TMA, so Bixby had to take on those

responsibilities in addition to her own duties.

135. On 41512010, Bixby had to perform all her regular duties and pass out medication

to all20 residents in the TCU. There were also only four aides working and there were supposed

to be five. She asked management for help, but was not given any.

136. Frequently, paperwork is not done over the night shift, so the day shift nurses

have to complete everything, which causes them to be rushed. On 31112009, Bixby had to do

multiple new admit packets and complete orders that had not been finished from the day before.

She informed the DON of this and told her that it is unsafe when she has to work in such a hurrv

to get everything done.

C. Golden Livins Set Revenue Goals That Led to Neslect and Lengthened Stavs

43


T37. Most residents at Twin Rivers arrived directly from hospital stays that qualified

the resident for coverage under Medicare Part A which pays higher reimbursement rates than

Medicaid.

138. Twin Rivers' administrator, Dana Johnson, openly stated that one business

objective was to increase the length of resident stays in order to meet Golden Living's occupancy

quotas. They also stated their business objective to increase the number of long-term patients

receiving therapy - which would be paid for by Medicare Part B.

139. As to TCU residents, the Occupational Therapists and Physical Therapists worked

on-site at Twin Rivers, and part of their duties was supposed to be assisting Transitional Care

residents with their Activities of Daily Living ("ADLs") so that they could leam the skills

necessary to renlrn home. This role required observing the resident's current limitations,

developing a therapy plan designed to improve their skills or develop modified approaches to

tasks, and to then implement the plan. The therapists, however, rarely performed these services.

Instead, they would simply ask how a particular resident seemed to be getting along.

140. Therapy services were also never performed on weekends. This fact precipitated

many complaints by family members to Aegis Management, who then "came down hard" on

Twin Rivers' management.

l4I. In addition, there was never sufficient staffing to permit CNAs the time necessary

to assist TCU residents with enough walking to create the muscle shength and balance necessary

for independent living.

142. The overall theme was to keep residents on Medicare Part A as long as possible,

by limiting their rate of improvement or, even worse, allowing their condition to decline.

44


I43. As a direct result of the foregoing, numerous residents who were cognitively

sharp and good candidates for returning home, such as Residents Il, 14,25,27 and 30, were

unable to do so. Instead, Twin Rivers internally transferred such residents to fill one of its long-

term care beds. The transfers then opened-up one of the 20 TCU beds for a new arrival.

D. Defendants Billed for Therapy and Other Services Not Provided. And OtherwiseModified Records In Order To Improperlv Obtain More Funds From theGovernment.

I44. During staff meetings, Occupational and Physical Therapists from Aegis would

read a list of residents on Medicare Part B, which everyone knew meant that their therapies were

being paid by Medicare Part B. Relators observed that many residents listed, such as Resident

12, never received any physical therapy or received less therapy than was actually billed for. In

some instances, Relators observed residents refusing therapy, yet the therapy services were billed

to the government. Relators complained to Twin Rivers management about the failure to

provide ordered therapy services, yet no changes were ever made.

145. On numerous occasions, Relators overhead or saw communications by Twin

Rivers management personnel and/or Golden Living personnel discussing changing dates on

MDS forms in order to improperly obtain additional funds from the government. On one

occasion, Relator Shoemaker saw a written communication stating that changes to the MDS

forms resulted in an additional $34,000 for a single month.

146. Relators also observed large volumes of medications that were paid for by

Medicaid or Medicare Part D, yet were not administered to or used by residents and which were

then placed in a storage room. The medications were not returned to the pharmacy and thus, at

the very least, constituted waste, and potentially fraud.

45


147. Relators also observed a general drive or push to keep people in therapy for as

long as possible for the stated pu{pose of generating more revenue. The reality observed by

Relators, however, was that therapy was only partially provided or not provided at all.

E. Defendants Violated The Anti-Kickback Statute

148. The Medicaid/Medicare Anti-Kickback Statute, 42 U.S.C. g 1320a-7b(b), reflects

Congress' concern that payments to those who influence healthcare decisions will result in providing

goods and services that are medically unnecessary, of poor quality, or even harmful to a vulnerable

patient population. To protect the integrity of government-funded healthcare programs from these

difflrcult to detect harms, Congress enacted a per se prohibition against the payment of kickbacks in any

form, regardless of whether the particular kickback gave rise to overutilization or poor quality of care.

149. The Anti-Kickback Act prohibits any person or entity from making or accepting payment

to induce or reward any person for referring, recommending, or arranging for federally funded medical

services, including services provided under Medicare, Medicaid, and TRICARE. 42 U.S.C. g 1320a-

7b(b).

150. The Anti-Kickback Act makes it a crime to knowingly and willfully offer, pay, solicit, or

receive any remuneration to induce a person-

(l) to refer an individual to a person for the furnishing of any item or servicecovered under a federal healthcare program; or

(2) to purchase, lease, order, zurange for or recommend any good, facility,service, or item covered under a federal healthcare program.

151. The term'oany remuneration" encompasses any kickback, bribe, or rebate, direct or

indirect, overt or covert, in cash or in kind. 42 U.S.C. g 1320a-7b(bX1).

I52. Relators observed that Twin Rivers' relationship with Dr. Sonntag went beyond

employing him as the Medical Director responsible for discharging certain statutory oversight

duties and providing part of the checks and balances the Government contracted for.

46


153. Twin Rivers also steered residents and their families to switch to Dr. Sonntag as

the attending physician under the guise of receiving better care, since he was on-site 2-3 times

per week.

154. As the attending physician to Medicare and Medicaid beneficiaries, Dr. Sonntag

would have billed his services separately under Medicare Part B. Hence, the arrangement

provi@-gubstantial additional remuneration to Dr. Sonntag.

155. As the attending physician, Dr. Sonntag was then in a position to return the favor

to Defendants, which he did by prescribing therapy and hospice services to be provided by

Golden Living's affiliates, Aegis Therapy and Ascera Care, respectively. Dr. Sonntag did so

knowing that those companies would be able to separately bill Medicare and/or Medicaid for

their services, and thereby enhance the total revenues earned by Golden Living from the Twin

Rivers facility.

156. Relators also observed that Dr. Sonntag would often "snow" residents (i.e.

overmedicate them) by prescribing certain drugs. When this occurred, the residents were unable

to stay awake to eat, and thus were at risk of choking while eating - which often occurred. As a

direct result, such "snowed" residents often suffered weight loss and dehydration. These

o'snowed" residents were also unable to move around or reposition themselves, resulting in

weakness.

157. Although the nurses complained of the overmedication, Dr. Sonntag's only

response was to prescribe various therapies for their eating, drinking or mobility issues -providing a financial benefit to Golden Living and its affiliates at the expense of the residents'

welfare and in contravention of the bargain paid for by the government. Again, Relators

47


observed that such therapies were charted as being provided, when in fact they were not provided

at all.

158. As an example, Resident 48 was "snowed" in 2008 and 2009 and suffered

frequent choking episodes. Relators and other Twin Rivers nurses and CNAs complained to

management that he needed different food which did not present a choking hazard. Dr. Sonntag

did not alter Resident 48's dietary orders, and instead ordered occupational therapy to improve

his eating and swallowing skills. Such therapy was not provided, yet was charted as being

provided. Only after a severe choking incident did Dr. Sonntag revise Resident 48's dietary

orders.

159. In addition to the foregoing, the "snowed" residents' decreased mobility, weight

loss, and dehydration also put them at greater risk for pressure sores.

II. FAILURE TO PREVENT HARM

A. Deaths" Harm or Risk of Harm From Improper Drug Administration

1. Deaths

160. The OBRA regulations mandate that each resident "must be free from

unnecessary drugs" including "excessive dose (including duplicate drug therapy)," 42 C.F.R. $$

483.25(lxi), and "must ensure that ... [r]esidents are free of any significant medication errors."

a$.2s(m)(2).

161. Resident 1810 died from an overdose of medication administered by Twin Rivers.

Resident 18 was taken to the hospital in April of 2009 for lethargy and loss of consciousness.

The DON asked Scharber to check the Medical Administration Record ("MAR") to see who had

given Resident 18 her prescribed Clonidine patches because the hospital had noted that Resident

l0 Residents are referred to by number to permit their identities or their €states to remain confidential in what maybecome a public court filing. The names of the residents identified by number here have been provided in the

Evidentiary Disclosure to the United States' Attorney. See generally HIPAA,45 C.F.R. $$ 160, 164.

48


18 had three Clonidine patches on her when she got to the hospital. Clonidine patches are

supposed to be changed every three days, and when the old patch is removed the skin must be

cleaned and the new patch put on a different area. Clonidine patches can be lethal if they aren't

administered correctly. Resident 18 died in the hospital.

162. Resident 30 died from Twin Rivers' administration of improper medications that

were contrary to physician's orders. In particular, Resident 30 was prescribed daily doses of

Coumadin and Plavix, which thin the blood and increases the risk of internal bleeding. Due to

the risk of bleeding, for pain medication Resident 30 was prescribed 650mg Tylenol 4-times

daily. Instead, Twin Rivers administered 650mg of aspirin 4-times daily. Resident 30 died, and

an autopsy ordered by the resident's daughter confirmed that Resident 30 died from internal

bleeding.

