The former CEO of American Senior Communities (ASC) was sentenced to nine and a half years in prison. ASC manages 70 Indiana nursing homes.
The CEO pleaded guilty to conspiracy to commit fraud, conspiracy to violate the anti-kickback statute, and money laundering. A second executive, the former COO, also pleaded guilty and was sentenced to 57 months in prison.
Both sentences involve a $19.4 million fraud and kickback scheme lasting six years. Here is how the scheme worked:
- The CEO asked vendors to inflate their bills and paid the excess to himself and to other defendants
- The CEO created shell companies who submitted phony bills to ASC
- The CEO asked vendors for kickbacks in exchange for ASC's business
- The CEO took kickbacks in exchange for referring patients to a particular home health or hospice company
As a result of these arrangements, the CEO took home an extra $600,000 a year (on top of his $1,000,000 salary), which enabled him to spend millions on private jets, trips to Vegas, diamonds and gold bars, lakefront property, and political contributions.
In 2015, the CEO asked a vendor to increase its bill by 30% and pay the excess to one of his shell companies. Instead, the vendor went to the authorities.
The DOJ is serious about holding individuals criminally responsible for fraud and kickback schemes. This raises the stakes for individuals running healthcare organizations. When is the last time your executives and board members were trained on compliance? Do they understand kickbacks, and the potential civil and criminal liability attached?