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Case: 1:13-cv-06437 Document #: 1 Filed: 09/09/13 Page 1 of 27 PageID #:1

F'f,T-ED
IN THE UNITED STATES DISTRICT COURT, .$tp ft n
FoR THE NORTHERN DISTRICT oF ILLINOI" $ee dq"

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UNITED STATES OF

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STATES OF ILLTNOIS,
AND WISCONSIN
EX REL.
RICHARD MEESKE

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INDIANA,

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PURSUANT TO 31 U.S.C.
53730 et seq.

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Case No:

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Plaintill's,
vs.

FILED UNDER SEAL - DO
NOT PLACE rN PRESS BOX
DO NOT ENTER rNTO
PACER

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PLATINUM HEALTH CARE, LLC;
)i
PHCH, LLC; PHRS, LLC; PHWD, LLC;
) JURY TRIAL DEMANDED
BENJAMIN M. KLEIN (In his individual capacity);_)
MARK SHAPIRO (In his individual capacity); (
BRIAN LEVINSON (In his individual capacity),l 13-cv-06437
Judg'e: Ruben Castillo
Defendants.
Magibtrate Judge: Susan E. Cox

COMPLAINT AT LAW
Relator Richard Meeske brings this action against defendants on his own behalf as well
as on behalf

of the United States pursuant to the qui tam provisions of the federal False Claims

Act (31 U.S.C. S 3729 et seq.)

as

well

as on behalf

of the states of Illinois (740Il. Code $ 17512),

Indiana (Indiana Code $ 5-11-5.5), and Wisconsin (WI Code $ 29.931) pursuant to the qui tam
provisions of each state's false claims statute, and.in support alleges as follows.

INTRODUCTION AND BACKGROUND

1.

Relator brings this qui tam action on his own behalf, as well as on behalf of the
aforementioned state and federal govefllment entities, to recover treble damages, civil

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penalties, attorney's fees and costs for violations of the federal False Claims Act ("FCA")
as

2.

well as for violations of each state's false claims act.

Such violations occurred when defendants knowingly retained ove{payments made by
state and federal govemment health care programs and

knowingly retained overpayments

made by Social Security; in the process, defendantS knowingly made and used numerous
false records or statements, and knowingly submitted numerous false claims to the United
States and to the state government entities named ahove.
a

J.

Relator hds met all procedural requirements of 31 U.S.C. $3730(bX2) prior to filing this

Complaint under seal.

JURISDICTION AND VENUE
4.

This action arises under the False Claims Act, 31 U.S.C. $$ 3729 et seq. The court has

jurisdiction over this action pursuant to 31 u.S.C. gg 3732 and 28 u.S.c. 1331.
$
5.

Venue is proper in this district pursuant to $ 3732(a) of the FCA, which provides that

"[a]ny action under $ 3730 may be brought in any judicial district in which the defendant
or, in the case of multiple defendants, any one Defendant can be found, resides, transacts
business, or in

which any actproscribed by section S3l2goccurred." At all'times

material hereto, Defendants regularly conducted substantial business in Illinois in this

judicial district and maintained permanent employees and offices in Illinois, within this
judicial district. Additionally, venue is proper in this district pursuant to 28 U.S.C.

$

13e1(bX1)-(2).
6.

Supplemental jurisdiction over the state law claims is proper because the state law claims
arise from the same transactions or occurrences as the claims under the federal False

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Claims Act; 31 U.S.C. $3732(b) specifically confers jurisdiction on this Court over the
state law claims asserted in this Complaint.

PARTIES

7.

Relator Richard Meeske is an adult male resident of the state of Illinois. At all times
relevant to this Complaint, Relator lived in this district and within this division and was
employed by some or all of the above-mentioned defendants, including Platinum Health
Care, in this district and within this division.

8. Relator is the original source of this information and has first-hand knowledge

of the

allegations in this Complaint; however, relator states that to the best of his knowledge,
none of the facts alleged herein have been publicly disclosed.

9.

Defendant Platinum Health Care, LLC ("Platinum") is an Illinois limited-liability
company based in Skokie, Illinois. The company was formed by individual defendants

Benjamin M. Klein, Mark Shapiro and Brian Levinson in 2001. Platinum provides
accounts receivable, accounts payable, general ledger, cost reporting, human resource,

purchasing, and marketing and media resource services to 26long-term care facilities
throughout the mid-west, including in Illinois, Indiana and wisconsin.
10. Defendants

PHCH,LLC, PHRS, LLC,

and

pHwD, LLC are all limited-liability

companies formed by the same three individual defendants and share an offrce address

with Platinum at 7444LongAve, Skokie, Illinois. These three LLCs are among the
numerous companies formed by the same three individual defendants for the purposes of

owning and/or operating a number of the 26 nursing homes owned by the individual
defendants, and form part of

a

joint-enterprise together with Platinum and the three

individual defendants.