2. Ilarm or Risk of Harm. Neglect

163. Defendants also did not provide prescribed medications to Twin Rivers residents

at the proper times or with the proper frequency, if at all. Again, this violated 42 C.F.R. $$

483.25(l) & (m). Furthermore, under Minn. Admin. Rule 4658.1325 Subp. 8, when medications

are not administered as prescribed, the documentation must include the reason for not doing so

and any follow-up that was done, such as contacting the patient's physician. These violations

put residents at risk of harm.

164. Resident 3 did not receive four of his prescribed medications on 412612010.

165. Resident 7 did not receive her prescribed pain medication on 5/7/2010 or

5/812010, or for five days in a row from 5ll5l20l0 to 5/1912010, according to her charting.

Resident 8 did not receive her prescribed medication on 517/2010, according to her charting.

49


166. Resident 9 did not receive her prescribed medication on 412512010 or on

4/27t20r0.

167 . Residents 9 did not receive his IV medication on 5l7ll0 because the nurse on staff

that night was not trained to administer IV medications.

B. Failure to Prevent Accidents

168. The OBRA '87 regulations mandate that the facility must prevenl accidents,

stating:

(h) Accidents. The facility must ensure that -(1) The resident environment remains as free of accident hazards as is possible;

and(2) Each resident received adequate supervision and assistance devices to

prevent accidents.

42 C.F.R. $ 483.25(h).

1. Deaths

169. On ll/1012009, Scharber and Bixby were both notified upon arriving at work that

Resident 17 had fallen behind her bathroom door during the night and the alarm on her bed was

not turned on. The night nurse had to pick her up by herself and put her back to bed. When

Scharber went to check on Resident l7 at 9 a.m.. she had blood all over herself and the wound on

her head had not been cleaned or dressed. Resident 17 died six days after this fall.

170. The night nurse was called back to Twin Rivers on 1111012009 to complete the

documentation about Resident 17's fall, but the report she created was later altered by Dana

Johnson, Administrator, and Teri Blumer, Interim Director of Nursing and a Golden Living

employee. Twin Rivers received a letter from the Health Department stating this matter merited

an on-site investigation.

50


l7l. In 2008, Resident 34 was found to have gotten out of bed and suffered a fall

which broke his hip. Resident 34's bed alarm was either not working or properly activated,

which would have alerted staff to the fact he got out of bed. Resident 34 died approximately

three weeks later.

C. Failure to Prevent Pressure Sores. Worsening of Pressure Sores. and Infection ofPressure Sores

172. The OBRA regulations, at 42 C.F.R. $ 483.25(c), mandate that the facility must

prevent new pressure sores, the worsening of pre-existing pressure sores and the infection of any

pressure sore, stating:

(c) Pressure Sores. Based on the comprehensive assessment of a resident, the

facility must ensure that-(1) A resident who enters the facility without pressure sores does not developpressure sores unless the individual's clinical condition demonstrates that they

were unavoidable: and(2) A resident having pressure sores receives necessary treatment and services

to promote healing, prevent infection and prevent new sores from developing.

173. Certain pro-active measures are necessary to the prevention of pressure sores, and

some of these also implicate other OBRA mandates. These measures include: the regular turning

and placement of residents every two hours when they are at risk of developing a pressure sore,

and every hour if they have a pressure sore (and some Twin Rivers residents required two

persons and mechanical assistance in order to properly and safely reposition them); ensuring that

necessary padding is in place; ensuring that residents do not stay in clothing that is soaked in

urine or feces which hasten skin breakdown; and ensuring that there is no pinching, rubbing or

chafing. It is also essential that the resident is properly hydrated, receives good nutrition, and

maintains their weight in order to avoid bony prominences and maintain good skin condition,

which also implicates OBRA mandates. 42 C.F.R. $ 483.25(i) (nutrition) & fi) (hydration). Twin

5l


Rivers failed to consistently and regular ensure these measures were provided as part of its

services to residents.

174. Proper assessment of skin integrity and "staging" (identification of severity from I

to IV) of pressure sores is essential to proper treatment. This is because the assessment and

staging determine the resident's care plan, including the type of dressing, the type of bedding, the

type of chair, and the type and frequency of debridement. Only RN's are qualified to properly

assess skin integrity, stage pressure sores and do the relevant documentation. At Twin Rivers,

however, the LPNs were directed to do the skin assessment, pressure sore staging and relevant

documentation. An RN, such as the TCU Manager, would only briefly look at resident pressure

sores once a week.

175. In addition to the foregoing, Relators observed that care plans for residents'

pressure sores were not followed. For example, when Relator Bixby applied a new dressing she

always placed her initials, date and time on it. After her days off she would routinely and

regularly observe that the dressing was still in place, yet the medical record would falsely reflect

various dressing changes that never occurred. Predictably, the pressure sore would be worse due

to the failure to actually change the dressing. Relators also observed that there was not sufficient

staffto reposition residents every 1-2 hours as required.

176. Golden Living also has a policy or rule requiring its facilities to report pressure

sores that are Stage II or above. Twin Rivers' administrator, Dana Johnson, refused to comply

with that policy or rule, and instructed Relators that they were not to comply with it either.

Johnson explained that reporting such issues to Golden Living would result in Golden Living

cutting Twin Rivers' budget as punishment.

l. Deaths

52


177. Resident 12 was a 13 year resident of Twin Rivers. Relators observed that on

many occasions he was not repositioned as prescribed. He repeatedly developed pressure sores

on his coccyx and both heels from 2007 through his death in 2010. The final pressure sore event

was to his left heel, which worsened, became gangrenous and severely infected resulting in

sepsis, and ultimately required amputation of half his foot. Resident 12's sepsis condition was

never fully resolved and he died shortly after the amputation.

178. When Resident l2's heel began blanching, Relator Scharber documented his

condition and its progression. She repeatedly notified the Administrator, Dana Johnson, of the

condition and the need to report it to the corporate parent, Golden Living. Dana instructed

Scharber not to report it to Golden Living because it would result in the parent company

financially penalizing Twin Rivers' with a budget cut. Relator Bixby also complained to

management that something should be done about Resident 12's pressure sore. Resident 12's

attending physician was the Medical Director, Dr. Sonntag.

2. Harm or Risk of Harm. Neslect

179. Resident 16 was diabetic and, while at Twin Rivers, repeatedly developed

pressure sores on his coccyx, groin, and heels (which were especially severe) during the period

2008 through 2010.. He rarely left his chair, and Relators observed many occasions when Twin

Rivers failed to provide him with basic assistance. For example, on 411012010, Resident 16 was

not taken to the toilet before 12:30 p.m., and when Scharber checked on him he was soaked in

urine from his armpits to his feet. Scharber and Bixby told the manager on duty, Dana Johnson,

that Resident 15 was still in bed and that Resident 16 had not been taken to the bathroom yet.

Rather than exhibiting concem for Resident 16's welfare and discharging her statutory duties as

53


administrator to ensure the requisite care was provided, Ms. Johnson scolded both Scharber and

Bixby for complaining and for having a negative attitude.

180. Resident 36 developed pressure sores on her heel during the period 2007 through

2008 while a resident at Twin Rivers, and for a portion of that time the pressure sore was Stage

m.

181. Resident 37 developed pressure sores on her legs during the period 2007 through

2008 while at Twin Rivers.

T82. Resident 38 developed pressure sores on her coccyx during the period 2007

through 2008 while at Twin Rivers.

183. Resident 40 developed pressure sores on her coccyx in 2008 while at Twin

Rivers.

184. Resident 4l repeatedly developed pressures sores on her coccy< during the period

2007 through2009 while at Twin Rivers.

185. Resident 42 repeatedly developed pressure sores on her coccyx during the period

2008 through 2009 while at Twin Rivers, and for a porlion of that time the pressure sore was

Stage IV.

186. Resident 43 developed a pressure sore on her coccyx during the period 2007

through 2008 while at Twin Rivers.

I87. Resident 44 developed a pressure sores on her coccyx and both heels during the

period 2008 through 2010 while at Twin Rivers.

188. Resident 45 developed a pressure sore on her coccyx in 2007 while at Twin

Rivers.

54


189. Resident 46 repeatedly developed pressure sore on her coccyx in 2007 through

2008 while at Twin Rivers.

190. Resident I developed pressure sores on his coccyx and foot while at Twin Rivers.

The wound dressings on both hips that were supposed to be changed daily. This was not done a

number of times in April 2010. Additionally, Jeff Emonvu, Ass't DON and TCU Director, was

supposed to check Resident l's wounds daily, which he never did. He would just ask the nurses

if they had looked at the wounds.

191. Resident 3 had a pressure sore on his coccyx that became worse while at Twin

Rivers.

192. Resident 6 had severe Gout and, while at Twin Rivers, developed a pressure sore

on his coccyx that became infected. In an effort to treat the infection, Resident 6 was on IV

administered antibiotics. Resident 6 was not given that IV antibiotic on 51712010 because the

nurse on duty said she was not trained to give IV medications. Furthennore, Resident 6's IV was

not even flushed on 517/2010.

I93. Resident l0 had a pressure sore on her coccyx that worsened while at Twin

Rivers. She was supposed to be given extra fluids before midnight if she had not consumed

enough throughout the day. Throughout the month of May, 2010, this treatment was not

provided at all.

194. Resident 11 repeatedly developed pressure sores on her coccyx and foot during

the period 2007 through 2010 while at Twin Rivers. In late 2008 the pressure sore on here

coccyx developed to Stage III with tunneling. Relator Bixby observed that the sore would

improve when proper care was consistently given, but then would routinely and regularly worsen

when the dressing was not timely changed and the resident was not repositioned every hour. Her

55


care plan and medical orders required that the dressing be cleaned, have hydrogel applied, and be

covered with new galuze ever day. For example, according to her charts this was not done at all

between 4124/2010 and 412712010.

