Federal agents raid convalescent home headquarters

Federal agents raid convalescent home headquarters
By TONY SAAVEDRA and RONALD CAMPBELL
The Orange County Register
Wednesday, December 17, 2008

Federal agents on Wednesday raided the Mission Viejo headquarters of a national chain of convalescent homes in what company officials said appears to be an investigation into suspected Medicare fraud.

Officials from Ensign Group Inc. said the Department of Justice has been investigating the company since 2006. Greg Stapley, corporate vice president and legal counsel, said the firm may have inherited the problem from its strategy of acquiring troubled group homes.

"We take in a lot of facilities that are in trouble and turn them around," Stapley said.

The U.S. Attorney's Office in Los Angeles could not be reached for comment.

Founded in 1999, The Ensign Group owns and leases 61 convalescent centers in six states, including three in Orange County: Palm Terrace Health Care Center in Laguna Woods; Sea Cliff Health Care Center in Huntington Beach; and Victoria Health Care Center in Costa Mesa. Ensign has a total of 7,400 beds and raised $411 million in revenue in 2007.

According to documents filed by the company with the Security Exchange Commission, the Department of Justice has been looking into the billing and reimbursement practice of some of the firm's subsidiaries.

In 2007, federal attorneys in Los Angeles subpoenaed the firm's bank documents, but later rescinded the demand. The subpoena asked for financial transactions involving Ensign, 10 subsidiaries, an outside investor group and some company officers, said the SEC report.

Later that year, the U.S. Attorney's office sought a meeting with an Ensign employee regarding an investigation into Medicare claims with the federal Department of Health and Human Services Office. The request for a meeting was rescinded, according to the SEC report.

In December 2007, the firm's accounting contractor was subpoenaed and, later, another employee was contacted.

"We believe that the U.S. Attorney may be conducting parallel criminal, civil and administrative investigations involving the Ensign Group and one or more of our skilled nursing facilities," the company said in SEC documents.

The raid on Wednesday was the first formal confirmation of the federal probe.

In November 2006, the company conducted its own internal investigation into Medicare reimbursements and found that documentation was missing for $224,000 in Medicare claims, documents said. These claims have been reported to the federal government, according to SEC statements.


Contact the writer: tsaavedra@ocregister.com or 714-796-6930