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11.

All four defendant LLCs are interdependent and interrelated

and at all times relevant the

three individual defendants each exercised complete control over all four entities; all
three individual defendants failed to observe corporate formalities with regard to the

LLCs under their control. All three individuai defendants are responsible for the failure
to observe corporate formalities among their various LLCs and have commingled assets,
including cash. Defendants have also used the assets and cash of limited liability
companies under their control to pay debts of other L[,Cs and other corporate entities
under their common control.

12. All three individual defendants have, from time to time, received checks and other
payment directly from Platinum and other LLCs under their common control. At times,
these checks are made out to various other corporate entities such as Beezee Consulting
Services,

LLC (which is a new company

set up by defendants and which also has its

location at 7 444 Long Ave, Skokie, Illinois) and at times the checks are made payable

directly to the individual defendants.
13. Relator has personal, first-hand knowledge that debts of one
cash belonging to another

LLC were oftenpaid using

LLC belonging to some or all defendants.

14' Defendant Benjamin M. Klein is upon information and belief, a resident of New Jersey,
and also maintains a residence in this district and within this

division. At all times

relevant Klein was joint-owner of a tangled web of limited-liability companies
throughout the mid-west, including the four defendant LLCs named in this Complaint.

All of Klein's business interests are interrelated

and interdependent; for example, Klein

owns or maintains an interest in each one of the 26 nursing homes operated by Platinum,

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and also maintains an interest in various other corporate entities that provide services to
some of his other corporate entities.
15. Klein is known to enter into contractual arrangements with third parties in his own name
and not in the name of any particular

entity. For example, in some contractual

arrangements, Klein signs the agreement on his own behalf as well as on behalf of all the
business entities under his
businesses related to

control. Such documents usually refer to "Klein and those

Klein as listed on the list attached hereto as Exhibit A" or similar

language.
16. At all times relevant to.this Complaint, Klein had knowledge of and approved of the false

claims alleged in this Complaint and personally profited from the false claims, records
and statements alleged iir this Complaint. At all times relevant, Klein had actual and/or
apparent authority to control each

ofthe defendant LLCs, and had actual and/or apparent

authority to control the submission of claims to the United States and.to the government
of each state in which the defendants transacted businesses. Klein also had power and
authority to control any employee of any of the defendant entities and to hire or fire any

individual employee.
17.

At all times relevant to this case, Klein exercised close day-to-day supervision of
virtually all aspects of his various business interests and personally approved and ordered
the fraudulent conduct complained of herein.

18. Defendant

Mark Shapiro is a resident of Illinois, and maintains

and within this

division. At all times relevant Shapiro

was

a residence

in this district

joint-owner of a tangled web

of limited-liability companies throughout the mid-west, including the four defendant
LLCs named in this Complaint. Alt of Shapiro's business interests are interrelated and

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interdependent; for example, Shapiro owns or maintains an ownership and/or
management interest in many of the 26 nursing homes operated by Platinum, and also

maintains an interest in various other corporate entities that provide services to some

of

his other corporate entities.
19.

At all times relevant to this Complaint, Shapiro had knowledge of and approved of the
false claims alleged in this Complaint and personally profited from the false claims,
records and statements alleged in this Complaint.

At all times relevant, Shapiro had

actual and./or apparent authority to control each of the defendant LLCs, and had actual
and./or apparent authority to control the submission of claims to the United States and to

the government of each state in which the defendants transacted businesses. Shapiro also
had power and authority to control any employee of any of the defendant entities and to

hire or fire any individual employee.

20. Atall times relevant to this case, Shapiro exercised close day-to-day supervision of
virtually all aspects of his various business interests and personally approved and ordered
the fraudulent conduct complained of herein.
21. Defendant Brian Levinson is a resident of Illinois, and maintains a residence in this

district and within this division. At all times relevant Levinson was joint-owner of a
tangled web of limited-liability companies throughout the mid-west, including the four
defendant LLCs named in this Complaint and some or all of the businesses in which

Klein owns an interest. All of Levinson's business interests are interrelated and
interdependent; for example, Levinson owns or maintains a management interest in some

or all of the 26 nursing homes operated by Platinum, and also maintains an interest in

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various other corporate entities that provide services to some of his other corporate
entities.
22.

At all times relevant to this Complaint, Levinson had knowledge of and approved of the
false claims alleged in this Complaint and personally profited from the false claims,
records and statements alleged in this Complaint.