195. Resident 13 repeatedly developed a pressure sores on his coccyx and both heels

during the period 2008 through 2010 while at Twin Rivers.

196. Resident 14 developed a pressure sore on her coccyx while at Twin Rivers.

Relators also observed that she did not have her weight taken daily between 4llll20l0 and

4130/2010 as required by her treatment plan.

I97. Resident 15 developed a pressure sore on her coccyx in 2009 while at Twin

Rivers. On many occasions Relators observed that she was not provided basic assistance. For

example, on 411012010, Resident 15 had not been gotten out of bed or been given breakfast at

12:30 p.m. She was supposed to have been gotten up and fed by the nursing assistant.

198. Resident 17 developed a pressure sore on her coccyx while at Twin Rivers.

199. Resident 18 was a single amputee (leg) who developed a pressure sore on her

coccyx while at Twin Rivers.

200. Resident 23 had multiple sclerosis which limited her mobility. She developed

multiple pressure sores on her coccyx and heels during the period 2008 through 2010 while at

Twin Rivers. She also did not receive prescribed heel protector treatment and hip adduction

wedge on multiple occasions in April 2010.

201. Resident 24 had limited mobility due, in part, to an issue with his hip and could

not stand on his own. He repeatedly developed chronic pressure sores on his cocclx, heels, toes

and arm during the period 2008 through 2010 while at Twin Rivers.

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202. Resident 25 developed a pressure sore on his coccyx in 2007 while at Twin

Rivers.

203. Resident 26 developed pressure sores on her coccyx and heels while at Twin

Rivers. She was also prescribed heel protectors and TED stockings, but these were not

administered as required a number of times in April 2010.

204. Resident 27 developed a pressure sore on his coccyx while at Twin Rivers. He

was supposed to have his sacral area dressing changed daily until the wound was healed. It was

not changed at all a number of times in April 2010.

205. Resident 28 developed a pressure sore on his coccyx while at Twin Rivers.

206. Resident 30 was a single amputee (leg) who developed a pressure sore on her

coccyx while at Twin Rivers. She also developed a pressure sore on the amputation stump while

at Twin Rivers, in part because a pressure band was routinely not properly placed and because

she was not provided adequate physical therapy, both of which were necessary to keep the

swelling down so she could practice using her prosthesis. As previously alleged, Resident 30

was initially a good candidate to return home, but Twin Rivers' failure to provide her with the

physical therapy necessary to adjust to the amputation and prosthesis resulted in her becoming a

long-term resident who eventually died as a result of a medication error by Twin Rivers.

207. Resident 32had, renal failure and required regular dialysis. He had pressure sores

on his coccyx and foot.

208. Resident 34 had a pressure sore on his coccyx that became worse while at Twin

Rivers.

57


209. Resident 35 was a resident at Twin Rivers for 9 years, and while there developed

a severe pressure sore on her coccyx that was Stage III-IV, along with other pressure sores on her

hip and shoulder blade.

D. Failure to Help Prevent Infection

210. OBRA regulations mandate that the facility "must establish and maintain an

infection control program designed to provide a safe, sanitary, and comfortable environment and

to help prevent the development and transmission of disease and infection." 42 C.F.R. $ 483.65.

This necessarily includes basic care of wounds, and the prevention of urinary tract infections. See

42 C.F.R. $ 483.25(dX2). Twin Rivers not only failed to provide this type of basic hygiene and

wound care, it also completely failed to properly prevent and control communicable diseases.

2Il. Twin Rivers never isolated residents with contagious conditions, as required by

OBRA '87 regulations. 42 C.F.R. $ 483.65(b)(l). Twin Rivers also did not use a code system or

otherwise implement a system notifying staff of a resident's contagious condition. Twin Rivers

also did not provide gloves and gowns outside an infected resident's room for staff use. Instead,

they simply stated that staff should always use universal precautions (i.e. avoid contact with

bodily fluids through the use of medical gloves, goggles and face shields), yet did not make these

supplies readily available and did not provide sufficient staffing to accommodate the additional

time necessary for adhering to such protocols for every resident interaction.

212. As a direct result of Twin Rivers' inadequate protocols and failure to provide

necessary supplies at the needed locations, Relator Scharber contracted MRSA from Resident24,

and thereby unknowingly increased the risk of transmitting MRSA to other residents and staff.

2I3. Upon information and belief based upon Relators' observations while working at

Twin Rivers, cases of MRSA, Shingles or other communicable conditions were not reported to

58


the local or state health authorities and were not reported to referring hospitals and other

facilities as required by CDC Guidelines. In fact, when sending a contagious resident to a

hospital or clinic for services, Twin Rivers purposely only sent over the face sheet and

medication sheet so as to conceal any contagious conditions. This demonstrates practices and

procedures that placed revenue, including maintaining its sources of incoming residents, ahead of

the safety of other residents, staff and even outsiders. In the paragraphs below, Relators provide

additional details about Twin Rivers failure to provide these requisite services.

214. At all relevant times, MRSA was rampant at Twin Rivers. For example, Resident

24 had MRSA and, due to the failure to provide adequate notices and protective gear, Relator

Shoemaker contracted MRSA from Resident24.

2I5. Some residents also had Hepatitis A, B, or C, (and one resident even had all

three). These conditions are highly contagious and can involve bleeding from the nose and

mouth, which requires use not only gloves but also long-sleeved gowns and face masks to protect

from airborne contaminated blood. Twin Rivers only stocked short-sleeved gowns, and did not

place either gowns or masks next to the rooms where they needed to be worn.

216. C. difficile also spread at Twin Rivers, with at least 10 residents becoming

infected.

2I7. Other infectious conditions at Twin Rivers included Shingles.

2I8. Twin Rivers' chronic understaffing also led to a failure to provide proper peri-

care, resulting in urinary tract infections that are I00o/o preventable. For example, Resident 47

developed a chronic infection in his peri area during the period 2008 through 2010.

59


2I9. A Mantoux tests for Tuberculosis ("TB") is to be administered to

Mantoux tests were

each resident

routinely notupon admission and after 10 days. Bixby is aware that such

given to Twin Rivers residents.

220. For example, Resident 16 did not have his

admission or on the tenth day after admission, as required.

Mantoux test on the first dav of

221. Resident 3 never had his Mantoux test done according to his April 2010 charting.

222. Resident 22 did not receive the two-step Mantoux test.

223. Resident 8 had recently undergone surgery and had an open wound from that

surgery on her abdomen. The wound was supposed to be cleaned, have ointment applied to it

twice a day, and be covered with a new dressing. On 412712010 Bixby noticed that the dressing

on the wound was the same one that she had put on 2 days earlier. While at Twin Rivers the site

became badly infected.

224. Resident 24 had the dressing on his forearm changed by Bixby on 412412010. As

of 4/27/2010, that dressing had not been changed.

225. Resident l0 had a dressing on her arm that needed to be changed daily. Bixby

changed it on 412512010 and it was not changed again until Bixby noticed on 4/27/2010 that it

was the same dressing.

226. Resident 14 did not have her prescribed Bacitracin applied for a skin condition on

4/1512010. She also did not get an antibiotic ointment applied twice a day as prescribed.

227. Resident 1l was supposed to have hydrocortisone cream applied twice a day, and

that was often missed in the month of April, 2010.

228. Throughout the month of May 2010, Resident 9's dressing on his wound was not

changed three times per week as prescribed.

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229. Resident 13 did not receive the daily hygiene to penis as prescribed by his

physician a number of times during April 2010.

230. Resident 16 did not receive proper peri-care and developed a UTI.

E. Failure to Prevent Mistreatment. NeglecL and Abuse.

23I. The OBRA '87 regulations mandate that "[t]he facility must develop and

implement written policies and procedures that prohibit mistreatment, neglect, and abuse of

residents." 42 C.F.R. $ a83.13(c) (bold added).

232. Most of the allegations in this complaint could also be classified as neglect and

are therefore, incorporated by reference as if fully stated under this heading.

ilI. FAILURE TO PROVIDE OTIIER SERVICES WHICH PLACED RESIDENTS ATRISK OF IIARM

A. Prescribed Treatments Not Properlv Administered

233. Defendants did not provide physician prescribed treatments to Twin Rivers

residents at the proper times or with the proper frequency, if at all. Furthermore, OBRA

regulation 42 C.F.R.$ 483.25(k) mandates that the facility "must ensure that residents receive

proper treatment and care for the following special services: (1) Injections; (2) Parenteral and

enteral fluids; (3) Colostomy, ureterostomy, or ileostomy care; (4) Tracheostomy care; (5)

Tracheal suctioning; (6) Respiratory care; (7) Foot care; and (8) Prostheses." Relators address

each mandate separately below. Each of these can also be classified as "neglect" in violation of

the mandate to prevent neglect, 42 C.F.R. $ a83.13(c), but are presented here to facilitate further

classification.

6r


1. Failure to Provide Proper Treatment and Care Related to Iniections

234. Resident l0 did not have her blood suqar checked on 5/712010 or 51812010 as

required.

2. Failure to Provide Respiratory Care

235. Resident 15 did not receive prescribed oxygen for eight days between 41412010

and 4llll20l0, as well as sporadically throughout the remainder of April 2010. Furthermore, his

oxygen tubing was supposed to be changed every Sunday night, and it was not done twice in

April2010.

