The New York Office of the Attorney General (OAG) secured a significant settlement with Fulton Commons Care Center, Inc., a nursing home in Long Island. The settlement requires the owners and operator "to pay up to $8.6 million and install monitors to reform the nursing home's healthcare and financial operations." Up to $7M will go into a fund to implement required reforms, and $1.6M will be paid to Medicaid and Medicare as restitution for illegally diverted funds.

The attorney general had sued the nursing home and its owners, operators, and other related entities in 2022 for financial fraud and resident neglect and mistreatment in violation of New York and federal laws.

The allegations were that from January 2018 to January 2022, the owners "orchestrated two different financial schemes to steer funding intended for patient care to themselves." They "paid themselves $14.9 million in fraudulent inflated rental payments using Medicare and Medicaid funds," and the principal owner and operator paid fraudulent salaries to his eight adult children for "no-show jobs" at the facility.

In addition, an OAG investigation, which began in 2018, found longstanding resident neglect, abuse, and mistreatment at the nursing home. Residents allegedly endured sexual abuse, unexplained bruising, lacerations, missed medical treatments, being left in soiled briefs, and not receiving bodily and dental hygiene or nutrition management as a result of the owners' profiteering.

As part of the settlement, the facility will be partially controlled by an independent healthcare monitor. The monitor will require hiring more staff and other reforms to improve resident care.

An independent financial monitor will audit the nursing home's spending and prevent owners from making fraudulent transactions.

The Fulton Commons corporation was sentenced for criminal acts related to covering up reports of sexual assaults against residents in 2020 and 2022.

"Attorney General James Secures $8.6 Million and Significant Reforms to Log Island Nursing Home after Repeated Financial Fraud and Resident Mistreatment" ag.ny.gov (Mar. 04, 2024).

Commentary and Checklist

To help prevent fraud, healthcare organizations can use routine audits (by an internal audit team or by a third-party) as well as forensic audits. A regular audit assesses an organization's financial health, but the purpose of a forensic audit is to look for, or investigate, suspected fraud or illegal activity. A forensic audit is usually performed by a Certified Fraud Examiner (CFE) or a forensic accountant.

What should healthcare organizations consider when choosing a forensic auditor?

• Choose one with expertise in healthcare organization investigation, so that if they need to appear at trial as your expert, their credentials will be appropriate and industry-specific.
• Choose one with experience in presenting evidence in court, specific training, qualifications, references, and membership in their professional groups.
• Know that there are different certifications: Certified Forensic Accountant, Certification in Financial Forensics, Certified Forensic Examiners, Certified Forensic Financial Analyst, and Government Forensic Accountant. https://www.becker.com/blog/career-spotlight-forensic-accounting
• Choose one who can work well with other professionals such as your legal counsel.
• Fully discuss costs and scope of work. Make sure you understand any exceptions.