At all times relevant, Levinson had

actual and/or apparent authority to control each of the defendant LLCs, and had actual
and/or apparent authority to control the submission of claims to the United States and to
the government of each state in which the defendants transacted businesses. Levinson
also had power and authority to control any employee of any of the defendant entities and

to hire or fire any individual employee.
23.

At all times relevant to this

case, Levinson exercised close day-to-day supervision

of

virtually all aspects of his various business interests and personally approved and ordered
the fraudulent conduct complained of herein.
24. At all times relevant to this Complaint, defendants owned and operated any number

of

additional LLCs.and corporate entities, some or all of whom may have some liability for
the false claims and fraud complained of herein.

COUNT ONE

vIoLATIoNS oF 31 U.s.C. 93729(a)(1)(c)

WRONGFUL RETENTION OF SOCIAL SECURITY OVERPAYMENTS AND
MAKING FALSE RECORDS TO CONCEAL OELIGATIONS TO REPAY
MONEY TO THE UNITED STATES
(AGAINST ALL DEFENDANTS)
25.

All of the preceding

paragraphs are reincorporated and alleged herein.

26.Title I of the original Social Security Act was signed into law in 1935 and created a social
insurance program that protects workers and their families from a loss of earnings

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because of retirement, death, or

disability. Social Security benefits

are based on the

eamings of a worker who has paid into the system by paying Federal Insurance

Contributions Act (FICA) tax for a specified period of time. A worker, or his or her

family, can receive Retirement, Survivors, and Disability Insurance ("RSDI") benefits
upon the worker's attainment of a certain retirement age, disability, or death. The amount
a beneficiary receives depends on

or dies and how long he or she

the age atwhich the worker retires, becomes disabled,

worked.

I

2T.TitleII of the Social Security Act created the Supplemental Securi,y trr.o*. program
("SSI") in 1972. SSI is a Federal income maintenance program for aged, blind, and
disabled persons with little or no income or resources. Funding for SSI does not come

from Social Security contributions. Rather, the United Stales Trtasury's general funds
provide financing for this program. Some States supplement the maximum SSI Federal
payment.

28. Both programs are administered by the Social Security Administration.
29. Given the nature of Title I and Title II benefits, many of the beneficiaries of these
programs will not be capable of handling their own finances as a result of advanced age
or disability; moreover, given the nature of the services offered by defendants (i.e.,

skilled nursing care in a Skilled Nursing Facility) most of the residents of defendants'
various SNFs are not capable of managing their own SSI or RSDI benefits.
30. In such cases Social Security makes payments to a representative payee instead

of

making the payments directly to the beneficiary. A representative payee helps
beneficiaries who need assistance in managing their benefits. A representative payee's

responsibilities include: using benefits to pay for the current and foreseeable needs of the

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beneficiaries; appropriately saving any remaining benefits; and keeping good records

of

how the benefits are spent.
31. In order to serve as a representative payee, one has to enter into a Representative payee

Agreement with the Social Security Administration. A separate agreement has to be
signed for each beneficiary. This Agreement details the representative payee's

responsibilities and fi duciary duties.

32. Atall times relevant to this Complaint, defendant Platinum and./or other individual
corporate entities under the control ofthe defendants served as representative payee for

fr*y,

or perhaps mbst, of the residents of the 26 nursing homes operated by defendants.

Each Platinum facility had its own trust account for Social Security deposits, usually with
a local bank, and eagh Platinum

facility had a separate accounts receivable employee

assigned to the trust account.

33. Social Security ovetpayments are governed by 42 U.S.C. 404 and the Code of Federal
$
Regulations. An overpayment of funds paid to a representative payee on behalf of the
beneficiary

"*

a debt owed

o".ri, for various

reasons. Regardless of

why it occurs, an overpayment is

I

to the U.S. Government that must be repaid.

34. On December 31,20,12, defendants sold six facilities located in Illinois; those facilities
are Colonial

Hall, Cipitol Care Center, Bella Vista Care Center, Morton Terrace Care

center, Morton villa care center, and Rivershores care center.
35. Each of these six horines are now owned and operated by ManagCare of Lincolnwood,

Illinois.
36. Because ManagCare bought the facilities and took over management of these facilities,

ManagCare also took over as representative payee for all residents who had those

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services through defendants. With regard to current residents of the six facilities,
defendants transferred the residents' trust account balances to ManagCare,
the new
representative payee.

37' However, at the time of the sale"relator learned that there was also money
left over in the
trust accounts of many residents who no longer resided in one of these six
facilities at the
time of the sale; in each case, the resident had either been discharged from
these

facilities, had moved, or had passed away prior to the sale of the facility to
ManagCare.
38. Relator discovered that the ruIme of each resident who no longer resided
in one of these

six facilities was marked on the report generated by the MDI accounting software
with an
asterisk.
39. None of the money held in the trust account for a resident marked
with an asterisk was

retumed to the United States or forwarded to a new representative payee;
instead,
accounts receivable manager Maralee Runge told the various employees
of platinum,

including relator, to keep the money in the trust account of the facility.
40. Furthermore, Runge told relator to transfer the information out of
the MDI format and

into an Excel spreadsheet so as to obscure which residents were no longer
staying in a

facility operated by defendants.
41. As just one specific example, relator learned that as of Oct.