236. Resident 21 was prescribed continuous oxygen, but according to his charting it

was not provided at all between 4/4110 and 4ll1l10, and only intermittently after that.

Additionally, his oxygen tubing was supposed to be changed every Sunday night, but that was

not done.

3. Failure to Provide Colostomy. Ureterostomv. or Ileostomv Care

237. On 4/3012010, Resident 20 asked for her colostomy bag to be changed at 5 a.m.,

but it was never changed. When Bixby began her shift at 6:30 a.m. feces had leaked all over the

bed and the patient.

238. Resident 11 had a catheter that was not irrigated twice a week as was required

under her treatment, and her catheter output was not recorded during each nursing shift in April,

2010 as her treatment plan required.

239. Resident 12 did not have catheter tubing anchored to his body checked on every

shift during April 2010 as required. Additionally in April 2010, his catheter output was not

checked every shift.

240. Resident t had a catheter that was not flushed on 5/7/10 as prescribed.

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4. Failure to Provide Care For Prosthesis

24I. Resident 30 had a prosthesis on her leg. Nurses were supposed to observe the

posterior side of Resident 30's left leg very shift for any rubbing, pinching, or redness. This was

not done on a number of shifts in April 2010. A nurse was also supposed to call Resident 30's

doctor on 4ll5l20l0 to update him on whether the adjustments to Resident 30's prosthesis were

working, but this was not done.

5. Failure to Provide Other Services Required bv the Care Plan and/orPhvsician Orders

242. Resident 9 was supposed to have his Hemoglobin checked on 5l9ll0 and 5/10/10

under the order of his physician, but that was not done.

243. Resident 23 developed sores in the folds of her skin due to lack of proper skin

care.

244. Resident 24 was supposed to have his pain level monitored every shift. It was

often not monitored at all.

245. Resident 25 was prescribed knee high hose during waking hours, but it was not

put on him on 4lIl10 or 415ll0, although someone misleadingly initial as having taken it off.

246. Resident 29 was prescribed Nystatin, a topical powder, on 512712010, but it was

not administered at all on 613/2010.

247 . Defendants' continuous failure to provide necessary care to the residents of Twin

Rivers deprived the government of its bargain for the care required by state and federal laws

which constitute the Medicare and Medicaid contracts under which Twin Rivers was paid.

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B. Clinical Health Status Forms Not Properlv Completed

248. Under applicable LTC standards of care, as well as Twin Rivers policy, all new

patients must undergo a new admit assessment within 24 hours of arriving at Twin Rivers called

a Clinical Health Status Form ("CHSF") that comprehensively reviews in detail the resident's

physical and mental status at the time they are admitted. Things that this assessment looks for

include cognitive abilities, skin conditions, pressure sore risk, ability to move around,

gastrointestinal status, urinary incontinence, any weaknesses and neurological issues, and sleep

patterns, among other things. The purpose of the CHSFs is to ensure that all new residents are

receiving the proper level of care for their condition immediately upon coming to Twin Rivers.

249. Defendants routinely failed to complete CHSFs within 24 hours of residents

arriving at the facility, and that they were often incorrect.

250. For example, Scharber and Bixby noted that on llll2009, she arrived at work and

found the new admit assessments from 12130108 and 12131/08 still had not been completed. On

3/112009, Bixby noted that CHSFs had not been filled out from admits the day before. Again on

5ll/2009, both Scharber and Bixby were unable to find new admit paperwork for a recently

admitted resident.

251. Also, on 811512009, Bixby found that CHSFs had not been double checked, and

when she did check them she found that many of them contained incorrect information about the

resident' s medications.

252. On 41512010 Bixby saw that the CHSF for Resident t had been started on

4ll/2010 but not completed until 41512010. On 4123/2010, Bixby noticed Resident I had a

pressure sore on his right heel that had not been documented on his admit skin assessment in the

64


CHSF. When she asked his wife about it. she said it had been there when Resident I was

admitted to Twin Rivers. Bixby reported this to the TCU director.

253. Additionally, the CHSFs for Residents 2 and 3 were not completed on 412412010

even though they had been admitted the day before. On 516110 it was noted that the CHSF for

Resident 4 was not completed. The CHSF was not timely completed for Resident 5, and the

name was spelled wrong on several pages. The CHSF was not timely completed for Residents 6

or7 inMay2010.

254. The failure to properly fill out CHSFs within 24 hours of new residents arriving at

Twin Rivers resulted in falsification of documents and a substandard level of care to Twin Rivers

residents.

C. 24 Hour Charting Not Properlv Completed

255. Furthermore, Defendants failed to properly conduct and record the 24 hour

charting for its residents.

256. This type of charting included completion of a "Tracker Sheet" on which the

CNAs were to record their personal observations of the fluid and food intake, urine and bowel

output, and other basic information about the residents assigned to them. Due to the chronic

understaffing, these sheets were rarely filled out by the CNA at the time of observation. Instead,

they were usually filled out at the end of a shift using estimates from mernory. Sometimes,

nurses simply filled in the information on the computer without asking the CNAs, and thus had

neither first-hand or second-hand knowledge from which to complete the forms.

257. Relator Brockopp observed that such "ghost-writing" regularly occurred at the

end of most months, when Twin Rivers' management would announce "we're going to make-up

hours" [i.e. cut hours in order to stay within budget] and then send two of the five CNAs home.

65


The remaining three CNAs were then assigned additional residents to care for. During these

times, the CNAs on duty were rushed and not able to complete all the services necessary for each

resident. Importantly, the CNAs did not have time to chart each residents' intake of food and

fluids, their output, and other data they were responsible for monitoring, and which was relevant

to ensuring residents did not become dehydrated, lose weight, or begin exhibiting signs and

symptoms of more acute conditions such as C. dificile which includes chronic diarrhea. Relator

Brockopp was surprised when nurses, would inform him that they had completed such charting

for him, even though they had no first-hand information and did not even ask him to relate the

requisite information to be charted. Instead, the nurses made-up the information and completed

the form.

258. By way of specific example, the chart for Resident 7 indicates she did not have

her vitals monitored or her condition checked by Defendants' staff for over 12 hours on

511/2010. The chart for Resident 4 indicates she also did not have her vitals monitored or her

condition checked for over 12 hours.

259. Defendants' failure to properly complete and record the 24 hour charting for its

residents resulted in failure to provide the requisite care and neglect of Twin Rivers residents.

IV. UNNECESSARY TREATMENTS TO INFLATE BILLING.

260. Scharber and Bixby filed a second complaint on June 15, 2010 concerning

Resident l. On 51612010 his physician ordered that his tube feedings be discontinued, but Twin

Rivers ignored the order and continued to administer medications through the tube until about

512312010. Twin Rivers fraudulently received a higher RUG rate to continue the unnecessary use

of the tube.

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V. DEFENDANTS FALSELY RECORDED AND REPORTED INFORMATION INORDER TO CONCEAL SERVICES THAT FAILED TO MEET REQUIREMENTS.

26T. In about September 2009, Relator Shoemaker was told by the Administrator,

Dana Johnson, to start collecting time cards from people who came to Twin Rivers to do clinical

consults with residents. Ms. Johnson said their hours could be used in reports that are given to

the Minnesota Department of Health to inflate the number of RN hours.

262. Defendants are req-uired under state and federal law to keep records of the care

given to its residents. All information must be timely, accurate, complete, and made as soon as

possible after the observation or treatment. Minn. Admin. Rule 4658.0445 subp. 2. No

information submitted for Medicare or Medicaid reimbursement may be falsified. 42 C.F.R. $

483.200.

263. Relator Shoemaker witnessed medical records being altered during annual state

surveys and during complaint suryeys. At the time of such surveys, Golden Living sent over its

own nurse consultants to go over the records and make sure they would pass muster with the

inspectors. The records were changed so they would seem to be complete and not have left out

any medications given or treatments done.

264. Relators Bixby and Scharber submitted a formal complaint to the Minnesota

Departmentof Health on4l2Tl20l0regardingResidents 1,8 ,10,12,and20. KimJohnson, a

RN with the Department of Health, went to Twin Rivers on 51512010 to do an on-site

investigation due to the complaint. Scharber witnessed Jeff Emorwu, the TCU director, and

Terry Blumer, the Interim DON and a Golden Living employee, take the MARs and Treatment

Administration Records ("TARs") into the nursing office before they were given to Kim

Johnson. Scharber overheard Mr. Emorwu tellMs. Blumer that he fixed all the records.

67


265. After an annual survey in January 2010, the facility was required to do certain

education for its staff. One piece of the required education was not done, and Shoemaker saw

Dana Johnson adding to the staff sheet after the fact so it would appear that it had been covered.

266. In spring 2010, Relator Shoemaker realized that pharmacy billing logs had not

been reviewed for error in more than a year. This meant that Twin Rivers was still receiving

medication for residents that had been discharged or whose prescriptions had changed. These

unnecessary medications were not being returned, but were still billed to Medicare and

Medicaid.

267. In May 2010, Golden Living sent over one of its employees, Marilyn Hoffer, to

be the interim MDS nurse at Twin Rivers. Relator Shoemaker overhead Ms. Hoffer tell an

occupational therapist, Penny Strafaccia, to change the dates on two residents' MDS forms so

they could collect more revenue for them. This request to change the dates was memorialized in

an e-mail. Relator Shoemaker also overheard Ms. Hoffer tell Shane Roche, Interim

Administrator/Executive Director who was also a Golden Living employee, that they were going

to generate a lot of money by re-working the MDS forms.

