You run a skilled nursing facility. Your billing department processes claims every day. Your compliance team reviews documentation. Your therapists submit their notes. Everything looks normal. The Medicare payments come through. You assume you're doing things right.
Then the FBI shows up.
Federal prosecutors have turned nursing home billing into the most dangerous fraud category in healthcare - and your own employees are being recruited to destroy you. The Department of Justice's 2025 National Health Care Fraud Takedown charged 324 defendants with $14.6 billion in alleged fraud. Two nursing home chains were explicitly named. The qui tam whistleblower system means your therapists, nurses, and billing staff can file sealed federal lawsuits, collect 15-30% of recoveries, and build the prosecution's case using your own documentation. You won't know until it's too late.
Welcome to Spodek Law Group. We handle federal nursing home fraud defense. If you've received a subpoena from the Office of Inspector General, if federal agents have contacted your facility, or if you suspect an investigation might be forming - this article explains what you're facing. The stakes are prison, exclusion from Medicare, and the end of your career in healthcare.
Your Own Employees Are Being Recruited to Destroy You
The federal government has created a financial incentive system that turns your staff into potential informants.
Under the False Claims Act, any employee can file what's called a qui tam lawsuit. They file the complaint in federal court. The case is sealed. The Department of Justice investigates - usually for 12 to 24 months. Your facility operates normally during this period. You have no idea the lawsuit exists. And while your running your facility, the government is building a case using information your employee provided.
Heres the financial incentive that makes this dangerous. Whistleblowers recieve 15 to 30 percent of whatever the government recovers. If your facility's billing fraud totals $20 million, the employee who reported it collects between $3 million and $5 million. Thats not a theoretical number. In the Grand Health Care case, two whistleblowers - sisters who worked as rehab providers - split more then $4 million for exposing billing fraud.
Look at what happend in California. A group of skilled nursing facilities paid $45.6 million to settle allegations of kickback violations. The case started when the management company's own Chief Operating Officer filed a qui tam complaint. The investigation revealed that facilities paid physicians $2,000 per month for promising at least ten referrals. They terminated doctors who didnt refer enough patients.
Your therapists. Your billing staff. Your compliance officer. Your medical directors. Any of them could be documenting violations right now. Any of them could be working with federal investigators. You wouldnt know.
This isnt paranoia. Its pattern recognition based on how these cases actualy unfold.
So now you understand the threat from inside your own organization. But heres what makes it worse - the government doesnt even need a whistleblower. Your billing system is doing the work for them.
How Your Billing System Becomes the Government's Evidence
Medicare reimbursement for skilled nursing facilities is based on something called the RUG score - Resource Utilization Group. Higher therapy minutes equal a higher RUG score. A higher RUG score equals higher Medicare payment. Federal prosecutors understand this system intimately. And there looking for very specific patterns in your billing data.
The pattern they look for isnt complicated. Therapy mysteriously spikes a few days before assessment periods - not becuase patients suddenly need more treatment, but becuase facilities need to hit minimum time thresholds for higher RUG scores. Then therapy drops off after the assessment. Patients get placed in "ultra-high" RUG categories automatically, regardless of medical necessity. Budgets get set with the expectation that most patients will be billed at the highest reimbursement level.
What the 2025 DOJ takedown revealed:
- 324 defendants charged across 50 federal districts
- $14.6 billion in alleged healthcare fraud
- $245 million in cash, vehicles, and cryptocurrency seized
- Two nursing home chains explicitly named in enforcement actions
- 96 licensed medical professionals among those charged
The RegalCare case filed in 2025 shows exactly how this works. The government sued 19 skilled nursing facilities in Massachusetts and Connecticut. The allegations: therapists documented treatment sessions on patients who were asleep, sedated, or otherwise unable to participate in therapy. Those therapy notes - created by the facility's own staff - became the government's primary evidence. The fraudulent billing allegedly continued from 2017 through 2023.
Your documentation system isnt protecting you. Its building the prosecution's case file.
The settlements tell the story. Life Care Centers paid $145 million - the largest skilled nursing facility settlement in DOJ history. Consulate Health Care got hit with a $347 million jury verdict after treble damages under the False Claims Act. RehabCare settled for $125 million. The Ensign Group paid $48 million. These arent small operators. These are major chains with sophisticated compliance systems.
And thats the paradox nobody talks about. Sophisticated billing systems generate more documentation. Every budget document showing revenue targets that can only be met through aggressive billing. Every therapy note. Every MDS assessment. Every RUG categorization. Your compliance infrastructure creates the paper trail prosecutors use to prove systematic intent.
Most facility owners dont realize this until its to late. The systems designed to ensure compliance become the evidence of systematic fraud when prosecutors frame the narrative.
And that would be manageable if the consequences were just civil settlements. There not.
What Happens When the Investigation Becomes Criminal
Healthcare fraud under 18 U.S.C. § 1347 carries specific federal penalties that most facility owners dont fully understand until there facing charges.
Federal penalties for nursing home fraud:
- Healthcare Fraud (18 USC 1347): Up to 10 years per count
- Healthcare Fraud causing serious injury: Up to 20 years
- Healthcare Fraud causing death: Life imprisonment
- False Claims Act violations: Treble damages plus $27,894 per false claim
- Anti-Kickback Statute: Up to 10 years plus $100,000 per violation
- Mandatory exclusion from Medicare and Medicaid programs
Philip Esformes recieved 20 years in federal prison. His fraud scheme totaled $1.3 billion - the largest healthcare fraud prosecution in Department of Justice history. He operated nursing homes and assisted living facilities. Kevin Breslin got 90 months and was ordered to pay $146 million in restitution for diverting funds from his Wisconsin nursing facilities.
Charge stacking is how prosecutors maximize leverage. One billing scheme triggers multiple federal charges. Healthcare fraud. Wire fraud for electronic submissions. False statements. Anti-kickback violations if there are referral arrangements. Conspiracy if multiple people were involved. Each count carries its own potential sentence.
And heres the trap most facility owners fall into. Your instinct is to cooperate. Explain the billing. Provide the documents they request. Talk to investigators. Show them your compliance efforts.
Your statements become evidence. Your document production becomes there case file. You waive privileges you didnt know existed. The window for negotiating a civil disposition instead of criminal charges narrows dramatically with every word you say without counsel present.
The consequence that ends careers: mandatory exclusion from Medicare and Medicaid. Conviction for healthcare fraud triggers automatic exclusion from federal healthcare programs. You cant bill Medicare. You cant bill Medicaid. You cant operate facilities that bill federal programs. You cant work for facilities that bill federal programs. Your career in nursing home operations is finished.
When Your Facing an Investigation
If your facility is under investigation - or if you suspect one might be forming - Spodek Law Group handles federal nursing home fraud defense.
The consultation is free. Theres no obligation.
What you'll get is an honest assessment of where you stand. Are we at the qui tam stage where a lawsuit might be sealed? Is this an OIG administrative investigation? Has there been a criminal referral to the FBI or HHS? What documentation exists? What's the realistic exposure? What options remain?
Todd Spodek has handled healthcare fraud cases in federal courts. He understands the difference between investigations that can be resolved civilly and those heading toward criminal prosecution. The earlier you have counsel, the more options exist.
Call us at 888-997-4071. The government moves slowly until it doesnt. Once charges are filed, everything accelerates. The time to act is before they arrive at your door.
Were here when you need us.