3l,2}l2Colonial Hall

resident "K.S." had$1,221.73 inher trust account. At that time, she
was not a resident

of

Colonial Hall, and there should not have been any money in her trust account.
K.S. also
had this money in her trust account as of the date of the sale to Managcare
(i.e., on

December 3I,2012).

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42. At some point after the sale of Colonial Hall facility to ManagCare, the
$L,221.73 in
K.S.'s trust account with defendants was transferred to Colonial Hall's operating
account;
by Apfil 25,2013, her balance was $0.
43. Relator knows that this money was not returned to K.S., nor was it forwarded
to a
successor representative payee

if

one existed; nor was the money retumed to Social

Security as an overpayment; instead Platinum transferred this money to Colonial
Hall,s
operating account.
44. Additionally, on January 7,2013 (i.e., one week after the facility was
sold to ManagCare)
trust account money belonging to 22 former residents of Colonial Hall was
transferred to
the operating account of that facility.
45. In order to conceal its actions, this money was recorded as collections
for old unpaid
debts that had been written off as uncollectible; most or all of this unpaid
bad debt was

five or six years old as ofJanuary 7,20L3.
46' Even if each one of

thes e

22 residents had in fact owed money to defendants, it is

unlawful for a representative payee to deduct money from a beneficiary trust
account
after the payee has ceased to serve in that capacity for the beneficiary,
without
govemment approval.
47

' In fact, defendants retained resident trust balances for five of the six facilities sold on
Dec. 31,2012, with the sole exception being the Bella Vista facility,
for which relator
was responsible' Relator insured that for his facility, Bella Vista,
all requirements of the

law were followed.

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48. Relator has first-hand knowledge that all tnrst balances for residents in each of these five

facilities was retained in the respective facilities' trust,account, and then eventually
transferred to the operating account of that facility.
49. Relator also has first-hand, non-public information that the fraud and false claims
perpetrated by these defendants was not limited to these five facilities; instead, the
problem was spread across a large number of the 26 facilities operated by defendants.
50. Additional examples came to relator's attention when a facility known as

All Faith

Pavilion (which had been operated by defendants) was closed by the state of Illinois in
May of 2012.
51. At the time this facility was closed, relator learned that tens of thousands of dollars was
being held in trust for residents who were no longer residents of

All Faith.

52. As further evidence, in late 2012 afacility in Illinois known as V/ood Glen pavilion was

audited by Illinois Department of Public Health ("IDPH"). As per the standard operating
procedure, when auditors visited the facility, a request was transmitted to platinum,s main

office and to the accounts receivable department for certain accounting information
requested by the auditors.

53. Relator again discovered that money was being held in trust for individuals who were no
longer residents.
54. Relator was told by Runge to remove all beneficiary names with an asterisk beside them,
because those beneficiaries were no longer residents and Runge knew that they were no

longer residdnts.
55. Relator protested but ultimately did what he was told.

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56. Only the incorrect report (which had all of the names'and trust account balances
for
residents no longer living in the facility removed) was produced to the Illinois
officials

auditing the facility; in the process, defendants created and submiued false records
or
statements to the state of

Illinois for the purposes of retaining overpayments.

57. Pursuant to federal law, defendants, as representative payees, were required
to return any
unused funds held in the name of a beneficiary to the United States when
the

representative payee ceased serving in that role for a beneficiary.
58. Alternatively, for those beneficiaries who died, funds held by defendants
in their official

capacity as representative payees must be delivered to the estate of the deceased
beneficiary.
59. Alternatively,

if a representative payee believes that it has a valid claim for

reimbursement at the time the payee ceases to be the representative payee,
the payee must
seek approval from the Social Security Administration prior to deducting
funds held in

trust for a beneficiary.
60. Under no set of circumstances is a representative payee entitled to transfer
funds held in

trust for a beneficiary to its own use without notifuing the federal govemment
after the
payee ceases to serve in that capacity for a benefi ciary.

61' Both civil and criminal penalties attach to any misuse of funds by a repres6ntative
payee.
The penalty upon conviction may be a fine of up to $250,000, imprisonment
up to l0
years, or

both. The Social Security Administration may also impose a civil monetary

penalty up to $5,000 for each violation and an assessment of not more
than twice the
amount of the misused benefits.