268. In August 20T0, Relator Shoemaker saw Jacqueline Lewis, the Activities

Director, make copies of the same activities documentation note and place them in some

residents' charts. After Relator Shoernaker looked at those charts, she saw there had not been any

charting since January 2010. Relator Shoemaker reported this to the DON, but nothing was ever

done.

269. Residents 3l and 32 had MARs and Pain Management Tool forms that did not

match. Both residents were prescribed Oxycodone and the nurse was supposed to mark on the

MAR and the Pain Management form contemporaneously with when the medication was

68


administered. For both residents, however, those two forms do not match up. The MARs

indicated the medication was administered many more times than was indicated on the Pain

Management form.

270. Residents 24 and 33 did not have new treatments prescribed by their physicians

entered into the Twin Rivers computer system until the day after the physician prescribed it.

Therefore those residents did not receive their prescribed treatments for an entire day.

271. From many sources, including but not limited to wrongful death and injury

complaints and claims brought by residents and their families, employee complaints, and survey

activity by MDHS, Defendants had knowledge within the meaning of 31 U.S.C. g 3729(bX1-(3)

that the Medicare and Minnesota Medicaid claims they submitted were oofalse or fraudulent"

and/or constituted false statements.

272. From many sources, including the conduct of Twin Rivers and Golden Living

management personnel, Defendants had knowledge within the meaning of 31 U.S.C. $

3729@)0-(3) that Defendants had made or used false records or statements to get Medicare and

Minnesota Medicaid claims paid, which were material to said claims and made with the intent to

deceive the federal and state government into believing that particular services had been

rendered in the manner required to be eligible for pa5rment, and/or that Defendants had otherwise

delivered the bargained for services necessary to prevent harm to residents.

VI. DEFENDANTS UNLAWFULLY RETALIATED AGAINST RELATORS

273. Relators openly and privately voiced their concerns about Twin Rivers'

understaffing and failure to deliver the services required to prevent harm to residents.

69


274. For example, Relator Bixby, LPN - TCU Charge Nurse, almost immediately upon

starting in August 2008 began openly keeping a journal of problems she observed at Twin

Rivers, and would openly tell managers altering records that it was illegal to do so.

275. This issue came to a crescendo on November 13, 2009 when Relator Bixby

refused to sign a write-up by Dana Johnson, Administrator/Executive Director, accusing her

improperly talking to Resident 17's family concerning a fall on November l0 that shortly

preceded her death. After her death, the family was angry, and Twin Rivers even received a call

from the coroner informing them that the family was threatening to sue and to report the

incident. In fact, MHD conducted an investigation.

276. The write-up was purportedly based on a policy or rule Relator Bixby had never

heard of, stating that such inquiries were to be handled only by the Executive Director. Relator

Bixby refused to sign the write-up about the incident, which angered Johnson.

277. Afterward, both Cindy flast name to be determined] and Jeff Emorwuo Ass't

DON, came up to Relator Bixby and confided that they did not agree with the write-up. In

particular, Cindy stated "If repeated I will get canned, but I don't agree with what happened,"

and Shane stated "I don't agree with what happened on Friday at all,I just want you to know

that;'

278. The beginning of the end came the week of January 10, 2010 when state

surveyors arrived and stayed for the entire week to conduct their annual survev. Twin Rivers did

not meet the standards.

279. Relator Brockopp was terminated. On February 19,2010, MDHS surveyors

were again on-site at Twin Rivers. That same day, Tom Johnson, Golden Living Human

Resources Department, arrived at Twin Rivers and invited anyone with issues to come talk to

70


him. Relator Brockopp spoke to T. Johnson about the lack of services being provided to

residents. A short time later, Terry Blumer, Interim DON and Golden Living employee, called

Relator Brockopp into her office and informed him that he was being written-up for an unsafe

practice pertaining to his use of a Hoyer lift to transfer Resident 12 from his chair to his bed.

280. Brockopp explained to Blumer that because there were only 3 CNAs on duty,

rather than 5, he had to do the transfer by himself. The transfer was safely completed, and the

lift disconnected and moved out of the way. The only remaining task was to slide the lift's

disconnected harness out from under the resident and then replace the rug next to the bed. At

that point a chair alarm went off in the hallway and, knowing that Resident 12 was safe,

Brockopp immediately went to stop the resident in the hallway from getting out their chair and

risking a fall and injury. Brockopp then immediately returned to Resident 12 and completed the

final tasks. Blumer said that it was improper to leave Resident 12 without first completing all the

steps, and that since he had been warned before about proper transfer techniques his employment

was terminated as of the end of his shift.

28L The first week of March, 2010, MHD conducted a re-survey of Twin Rivers due

to the poor showing during the initial survey. During the re-survey, Relator Scharber was

assigned to Group 3 because the surveyors were closely monitoring the care of those residents.

282. Predictably, during both surveys additional staffing was put on the floor, both by

ordering existing employees to work extra shifts and by bringing in personnel from Golden

Living in an effort to "put on a good show." Each time after the surveyors departed, however,

staffing was cut below pre-survey levels in an effort to bring labor costs within budget.

283. During these weeks in particular, Relators were outspoken about the understaffing

and failure to provide the care necessary to prevent harm to residents.

7l


t

284. On April 20, 2010, Relator Bixby again refused to sign a write-up for o'crying,

being rude, and failing to attend a nursing meeting on April 16." The meeting was scheduled for

2:15 pm, and in the morning Bixby advised management that she needed to leave at2:45, a mere

15 minutes early in order to make a 3:00 pm appointment. At 2:15 the meeting did not start, and

Bixby was overwhelmed with the amount of work due to understaffing, handling two

admissions, and Jeff Emorwu's refusal to provide assistance. At 2:40 Emorwu informed Bixby

that the meeting would start at 2:45, precisely when he knew she needed to leave, and that Dana

Johnson, Administrator/Executive Director, expected her to be there.

285. On her way out the door at 2:45pm, Bixby stopped by the meeting and informed

Johnson she was unable to affend, to which Johnson responded "I've had it" and Bixby replied

"So have I." Later that afternoon Bixby received a call from Twin Rivers management

informing her that she was suspended for slamming down the phone in at the nursing desk,

which was completely fabricated. That allegation was ultimately dropped from the write-up,

which Relator Bixby refused to sign.

286. After weeks of overwork due to understaffing, and the predictable care issues that

ensued requiring even more tasks per resident, on April 27, 2010 all five Relators signed a note

delivered to Dana Johnson, Administrator/Executive Director, stating:

This letter is to inform you that we are exhausted with theoverworking/understaffing that has been consistently going on for well over ayear; which is leading to neglect of many residents. This neglect has beenreported to several management team members as well as the executive director,Dana Johnson. Corporate H.R. has also been notified of this. We have contactedthe Minnesota State Health Department with specific resident names andinformation regarding the neglect.

287. Shortly after delivering this note, Twin Rivers began terminating the Relators

under the guise of false accusations of improper conduct.

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288. That same day, April 27, 2010, Relators Scharber and Bixby filed a complaint

withtheMinnesotaDepartmentof Healthregardingthecareof Residents 1,20, 12;8,and 10.

As previously alleged, at this time Resident 12 was developing a pressure sore on his foot that

worsened, and that Relators complained to management about, which pressure sore eventually

became gangrenous leading to sepsis, amputation and death. Relators received a letter

confirmation dated Api129,2010 advising them of the person assigned to handle the complaint.

289. On May 5,2010, Kim Jacobson, RN, Special Investigator arrived at Twin Rivers

to investigate the complaint. Relator attempted to speak directly to Jacobson at that time, but

was told she would be contacted later. Relators observed that Twin Rivers immediately went

into'osurvey" mode, with all managers working on the floor helping the CNAs and nurses deliver

services to residents.

290. During the investigation, Jacobson asked for several resident records and for

staffing schedules since January 2010. Relator Sharber witnessed Jeffrey Emorwu, Assistant

DON, take the MARs and TARs requested by Jacobson and bring them to Terry Blumer's office,

at which time he stated that he "fixed" all the records. The records were then turned over to

Jacobson for inspection.

291. During the investigation, Emorwu asked Relator Scharber to assist with

"preparing" the records to be tumed over to the surveyors, which request Scharber refused.

Emorwu seemed to know, or at least suspect, that Scharber had filed the complaint. Indeed,

about this time Corrin Sanji, RN, informed Scharber that Emorwu did in fact know the Scharber

had filed the complaint.

292. Also during the investigation, and continuing thereafter, other facts and

circumstances indicated that management knew that Scharber and Bixby had filed the complaint,

t3


and that the other Relators were also involved. This included various statements to Relators by

other employees. It also included clear efforts by Defendants' management team to 'oset-up"

Relators to be fired for false and pretextual reasons. For example, management increased

Relator Scharber's work assignments forcing her to work in a rushed manner, and even added

duties that were outside the scope of her duties and/or professional competence. They would

then "audit" her perfonnance and find something that was not perfect.

293. On May 2I,2010, Relator Shoemaker was called into the office of Dana Johnson,

Administrator, where Jeanette Mondeng, the Business Director, was also waiting. Johnson and

Mondeng interrogated Shoemaker about whether she knew Relators Scharber and Bixby had

filed a complaint with MDH. Fearing that she would be fired if she admitted her knowledge that

they had filed a complaint, Relator Shoemaker did not state that she knew. Johnson then made it

perfectly clear that if Shoemaker or any other manager knew who filed a complaint and did not

inform her, they would be fired immediately.

