Extendicare to Pay $38 Million in Largest Failure-of-Care Settlement in DOJ History

Extendicare Health Services Inc., which operates 146 skilled nursing facilities in 11 states, has agreed to pay $38 million to settle claims that it billed Medicare and Medicaid for “substandard” nursing services, the Department of Justice (DOJ) announced late last week. 

Extendicare and its subsidiary Progressive Step Corporation (ProStep) allegedly billed the federal government for services “that were so deficient that they were effectively worthless” and billed Medicare, specifically, for medically unreasonable and unnecessary rehabilitation therapy services, the DOJ said. 

In its settlement — which represents the largest failure-of-care settlement with a chain-wide skilled nursing facility in the department’s history — Extendicare will pay the federal government $32.3 million and eight state Medicaid programs $5.7 million.


Extendicare is also required to enter into a five-year chain-wide corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). 

“It is critically important that we confront nursing home operators who put their own economic gain ahead of the needs of their residents,” said Acting Associate Attorney General Stuart F. Delery, in a statement. “Operators who bill Medicare and Medicaid while failing to provide essential services or bill for services so grossly substandard as to be effectively worthless will be pursued for false claims.” 

The settlement resolves allegations that between 2007 and 2013, in 33 of its skilled nursing facilities in eight states, Extendicare billed Medicare and Medicaid for substandard skilled nursing services and failed to provide care to its residents that met federal and state standards of care and regulatory requirements.  


For instance, the government alleges that Extendicare failed to have a sufficient number of skilled nurses to adequately care for its residents, it failed to provide adequate catheter care to some of the residents and failed to follow the appropriate protocols to prevent pressure ulcers or falls. The eight states involved in this component of the settlement are Indiana, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, Washington and Wisconsin.   

Additionally, the settlement resolves allegations that, during the same time period, Extendicare provided medically unreasonable and unnecessary rehabilitation therapy services to its Medicare Part A beneficiaries — particularly during the patients’ assessment reference periods — so that it could bill Medicare for those patients at the highest per diem rate possible, the DOJ said.   

Along with its $38 million settlement, the OIG has required Extendicare to agree to a corporate integrity agreement under which Extendicare must have a comprehensive compliance program with systems to address the quality of resident care.  

Extendicare’s compliance program must include, among other things, corporate-level committees to address compliance and quality, including a committee to assess staffing, and an internal audit program to assess the quality of care provided to its residents. Extendicare must retain an independent monitor, selected by the OIG, which will regularly visit Extendicare’s facilities and report to the OIG. Finally, an independent review organization will perform annual reviews of Extendicare’s claims to Medicare. 

“The continued viability of Medicare depends, in large part, on the honesty and integrity of the program participants,” said Acting Assistant Attorney General for the Civil Division Joyce R. Branda, in a statement. “Health care providers must make decisions regarding the level of services to be provided based solely on their patients’ clinical needs, and not corporate financial targets.”

Written by Emily Study

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