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62.Eachyeat, arepresentative payee is required to submit a form to the United
States
entitled to SSA-6233-BK for each beneficiary. That document contains
a mandatory

certification which states as follows:

I

declare under oath and penalties of perjury that I have examined alt
of the
information on thisform and on any accompanying statements orforms,
and it is true
and coftect to the best of knowledge. I undirstani*ot anyone wio
knowingty gives a
false or misleading statement about a materialfact in this information, or causes
someone else to do so, commits a crime and may be sent to prison
or mayface other
penalties, or both.
63. ln multiple years, defendants knowingly submitted hundreds of false
claims on the SSA-

6233-BK; such claims were false because defendants knowingly certified
that all of the
information for each SSA-6233-BK was true and accurate, when it was
not true and
accurate.

64'Theinformation on the SSA-6233-BK was not true and accurate because
it did not
contain correct information for all of the beneficiaries'trust accounts;
these forms
contained false and misleading information in order to conceal and
avoid repaying
monies to the United States.
65. As a result the United States has been damaged.

COUNT TWO

VIOLATIONS oF 3t U.s.C. g 372e(a)(t)(A)
KNOWING SUBMISSION OF'FALSE OR FRAUOUT,TNT CLAIMS TO
THE UNITED
STATES BY UNLAWTULLY ENDORSING CHECKS DRAWN ON
THE UNITED
STATES TREASURY
(AGAINST ALL DEFENDANTS)
66'

All of the preceding

paragraphs are alleged and reincorporated by reference herein.

67' Prior to May 1,2011, payments by the Social Security Administration
for SSI and RSDI
benefits were not in electronic form, but were issued in the form of paper
chebks drawn

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on the United States Treasury and mailed to the beneficiaries
or to the representative
payee.

68' Beneficiaries who received their first SSI or RSDI payment prior
to May 1,

2oll,

continue to receive their benefits payments via paper checks
drawn on the United States
Treasury and mailed to the beneficiary or his or her representative
unless and until the

beneficiary affirmatively chooses to receive direct deposits.
69'

At all times relevant to this complaint, defendants were representative payees
for a large
number of beneficiaries who received their first SSI or RSDI payment
prior to May 1,
2011. and who never

affirmatively opted into direct deposit for their benefits;

as a result,

defendants were required to endorse and deposit numerous paper
checks periodically in

their official capacity as representative payees.
70' After the

All Faith Pavilion facility

was closed in May

of 21l2defendants continued to

receive paper checks for SSI and RSDI benefits for beneficiaries
who had once resided at
the All Faith Pavilion facility
71' Because defendants were no longer representative payees
for any of the residents of

All

Faith Pavilion, defendants were not lawfully entitled to
endorse or to deposit any of the
paper checks which they received for their past
beneficiaries.

72' Despite this requirement, defendants endorsed and deposited
numerous paper checks
drawn on the united States Treasury for sSI and/or RSDI
benefits for beneficiaries who

formerly resided at All Faith Pavilion; such checks were
deposited directly into the
operating account of Platinum and/or another entity under
the control of defendants.
Such deposits were made at Platinum's headquarters
via remote scanning technology, and

were deposited directly into accounts held at Lake Forest
Bank and Trust in Illinois.

r.d+, I

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73. From May of 2012 (when

Atl Faith Pavilion was closed) through July of 2013

a

total of

at least 34 checks drawn on the United States Treasury were endorsed and deposited
in

this manner; the total amount of these checks was at least $27,93g.

T4.Likeother checks drawn directly on the United States Treasury, each check is void after
one year and clearly states this on the face of the check.

75.In each case, the checks were received by defendants after the facility had closed in May
of 2012; in each case, accounts receivable manager Maralee Runge (or another accounts
receivable manager) kept the paper checks in a basket and waited for just under
one year

to negotiate and deposit the checks.
76' As just one specific example, "R.O." was a resident of

All Faith pavilion

facility was closed in May of 2ll2;defendants..".iu"j

.

a check

before the

for R.O. in the amount

of $600.00 for SSI and/or RSDI benefits after the facility was closed. This check for
R.O. was held in a basket on the desk of Maralee Runge until just before it became
void;
defendants endorsed and deposited the check on May

r,zol3.

77. As one other specific example "'W.B." was a resident of
residents, he ceased to reside at

All Faith. Like all other

All Faith no later than May of 2012 when the facility

was

closed.
78. On or about August 3,2Tlz,defendants received a check

for W.B.,s Social Security

payment for July of 2012 in the amount of $1,061. The check was dated
August 3,2012,
and also stated that

it was void after one year.

79. Defendants held this check on Runge's desk from August

of 2)l1until July 2,2013 when

the check was endorsed and deposited directly into an operating account belonging
to

PHWD, LLC, one of the many LLCs operated by the individual defendants.