294. A few days later, on May 26, 2010, Dana Johnson confronted Relator Scharber

and asked her whether she had filed a complaint with MDHS. Scharber had already heard from

other management personnel that Johnson knew the complaint was filed by Scharber and Bixby,

had pulled their personnel files and was planning to terminate them that day. Fearing for her job,

Scharber did not admit that she had filed the complaint. About an hour later Mr. Paxton, Golden

Living's Regional Director of Operations for Division 48 (north Twin Cities suburbs),

terminated Johnson as the Administrator and was escorted out of the building. Golden Living

then exercised additional control and brought in Shane Roche, a Golden Living employee, to

serve as the interim Administrator/Executive Director of Twin Rivers.

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295. Relator Scharber later called Jacobson. who confirmed that the records she

reviewed on May 5,2010 did not match the records previously provided by Relators.

296. During the call, Jacobson also requested that Relators file another complaint,

which they did on June 17,2010 with supplemental information about residents I and,12.

297 . Thereafter, Relators Scharber and Bixby received a letter dated June 17, 2010

from the Minnesota Department of Health informing them that an off-site investigation was

being conducted. Thereafter, Relators Scharber and Bixby received a letter dated September 1,

2010 informing thern of the determination that Twin Rivers was not in compliance with

applicable regulations.

298. Relator Farr was terminated. In the interim, in early July 2010, Resident l2 was

taken to the hospital with a severe pressure sore on his foot that had become gangrenous and the

infection had developed into sepsis. After three days off, during which Resident 12 returned

from the hospital, Relator Farr arrived at work on July 9, 2010 and was assigned to care for

Resident 12. She heard from other staff members that Resident 12's foot had been amputated, so

she sought his medical records so she could review exactly what new orders and care plan she

was to follow. Corrine Sattji, LPN, refused to provide Farr with the records, so she later went to

the nursing station and looked at thern. At that point Sanji started yelling at Farr and telling her

that she was not allowed to copy anything out of the chart. When Farr replied that she didn't

know what she was talking about, Sanji replied "You watch what happens, you'll see, you'll see,

you will be in trouble. You don't think people talk around here, we know what Julie and you

guys are doing."

299. Later that day, Lindsey Dewey, RN, Long-Term Care Manager, pulled Relator

Farr away from a resident and took her down to her office where Mary Weitz, RN, DON, and

75


Shane Roche, Interim Executive Director, were waiting. They informed Relator Farr that she

was being immediately suspended for a "level one offense" pending further investigation. When

Farr asked whether it had to do with the incident earlier in the day concerning Resident 12's

records, they refused to answer. Instead they escorted Relator Farr out of the building. Later

that afternoon Relator Farr received a call from Roche, Weitz and Dewey informins her that she

was terminated immediately.

300. Relator Bixby was terminated. In early July 2010 Relator Bixby injured her

back outside of work, and her doctor placed her on work restrictions until August 1, 2010.

Contrary to how Twin Rivers handled other employees with such restrictions, Twin Rivers

informed Bixby that she could not work such restrictions, and that she would be taken off the

schedule and placed on the o'on-call" list. Even after August 1, Twin Rivers never placed Bixby

back on the schedule, and she has not worked at Twin Rivers since July 4,2010. Defendants

actions constituted a constructive termination of Bixby's employment.

301. Relator Scharber was terminated. Defendants were "stunned" that after 25

years of employment, Relator Scharber was reporting substandard care at the facility to MHD.

After weeks of being overworked and constantly being o'set-up" for termination, Relator

Scharber went on medical/personal leave in early August 2010. Shortly thereafter, Scharber was

informed by other employees that if she attempted to return to work she would be terminated.

Ultimately, on October 25,20T0, Twin Rivers terminated her employment.

302. Relator Shoemaker was terminated. On about August 14, 2010 Relator

Shoemaker went on temporary leave for 12 weeks to care for her mother who was dying of

cancer. Unlike other employees who took leave, Shoemaker was asked to immediately turn-in

her keys to the facility. Within 2-3 weeks, Shoemaker was informed by other employees that if

76


she attempted to return to work she would be terminated. In early November 2010, Shoemaker

requested a few weeks additional leave in order to care for her mother during her final days,

which in fact came on December 5,2012. Defendants had granted more than 12 weeks of leave

to other employees, but denied Shoemaker's request and informed her that if she did not return to

work on November 14 she would be terminated. Indeed, on November 15, 2010, Twin Rivers

terminated Relator Shoemaker's employment.

303. Thereafter, the Minnesota Unemployment Insurance Program found that Twin

Rivers had improperly denied her leave and granted her application for benefits.

COUNT IVIOLATION oF 31 U.S.C. $ 3729(a)(1) AND M.S.A. $ 1sc.02(aXl)

AGAINST ALL DEFENDANTS

304. Relators re-allege and incorporate by reference all prior paragraphs.

305. By virtue of the acts described herein, Defendants violated 31 U.S.C. $ 3729(aX1)

from at least October 24,2006 through August 14,2010 and continuing through the present by

knowingly presenting or causing to be presented false or fraudulent claims to Medicare and

Minnesota Medicaid for payment or approval.

306. Defendants jointly and severally submitted or caused others in their employ to

submit claims for reimbursement to Medicare and Minnesota Medicaid.

307. The Defendants represented, at least impliedly and also under circumstances that

qualified as implied certifications, that the claims were true and correct and that the services

identified in the claims were provided in compliance with applicable laws and regulations setting

forth care outcomes and objectives, and/or standards of care, that were bargained and paid for

and were clearly material to, or conditions of, the federal and state governments' obligation to

pay.

77


308. However, the claims were false in that they were submitted for services that were

essentially worthless, inasmuch as they were: not rendered; or were deficient, inadequate, andlor

substandard because they failed to deliver the bargained for services to prevent harm to residents,

did not promote the maintenance or enhancement of the quality of life of the resident of the

facility, failed to meet the standards of health care set forth in statutes and regulations governing

LTCs, and/or failed to meet professionally recognized standards of health care.

309. The United States and the State of Minnesota, unaware of the foregoing facts and

circumstances causing said claims to be false or fraudulent, paid said claims.

310. As a result of Defendants' violations of 3l U.S.C. $ 3729(a)(1), the United States

and the State of Minnesota sustained damages in an amount to be determined.

WHEREFORE Relators demand judgment against Defendants jointly and severally in the

amount of three times the overcharges submitted for payment to the United States and the State

of Minnesota, for a civil penalty against Defendants each jointly and severally in an amount

between Five Thousand Five Hundred Dollars ($5,500.00) and Eleven Thousand Dollars

($11,000.00) for each violation of 31 U.S.C. 5 3729, et seq. and M.S.A. $ 15C.01 et seq.,, for the

maximum amount allowed to the Qui Tam Plaintiff under 31 U.S.C. g 3730(a) and M.S.A. g

I5C.I2, or any other applicable provision of law, for their expenses, court costs and reasonable

attorneys fees atprevailingratesunder3l U.S.C. $ 3730(d) andM.S.A. $ 15C.12, and forsuch

other and further relief as this Court deems just and proper.

78


COUNT IIIvIoLArIoN oF 31 U.S.c. g 373e(a)(1) & (2) AND M.S.A. g 1sc.02(a)(1) & (z)

AGAINST ALL DEFENDANTSARISING FROM VIOLATION OF THE ANTI-KICKBACK STATUTE

3 I l. Relators re-allege and incorporate by reference all prior paragraphs.

312. Defendants violated the Medicare/Medicaid Anti-Kickback Statute, and as a

consequence violated 31 U.S.C. 5 3729(a)(l) & (2) and M.S.A. g 15C.02(aXl) & (2) by

presenting or causing to be presented claims for Medicaid and Medicare payment that were

tainted by the kickbacks and thereby false or fraudulent.

313. Under the Anti-Kickback Statute it is illegal to make or accept a payment to

induce or reward a person for arranging for federally funded medical services. 42 U.S.C. $

r320a-7b(b).

314. Compliance with the Anti-Kickback Statute is a material to, and/or a condition of,

the government's obligation to pay Medicaid and Medicare claims.

315. Defendants entered into an improper anangement with Dr. Sonntag while he was

serving as the Medical Director of Twin Rivers. In particular, Defendants steered incoming

residents to retain Dr. Sonntag as their attending physician, thereby enhancing Dr. Sonntag's

revenue since he billed such services separately to Medicare Part B. These referrals were an

inducement and/or reward for Dr. Sonntag in turn ordering for such residents various therapy

services to be delivered by Defendants' affrliate Aegis Therapy, and ordering hospice services to

be delivered by Defendants' affiliate Ascera Care. Both Aegis Therapy and Ascera Care billed

their services separately to Medicaid and/or Medicare, thereby generating additional revenue to

Defendants, and in particular the overall parent company - Defendant Golden Living.

316. The Defendants represented either expressly, or at least impliedly and also under

circumstances that qualified as implied certifications, that the claims were true and correct and

79


that the services identified in the claims were provided in compliance with applicable laws and

regulations, including the Anti-Kickback Statute, that were bargained and paid for and were

clearly material to, or conditions of, the federal and state governments' obligations to pay.

