Category: Security Intelligence

BOSTON – The U.S. Attorney’s Office has filed a joint complaint with the Massachusetts Attorney General’s Office under the federal and Massachusetts False Claims Acts against 19 skilled nursing facilities (SNFs) in Massachusetts and Connecticut and their present and former management companies, RegalCare Management Group, LLC and RegalCare Management 2.0 (together “RegalCare”); RegalCare’s owner, Eliyahu Mirlis and an executive, Hector Caraballo; and RegalCare’s therapy consultant, Stern Therapy Consultants (Stern).  

SNFs are inpatient facilities that provide transitional care to patients following a hospital stay. Federal healthcare programs, including Medicare and Medicaid, reimburse providers for medically reasonable and necessary services rendered to SNF patients. Both the federal and Massachusetts False Claims Acts prohibit individuals or entities from submitting, or causing the submission of, false claims for payment and false statements material to a claim for payment from the respective governments.  

The complaint alleges that, between 2017 and 2023, RegalCare – at the direction of Mirlis and Caraballo and aided by Stern – fraudulently caused the submission of claims to Medicare and Medicaid (via MassHealth and its managed care organizations) for medically unreasonable and unnecessary services to patients of RegalCare’s SNFs. The defendants’ scheme allegedly resulted in millions of dollars in damages to the Medicare and Medicaid programs.  

Specifically, the complaint alleges that RegalCare, at Mirlis’ direction, systematically caused Medicare to be billed for the highest level of skilled rehabilitation therapy services at RegalCare’s SNFs in Massachusetts and Connecticut, despite patients not clinically needing those services. Caraballo facilitated Mirlis’ plan by ensuring that RegalCare’s patient records supported billing for such services – including altering and amending records despite knowing he was not authorized to do so at his licensing level, without having assessed or spoken to the patients, and often without having spoken to clinicians about the changes he personally made. The United States also alleges that RegalCare, through Mirlis and Caraballo, improperly directed RegalCare’s third-party billing company to bill Medicare for the highest-level skilled rehabilitation therapy services before the underlying necessary clinical documentation was even complete.

The complaint further alleges that Stern, a New York long-term care consulting company, conspired with RegalCare to cause the submission of fraudulent claims to Medicare by scheduling therapists to provide unnecessary services, contrary to patients’ medical needs, to justify billing at the highest-level. When Stern therapists refused to provide services they deemed unnecessary or unreasonable, Stern managers threatened to take employment action against those therapists to pressure them to capitulate.

“As alleged, these defendants drained Medicare and Medicaid of millions of dollars and put vulnerable patients at risk – making them undergo unnecessary, and sometimes painful, services,” said United States Attorney Leah B. Foley. “When facilities prioritize profits over patient well-being, they endanger those in their care and undermine the integrity of our healthcare system. This office will continue to hold accountable those who exploit federal healthcare programs at the expense of patients and taxpayers alike.”

“I am proud of our team’s partnership with the USAO in this case, which advances elder justice and safeguards crucial nursing home funds,” said Massachusetts Attorney General Andrea Joy Campbell. “My office will continue to work aggressively to protect our elders and hold companies accountable that seek to harm them or violate our false claim laws.”

“Taxpayers who fund the Medicare and Medicaid programs expect skilled nursing facilities to bill those programs honestly and accurately,” said Roberto Coviello, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General. “The integrity of our federal health care system is undermined when that expectation is not met, and we will continue to thoroughly pursue allegations of False Claims Act violations.”

Massachusetts contends that RegalCare, directed by Mirlis and Caraballo, submitted inflated claims to MassHealth for long-term care services performed for patients of RegalCare’s SNFs in Massachusetts. Between 2017 and 2023, RegalCare operated SNFs in Amesbury, Danvers, Greenfield, Harwich, Holyoke, Lowell, Quincy, Saugus, Taunton and Worcester.  The complaint alleges that RegalCare, Mirlis and Caraballo altered documentation to support billing for increased long term care services even though the patient did not clinically need the additional services.  

The governments filed their complaint in a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Acts. Under those laws, a private citizen can sue on behalf of the United Staes or Massachusetts and share in any recovery. The United States and Massachusetts also are entitled to intervene in the lawsuit, as they have done in this case, which is captioned United States and Commonwealth of Massachusetts ex rel. McCormick v. RegalCare Management 2.0, LLC, et al.  

U.S. Attorney Foley, AG Campbell and HHS-OIG SAC Coviello made the announcement today. This matter is being handled by Assistant U.S. Attorneys Steven Sharobem, Andrew Caffrey, Olivia Benjamin and Diane Seol of the U.S. Attorney’s Office’s Affirmative Civil Enforcement Unit and Assistant Attorney General Scott Grannemann of the Attorney General’s Office’s Medicaid Fraud Division.  

The claims in which the United States and Massachusetts have intervened are allegations only. There has been no determination of liability.