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80. Like all checks, drafts, or other negotiable instruments, these checks
were ,'payable on
demand" to the rightful holder or to his designee; the act of endorsing
and presenting
these checks constituted submitting a claim or demand to the United
States for payment.

81. At all times relevant, the united States maintained a property interest
in social security
payments made in error.

82' Because these checks were drawn on the United States Treasury, and
because the United
States maintained a property interest in payments

wrongfully issued to a deceased

beneficiary, each act ofendorsing and depositing these checks constituted
a separate and

distinct false claim in violation of 3t U.S.C. g 3729(a)(tXA).
83' The above are only specific examples; relator has first-hand, non-public
knowledge that
the same pattern was widespread and occurred in most or all of the
facilities oumed and
operated by defendants.

84' Upon information and belief, some residents elected to receive
their Social Security or
other benefits from the United States via direct deposit, and defendants
also
misappropriated some or all of those payments.
85. As a result, the United States has been damaged.

COTiNT THREE

vIoLATIoNS oF 31 u.S.C. g 372e(a)(rxA) AND g 372e(a)(t)@)
KNOWING SUBMISSION or F'ALSE oR FRAUbur,rNr CLAIMS
To UNITED
STATES HEALTH CARE PROGRAMS AND MAKING AND
USING F,ALSE
RECORDS OR STATEMENTS
(AGAINST ALL DEFENDANTS)
86'

All of the preceding

paragraphs are alleged and reincorporated by reference
herein.

87' In 1965, Congress enacted Title

xVI[

of the Social Security Act, known as the Medicare

program. Medicare is a federally-funded health insurance program
primarily benefiting

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the elderly and individuals receiving Social Security Disability Insurance (SSDI)

benefits. Entitlement to Medicare is based on age, disability or affliction with end-stage
renal disease.
88. Medicaid is a state and federal assistance program to provide payment
of medical
expenses for low-income patients. Medicaid was created

in 1965 in Title XIX of the

Social Security Act. Funding for Medicaid is shared between the Federal Government
and those states participating in the program.
89. Part A of the Medicare Program is hospital insurance that helps cover inpatient
care in

hospitals, skilled nursing facilities, hospices, and home health care services.
90. Part B of the Medicare Program is an insurance program that provides medical
insurance
benefits for aged and disabled individuals who elect to enroll in this program. It
is
financed from premium payments by enrollees together with contributions
from funds
appropriated by the Federal Government.
91. Whereas Medicare Part A is automatic for most individuals who paid Medicare
taxes

while they were employed, Medicare Part B is voluntary. Medicare part B helps
cover
medically-necessary services like doctors' services, outpatient care, durable
medical
equipment, home health services, and other medical services. Part B also
covers some
preventive services.

92.The Medicare program is administered through the Department of Health and
Human
services, centers for Medicare and Medicaid services (,.cMS,,). To assist
in the
administration of Medicare Part A, CMS contracts with "fiscal intermediaries.,,Fiscal
intermediaries, typically insurance companies,

ile responsible for processing and paying

claims and auditing cost reports. A claim made to a fiscal intermediary
acting on behalf

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of Medicare is considered the same as a claim made directly to Medicare.
A false claim

'

made to a fiscal intermediary is subject to the same penalties as
a false claim submitted to

Medicare.

93. Along-term stay in a Skilled Nursing Facility is not fully covered by
Medicare part A;
instead, Medicare Part

A covers only short stays in a Skilled Nursing Facility for up to 20

days.

94' For residents recdiving both Medicare and Medicaid coverage, Medicaid
covers the copayments, deductibles, and other out of pocket expenses not covered
by Medicare.
95. Reimbursement for services provided by a Skilled Nursing Facility
to a Medicare

beneficiary is provided under

a

prospective payment system. Each SNF submits claims,

for specific services provided to individual beneficiaries

as

well

as claims

for general and

adminiskative costs incurred in treating Medicare beneficiaries. Untike
a fee-for-service
system, this includes routine service costs, ancillary costs, and
capital-related costs

of

covered skilled nursing facility services.