3I7. The United States and the State of Minnesota. unaware of Defendants'

misconduct, made Medicare and Medicaid payments for the above-referenced services that were

tainted by the improper kickback arrangement. If the United States and the State of Minnesota

had known the claims for said services were tainted by kickbacks, they never would have paid

said claims. The improper payment of such false or fraudulent claims resulted in damages to the

United States and the State of Minnesota in an amount to be determined.

318. WHEREFORE Relators demand judgment against Defendants jointly and

severally in the amount of three times the overcharges submitted for payment to the United

States and the State of Minnesota, for a civil penalty against Defendants each jointly and

severally in an amount between Five Thousand Five Hundred Dollars ($5,500.00) and Eleven

Thousand Dollars ($11,000.00) for eac$..violation of 3l U.S.C. $ 3729, et seq. and M.S.A. g

15C.01 et seq., for the maximum amount allowed to the Qui Tam Plaintiff under 31 U.S.C. $

3730(a) and M.S.A. $ 15C.12 or any other applicable provision of law, for their expenses, court

costs and reasonable attorneys fees at prevailing rates under 31 U.S.C. $ 3730(d) and M.S.A. g

l5C.I2, and for such other and further relief as this Court deems just and proper.

COUNT IIIVIOLATION oF 31 U.S.C. g 3729(a)(2) AND M.S.A. g 1sc.02(a)(2)



320. By virtue of the acts described herein, Defendants violated 3l U.S.C. g 3729(a)(2)

from at least October 24,2006 through August 14,2010 and continuing through the present by

80


knowingly making, using, or causing to be made or used, false statements or records to get a

false or fraudulent claims paid by Medicare and Minnesota Medicaid, or that were otherwise

material to the govemment's obligation to pay and were intended to deceive the government.

321. This Count includes, without limitation, making and using falsified claims

documentation, as well as making and using falsified medical and business records, such as the

Minimum Data Set, Medication Administration Records, Treatment Administration Records. and

Staffing Schedules, which were false because they omitted information or affirmatively falsified

information. These and other false documentation was used to document and support the

eligibility of Medicare and Minnesota Medicaid claims for payment, and also to affirmatively

mislead Medicare and Minnesota Medicaid surveyors concerning the type, frequency and quality

of services provided to residents.

322. This Count also includes, without limitation, false express certifications of

compliance with applicable statutes and regulations mandating the prevention of harm to

residents, setting forth other care objectives, and/or setting forth standards of care, which

certifications of compliance were required as a condition of paSrment.

323. The United States and the State of Minnesota, unaware of Defendants'

misconduct, made Medicare and Medicaid payments for the above-referenced services. If the

United States and the State of Minnesota had known of said misconduct, they never would have

paid said claims. The improper pa5rment of such claims resulted in damages to the United States

and the State of Minnesota in an amount to be determined.




81



($11,000.00) for each violation of 31 U.S.C. $ 3729, et seq. and M.S.A. $ 15C.01 et seq.,, for the

maximum amount allowed to the Qui Tam Plaintiff under 31 U.S.C. $ 3730(a) and M.S.A. g

l5C.T2, or any other applicable provision of law, for their expenses, court costs and reasonable

attorneys fees at prevailing rates under 3l U.S.C. $ 3730(d) and M.S.A. $ 15C.12, and for such


COUNT IVVIOLATION oF 31 U.S.C. g 3729(a)(3) AND M.S.A. g 1sc.02(a)(3)



325. 3l U.S.C. $ 3729(a)(3) and M.S.A. $ 15C.02(a)(3) prohibit any person from

conspiring to commit a violation of the federal and Minnesota False Claims Acts, respectively.

326. The allegations above demonstrate that Defendants conspired to commit

violations of the 31 U.S.C. g 3729(a)(3) and M.S.A. g 15C.02(a)(3).

327. Defendants knowingly submitted false information to the United States and State

of Minnesota in order to receive larger reimbursement payments from the Medicare and

Medicaid programs than they were otherwise entitled to receive.

328. As a result of the conspiracy to provide substandard nursing care that failed to

meet federal and state requirements for skilled nursing services, services were billed to Medicare

and Medicaid that did not reflect the true care being provided and were in amounts in excess of

what should have been charged for unskilled nursing service, worthless services, or services not

provided at all.

329. The United States and the State of Minnesota, unaware of Defendants'

misconduct, made Medicare and Medicaid payments for the above-referenced services that were

82


tainted by the conspiracy. If the United States aird'the State of Minnesota had known the claims

for said services were tainted by the conspiracy, they never would have paid said claims. The

improper payment of such claims resulted in damages to the United States and the State of

Minnesota in an amount to be determined.



of Minnesota,, for a civil penalty against Defendants each jointly and severally in an amount


($11,000.00) for each violation of 31 U.S.C. 5 3729, et seq., and M.S.A. $ 15C.01 et seq., for the


I5C.l2, or any other applicable provision of law, for their expenses, court costs and reasonable

attorneys fees atprevailingratesunder3l U.S.C. $ 3730(d) andM.S.A. $ 15C.12, and forsuch


COUNT VvIoLATIoN oF 31 U.S.c. 93729(a)(7) AND M.S.A. g 1sc.02(a)(7)

REVERSE FALSE CLAIMS AGAINST ALL DEFENDANTS


331. Defendants knowingly made, used, or caused to be made or used, false records or

statements conceal, avoid, or decrease an obligation to pay or transmit money or property to the

United States and the State of Minnesota in violation of 31 U.S.C. S 3729(a)(7) and M.S.A. $

1sC.02(a)(7).

332. The Code of Federal Regulations requires that all data in the MDS be truthfully

reported to the State for payment by the state or federal government.

83


333. The purpose behind the MDS reporting requirements are to provide for a way of

monitoring indicators of quality ("Quality Indicators" or'oQI").

334. If a facility's QI report exceeds national or regional nonns, an inspection team

may be sent in by the State of Minnesota or by the HCFA.

335. Where a facility is found not to be in compliance, licensure actions and fines can

result.

336. Had this facility correctly reported the incidents of poor medical treatment, failure

to provide medication, inadequate staffing levels, or accidents and falls, it would have been

surveyed, found not to be incompliance, and assessed Civil Money Penalties.

337. Federal regulations require written claims that state the medical services provided

in nursing homes to be submitted in order to receive reimbursement under Medicare and

Medicaid. 42 U.S.C. $ 1395n; Minn. Stat. $$ 2568.411,2568.431. Defendants did not submit

truthful claims for repayment as required under federal and state law.

338. From at least Octob er 24, 2006 to the present, Defendants' nursing home care has

been substandard and Defendants knew or should have known that discovery of their

substandard care would have subjected them to civil money penalties under 42 U.S.C. $$ 1395i-

3(h), 1396r(D; a2 C.F.R. $$ 488.330(eX2), 488.406, et al. and under their provider agreements

wherein they agreed to submit truthful claims.

339. By omitting or directing others to omit material and relevant information from the

MDS and medical records of numerous residents at Defendants' nursing home facilities,

Defendants made, used, or caused to be made or used false records or statements in order to

conceal, avoid or decrease an obligation to pay or transmit money to the Government.

84


344. In addition, by certifying in its Cost Reports that the services rendered complied

with all applicable laws, Defendants made, used, or caused to be made or used false records or

statements in order to conceal, avoid or deerease an obligation to pay or transmit money to the

Government.

341. On the basis of the foregoing, the Treasury of the United States of America

sustained damage in an amount to be calculated and proved at trial.





($11,000.00) for each violation of 31 U.S.C. S 3729, et seq. and M.S.A. $ 15C.01 et seq., for the


l5C.I2 or any other applicable provision of law, for their expenses, court costs and reasonable

attorneys fees at prevailing rates under 31 U.S.C. $ 3730(d) and M.S.A. $ 15C.12, and for such


COUNT VIvroLATroN oF 31 U.S.C. S 3729(h)AGAINST ALL DEFENDANTS FOR

RETALIATION AGAINST ALL PLAINTIFFS


343. 31 U.S.C. $ 3739(h) provides as follows:

RELIEF FROM RETALIATORY ACTIONS

(1) IN GENERAL. Any employee, contractor, or agent shall be entitled to allrelief necessary to make that ernployee, contractor, or agent whole, if thatemployee, contractor, or agent is discharged, demoted, suspended,threatened, harassed, or in any other manner discriminated against in the

85


terms and conditions of employment because of the lawful acts done bythe employee, contractor, or agent on behalf of the employee, contractor,or agent or associated others in furtherance of other efforts to stop 1 ormore violations of this subchapter.

(2) RELIEF. Relief under paragraph (1) shall include reinstatement with thesame seniority status that employee, contractor, or agent would have hadbut for the discrimination, 2 times the amount of back payu,igterest on theback pay, and compensation for any special damages sustained as a resultof the discrimination, including litigation costs and reasonable attomeys'fees. An action under this subsection may be brought in the appropriatedistrict court of the United States for the relief provided in this subsection.

(3) LIMITATION ON BRINGING CIVI ACTION. A civil action underthis subsection may not be brought more than 3 years after the date whenthe retaliation occurred.

344. Plaintiffs' actions in advising Defendants' management, CMS, MDHS and others

about Defendants' repeated failure to provide the required services and care to Twin Rivers'

residents constitute protected activities as defined in 3l U.S.C. $ 3730(h).

345. Defendants retaliated against Plaintiffs as a direct result of their protected

activities. The retaliation included but was not limited to verbal harassment, threatso increased

workloads, heightened scrutiny and efforts to "set-up" pretexts for terminating their employment,

and failure and refusal to cease their fraudulent conduct, all subjecting Plaintiffs to physical,

mental and emotional stress, and ultimately termination or constructive discharge of their

employment.

