The former CEO of a New Jersey-based company that owned and operated 24 skilled nursing facilities and nine assisted living facilities in Wisconsin and Michigan recently was indicted on charges of healthcare fraud, six counts of wire fraud, three counts of mail fraud, conspiracy to commit tax fraud, and conspiracy to commit money laundering.
The crimes were allegedly perpetrated by Kevin Breslin of Hoboken, N.J., CEO of KBWB Operations, doing business as Atrium Health and Senior Living.
Between January 2015 and September 2018, Atrium billed Medicare for more than $189 million and received more than $49 million and billed Medicaid for more than $218 million and received more than $93 million. The indictment alleges that the defendant failed to follow all required quality of care standards and operate with adequate staffing, supplies, and services, despite certifying to both Medicare and Medicaid that they would do so.
Instead, the indictment alleges that Breslin and Atrium engaged in a complex scheme to divert funds from the Wisconsin facilities through guaranteed payments to Atrium owners, guaranteed monthly return-on-investment payments to investors that were financing the construction of skilled nursing facilities in New Jersey, and construction costs for the New Jersey facilities.
The indictment further alleges that by diverting the funds, residents of the existing facilities were not cared for adequately. This included a shortage of clean diapers, inadequate wound care supplies, inadequate cleaning supplies, and a lack of durable medical equipment and respiratory supplies. In addition, vendors were not paid, which caused numerous services to be cut off, including physical therapy for residents, fire alarm monitoring services, phone and internet services preventing staff from obtaining prescription orders and accessing electronic medical records systems, and necessary repairs and maintenance of the facilities.
Breslin and Atrium also are alleged to have withheld insurance premiums from employees’ paychecks but failed to give them to a third-party administrator for use in paying health claims, causing payment of employees’ health claims to be stopped. The indictment further alleges that the defendants also withheld 401(k) retirement savings account contributions from employees’ paychecks but failed to give that money to the third-party pension administrator.
Finally, the indictment alleges that Breslin and Atrium evaded payment to the Wisconsin Department of Revenue and the Internal Revenue Service of state and federal income taxes and employment taxes withheld from employees’ paychecks.
If convicted, Breslin and Atrium face penalties of five years in federal prison on the conspiracy to commit tax fraud charge, and 20 years on each healthcare fraud, wire fraud, mail fraud, and conspiracy to commit money laundering charge. The conspiracy to commit tax fraud charge and each of the healthcare, wire and mail fraud charges carry a $250,000 fine; the money laundering charge carries a $500,000 fine.
In September 2018, Atrium agreed to place 33 of its properties — including nine assisted living communities in Wisconsin — into a court-appointed receivership. According to an article in Senior Housing News, 22 of the properties were purchased by North Shore Health Care a Wisconsin-based company. At the time it entered receivership, Atrium owed debtors more than $13.5 million, according to local news reports.
The Health Law Offices of Anthony C. Vitale represents a wide range of healthcare professionals in state and federal court who are charged with fraudulent billing, kickbacks, Medicare and Medicaid fraud and false claims, among others. For more information, contact the firm at 305-358-4500 or email [email protected].