96' Defendants took affirmative steps to obtain overpayments under the prospective
payment
system, and those steps were successful in that total overpayments
in excess of $1.9

million dollars were obtained; defendants then fabricated false and fraudulent

charges

and records to retain these overpayment amounts.
97

' At all times relevant to this Complaint, defendants were required to disclose all known
elrors and omissions in its claim for Medicare reimbursement (including
its cost reports)

to its fiscal intermediary. 42 U.S.C . $ 1320a-7b(a)(3) specifically creates
a duty to
disclose known enors in cost reports by including the following
language:
Whosoever ... having knowledge of the occurrence of any event

affeuing (A) his initial
or continued right to any such benelit or paymenl.. conceals orfoils
to disclose such
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event with an intentfraudulently to secure such benelit or payment
either in a greater
amount or quantity thsn is due or when no such payment or beneJit
is suthorized...
shall in the case of such a... concealment orfailure... be guitty of
afetony.
98' Medicare has the right to make retroactive adjustments to
Cost Reports previously
submitted by a provider if any overpayments have been made.
99' Medicare enters into provider agreements with Skilled Nursing
Facilities to participate in
the Medicare program. In addition, each Medicare provider
must sign a provider
agreement as a conditioh of participation that agrees to
comply with all Medicarc

requirements including the fraud and abuse provisions. A provider
who fails to comply

with these statutes and regulations is not entitled to payment for
services rendered to
Medicare patients.

100'

By submitting a claim for Medicare reimbursement, the provider
certifies that the
\

submitted claim is eligible for Medicare reimbursement and
that the provider is

in

compliance with all Medicare requirements.

101'

Despite these requirements, relator has first-hand, non-public
information that

defendants have retained a total of $1,237
,144.81 inMedicare overpayments received for
a

total of L,265 individual residents at one of defendants' facilities.
Some of these

ove{payments have been retained for as long as five years,
dating from 200g.

102'

As with the Social Security ove{payments described above,
defendants,approach

is to slowly transfer the overpayments to an operating
account over periods of time; at
certain times, these overpayments are transfered to an
operating account via General

Ledger 42100, which in the accounting system of defendants
covers accounts receivable
for room charges for residents.

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103'

Among the 1,265 residents for whom Medicare ove{payments were received
was

a resident named "C.B.:' who resided at

All Faith Pavilion beginning sometime in January

of 2008 and ending on May 1,200g.
For each month of her stay at All Faith, General Ledger 42100 reflects
the

104.

number of days in the month, multiplied times the daily rate in effect.
So for January of
2008, records maintained by defendants in the normal course of business
show that she
was charged 31.0 x$L26.64 because there were 31 days in January.

105'

Her stay ended on May

l,

2008; however, in December of 200g, just before the

end of the calendar year, C.B. was billed via a single entry

of

1.0

x $4,670.79 without.any

further explanation in the records; the money was moved from the
trust account General
Ledger to General Ledger 42100.

106'

The 42100 General Ledger is used only to track revenues for room
and board

charges; because C.B. was not a resident of

All Faith in December of 200g, and because

all of her room and board charges from January of 2008 through May

1, 200g were

already billed and paid, the journal entry described above was
a false record or statement

in violation of 31 U'S.C. $ 3729(a)(1)(B); the record was false
because C.B. had not
incurred charges of $4,670.79, and defendants knew that
she had not incurred such

charges' Defendants used this General Ledger entry as a means
of concealing a transfer
in the amount of $4,670.79 to the operating account where it could
be used for their own
purposes.
107

'

As an additional example, a Medicaid patient named ,,D.A.,, resided
at All Faith

intermittently beginningin2}}g and ending on or about November
30,2011.

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108.

Despite the fact that D.A. checked out

ofAll

Faith on November 30,

z0ll,

defendants received overpayments for D.A.; such ove{payments include payments
for
care not provided and

for services not rendered in December of 2011 and in January and

February of 2012 in the amount of $12,000.

109.

Each year, each facility owned and/or operated by defendants is required
to file an

annual cost report on a govemment form known as CMS-2540-10; providers
of services

must also endorse the oath and penalties language of this document and
swear under oath
and penalties of perjury that they have not knowingly retained any ovefpayments.

110'
'

By law, any Medicare or Medicaid overpayments have to be reported no later
than

60 days after discovery, or with the next cost report, whichever is later.
By law this

money should have been reported and repaid but Platinum has failed to
do so.
1

I

1'

Medicare has the right to make retroactive adjustments to Cost Reports previously

submitted by a provider if any overpayments have been made; in addition,
Medicare has
the right to reduce future payments to a provider in order to recoup
ove{payments made

in the past.

ll2'

Despite defendants'knowing failure to repay the overpayments that
were

wrongfuily retained, defendants continued to certiff under oath and penalties
of perjury
on the form CMS-2540-I0 that no event had occurred that could or
would affect
defendants' continued right to receive payment.

113'

The certification signed on each CMS-2540-10 was submitted to the
United States

or to a fiscal intermediary for approval and was false.

ll4.

As a result, the United States has been damaged.

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COUNT FOUR

KNOWING RETENTION OF OVERPAYMENTS FROM GOVERNMENT
HEALTH CARE PROGRAMS
(AGAINST ALL DEFENDANTS)

115'

All of the preceding

116.