346. Defendants' fraudulent acts described herein constitute violations of applicable

statutes and regulations governing services to Medicare and Medicaid beneficiaries in nursing

facilities, and were material to, and/or conditions of, the United States' obligation to pay,

resulting in violation of 31 U.S.C. g 3729 et seq. Plaintiffs'efforts to disclose and correct

Defendants'violations of said laws were made in furtherance of protected activities under 3l

u.s.c. $ 3730(h).

86


347. Defendants knew or should have known that Plaintiffs were engaging in such

protected activities when they revealed to Defendants' management, CMS, MDHS and others the

Defendants' failure to provide the requisite services to Twin Rivers residents.

WHEREFORE, Plaintiffs respectfully request this Court to grant judgment in their favor

and award the following damages against Defendants, jointly and severally:

(a) Front pay and two times their back pay since the date of their respectiveterminations or constructive discharges, plus interest on their back pay calculated atthe prime rate, compounded annually;

(b) Compensatory damages, including damages for emotional distress;

(c) Punitive damages in an amount sufficient to deter defendants from committing suchwroneful acts in the future;

(d) Their reasonable attorneys' fees, expenses and costs; and

(e) Such further relief as this Court deems equitable and just.

COUNT VIIvroLATroN oF M.s.A. s 1sc.14

AGAINST ALL DEFENDANTS FORRETALIATION AGAINST ALL PLAINTIFFS

348. Plaintiffs re-allege and incorporate by reference all prior paragraphs.

349. M.S.A. $ 15C.14 provides as follows:

EMPLOYER RESTRICTIONS; LIABILITY

(a) An employer must not adopt or enforce any rule or policy forbidding an

employee to disclose information to the state, a political subdivision, or alaw enforcement agency, or to act in furtherance of an action under thischapter, including investigation for, bringing, or testiffing in the action.

(b) An employer must not discharge, demote, suspend, threaten, harass, denypromotion to, or otherwise discriminate against an employee in the termsor conditions of employment because of lawful acts done by the employeeon the employee's behalf or on behalf of other in disclosing information tothe state, a political subdivision, or a law enforcement agency in

87


furtherance of an action under this chapter, including investigation forbringing or testifying in the action.

(c) An employer who violates this section is liable to the affected employee ina civil action for damages and other relief, including reinstatement, twicethe amount of lost compensation, interest on the lost compensation, any

special damage sustained as a result of the discrimination, and punitivedamages if appropriate. The employer is also liable for expenses

recoverable under section l5c.l2, including costs and attorney fees.



residents constitute protected activities as defined in M.S.A. $ 15C.14.


activities. The retaliation included but was not limited to verbal harassmento threats, increased

workloads, heightened scrutiny and efforts to ooset-up" pretexts for terminating their employment,


mental and emotional stress, and ultimately termination or constructive discharge of their

employment.



facilities, and were material to, and/or conditions of, the State of Minnesota's obligation to pay,

resulting in violation of M.S.A. $ 15C.01 et seq. Plaintiffs' efforts to disclose and correct

Defendants' violations of said laws were made in furtherance of protected activities under

M.S.A. $ r5C.14.




88




(a) Front pay and two times their back pay since the date of their respective

terminations or constructive discharges, plus interest on their back pay calculated at

the prime rate, compounded annually;

(b) Compensatory damages, including damages for emotional dishess;

(c) Punitive damages in an amount sufficient to deter defendants from committing such

wrongful acts in the future;

(d) Their reasonable attorneys' fees, expenses and costs; and

(e) Such further relief as this Court deerns equitable and just.

COUNT VIIIVIOLATION OF M.S.A. S 181.932

AGAINST ALL DEFENDANTSFOR RETALIATION AGAINST ALL PLAINTIFFS

354. Plaintiffs re-allege and incorporate by reference all prior paragraphs.

355. M.S.A. $ lS1 .932 provides in relevant part, and without limitation, as follows

(bold added):

Subdivision 1. Prohibited action. An employer shall not discharge, discipline,threaten, otherwise discriminate against, or penalize an employee regarding the

employee's compensation, terms, conditions, location, or privileges ofernployment because:

(l) the employee, or a person acting on behalf of an employee, in good faith,reports a violation or suspected violation of any federal or state law or ruleadopted pursuant to law to an employer or to any governmental body orlaw enforcement offi cial:

(2) the employee is requested by a public body or office to participate in an

investigation, hearing, inquiry;

(3) the employee refused an employer's order to perform an action that the

employee has an objective basis in fact to believe violates any state orfederal law or rule or regulation adopted pursuant to law, and the

89


employee informs the employer that the order is being refused for that

reason;

(4) the employee, good faith, reports a situation in which the quality ofhealth care services provided by a health care facility, organization, or

health care provider violates a standard established by federal or state lawor a professionally recognized national clinical or ethical standard and

potentially places the public at risk of harm.

356. M.S.A. $ 1S1.935 provides for the following remedies and penalties:

(a) In addition to any remedies otherwise provided by law, an employee injured by aviolation of section 181.932 may bring a civil action to recover any and alldamages recoverable at law, together with costs and disbursements, including

reasonable attorney's fees, and may receive such injunctive and other equitable

relief as determined by the court.

An employer who failed to notiff, as required under section 181933 or 181.934,

an employee injured by a violation of section 181.932 is subject to a civil penalty

of $25 per day per injured employee not to exceed $750 per injured employee.

If the district court determines that a violation of section 181.932 occuned, the

court may order any appropriate relief, including but not limited to reinstatement,

back-pay, restoration of lost service credit, if appropriate, compensatory damages,

and the expungement of any adverse records of an employee who was the subject

of the alleged acts of misconduct.

(c)



residents constitute protected activities as defined in M.S.A. $ 181.932.


activities. The retaliation included but was not limited to verbal harassment, threats, increased

workloads, heightened scrutiny and efforts to "set-up" pretexts for terminating their employment,


mental and emotional stress, ild ultimately termination or constructive discharge of their

employment.

(b)

90




facilities, and were material to, and/or conditions of, the United States' and the State of

Minnesota's obligation to pay, resulting in violation of 31 U.S.C. S 3729 et seq. and M.S.A. $

15C.01 et seq. Plaintiffs' efforts to disclose and correct Defendants' violations of said laws were

made in furtherance of protected activities under M.S.A $ 181.932.






(a) Front pay and two times their back pay since the date of their respectivepay calculated atterminations or constructive discharges, plus interest on their back

the prime rate, compounded annually;

Compensatory damages, including damages for emotional distress;

Punitive damages in an amount sufficient to deter defendants from committing such

wrongful acts in the future;

Their reasonable attorneys' fees, expenses and costs; and

Such further relief as this Court deems equitable and just.

Plaintiffs/Relators hereby demand trial by jury on all issues so triable.

(b)

(c)

(d)

(e)

91


Attorney for Plaintiff/RelatorsMN Lic. #165975775Wayzata BoulevardSuite 670St. Louis Park, MN 55416(612\ [email protected]

LBV DER&V LINDEN. P

James G. VanderAttorney for Plaintiff/RelatorsMN Lic. #1121365775 Wayzata BoulevardSuite 670St. Louis Park. MN 55416(612) 33e-684rj im@ vanderlindenlaw. com

WOJTALEWICZ LAW FIRM, LTD.Brian WojtalewiczAttorney for Plaintiffs/RelatorsMN Lic. #118369139 N. Miles, P.O. Box 123Appleton, MN 56208-0123(320) 289-2363brian@woj talewiczlawfi rm. com

NEIL P. THOMPSON, RPH, ESQ.Neil P. ThompsonAttorney for Plaintiffs/RelatorsMN. Lic. #02916382249 East 38ft StreetMinneapolis, MN 55407-3083(612) [email protected]

92


Vande[^o**) =ifi ,n i r'o:: '3 r'-/ .

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October Zq. zdtZ

VIA PERSONAL SERVICE

U.S. Courthouse300 South Fourth Street202 U.S. CourthouseMinneapolis, MN 55415

RE: In Camera Filing, Sealed CaseJulie Scharber, et. al. v. Golden Gate NationalLivingCenter Twin RiversCivil Case No

RACCTYED

]cr 24 tuQ

r,runE^BgIB#."pffg..qrs9Af,K;t,V,VgSa

Senior Care LLC. dlbla Golden

Dear Clerk of Court:

Enclosed herewith for filing in camera and under seal, please find the Complaintand Civil Cover Sheet regarding the above-entitled matter. Our check in the amount of$350.00 is enclosed representing the filing fee.

We have also enclosed a proposed Order Sealing Case.

Sincerely,

JGV/girEnclosurescc: Mr. Robert P. Christensen, Esq.

Mr. Neil P. Thompson, Esq.Mr. Brian Wojtalewicz, Esq.

MSBA

BOA]R5Crnrrrreo

James. G. Vander Linden, Certifed Civil Trial SpecialistBernhard W. LeVarder 1O la-ZOOa)

577 SWayzata Bouievard . Suite 670 . Saint Louis park, I\{innesota 55416(612) 339 -684 t or (l SZ)t 6Z -68+t . Fax No. (l sz)t ez _es+e

u.wrr'.pharmacyfraudwhistleblolt'ers.com /attorneys . wwwiilse,claims_act.com

AITORNEYSATLAW

ANDER LINDEN

-AttlmrucaNrJOARD.^ OFIRIAL

ADVOCATES


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