As alleged above, defendants knowingly retained overpayments and took

paragraphs are reincorporated and re-alleged herein.

affirmative steps to conceal those overpdyments.

ll7.

As a result, the United States has been damaged.

COUNT FIVE

KNOWING RETENTION OF OVERPAYMENTS TROM MEDICAID IN
VIOLATION OF THE FEDERAL F'ALSE CLAIMS ACT AND THE ILLINOIS,
INDIANA AND WISCONSIN FALSE CLAIMS ACTS
(AGAINST ALL DEFENDANTS)

118.

All of the preceding

ll9.

Medicaid is a state and federal assistance program to provide payment of medical

paragraphs are reincorporated and re-alleged herein.

expenses for low-income patients. Medicaid was created

in 1965 in Titte XIX of the

Social.security Act. Funding for Medicaid is shared between the Federal Government
and those states participating in the progftlm.

120.

In Illinois, the Medicaid program is funded with 50% federal funds and 50% state

funds; in Wisconsin and Indiana the Medicaid program is funded with60%ofederal
funds

and40% state funds.

t2t.

Medicaid covers benefits not normally covered by Medicare, like long-term stays

in a Skilled Nursing Facility.
t22.

Some low-income elderly and persons with disabilities are considered..dual

eligible," i.e. they are enrolled in and eligible for both Medicare and Medicaid. A ..dually

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participating facility" is a facility that has a provider agreement in both the Medicare
and
Medicaid programs.

123.

In addition, individuals who are dually eligible for Medicare ana Ueaicaid have

their Medicare coinsurance amounts and copayments covered by Medicaid.

I24.

At all times relevant to this Complaint, a majority of the residents of the facilities

owned and operated by defendants all three states were "dual eligible."

125.

Although the requirements for each state may vary slightly, all violations of the

federal False Claims Act above also constitute violations of the false claims act
of each
state.

126.

Relator has first-hand, non-public information that despite these requirements

defendants have retained a total of $687,421.34 inMedicaid ove{payments

for

1,209

individual residents who qualified for Medicaid.

127.

Like Medicare, Medicaid makes payments to skilled nursing facilities on a

prospective payment system, subject to reconciliation on the annual CMS-2540-10,

which covers both Medicare and Medicaid payments.

128.

'Despite

these overpayments, defendants continued to certify under oath and

penalties of perjury on the form CMS-2540- O that no event had occurred
that could or

would affect defendants'continued right to receive payment, and as a result the
certification signed on each cMS-2540-10 submitted was false.

129.

Each violation of the federal false claims act alleged herein also constituted
a

violation of the comparable provisions of the false claims acts of Illinois, Indiana
and
Wisconsin False Claims Acts.

130.

As a result, the states of Illinois, Indiana and Wisconsin have been damaged.

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COUNT SIX

KNOWING RETENTION OF OVERPAYMENTS FROM OTHER GOVERNMENT
PROGRAMS
(AGAINST ALL DEFENDANTS)
I3I

.

1.32.

All of the preceding

paragraphs are realleged and reincorporated by reference.

In addition to the false claims and overpayments associated with Social Security

benefits, defendants also unlawfully retained overpayments from other govemment
programs.

133.

As one specific example, a beneficiary named "R.S." was a resident at a home

known as AllI'aith Pavilion, in the city of Chicago.

I34.

On July 6,2009, R.S., who was a veteran of the United States Nury, received a

paper check from the Veteran's Administration (and drawn on the United
States

Treasury) in the amount of $l11,016.80; on July 31,2009 accounts receivable manager
Maralee Runge personally deposited this check into an All Faith account.

135.

On January 22,2012 R:S. passed away,while still residing at All Faith pavilion.

136.

After R.S. passed away,defendants did not pay this money to R.S.'s estate

as

required by law and/or did not return this money to the Veteran's Administration
as
required by law.

137.

All Faith was closed by Illinois state auditors in May of 2)l2after

several

resident-on-resident attacks; at the time All Faith was closed, R.S. still had a remaining
balance of $92,596.80 in his account. At that time, of course, R.S. had been deceased
for

roughly five months.

138.

After the facility was closed, defendants did not pay this money to R.S.'s estate;

instead, Runge moved this $92,596.80 from R.S.'s account via a new kind ofjournal

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entry called "other." These actions were taken specifically to deceive any state or"federal
auditors who might inspect the records of defendants and to conceal this overpayment.

139.

As a result, the United States has been damaged.

PRAYER FOR RELEIF
140.

WHEREFORE, relator Richard Meeske, through his undersigned counsel,

respectfully requests that the Court enter judgment against ALL DEFENDANTS

JOINTLY AND SEVERALLY, as follows: (a) That the U.S. and each state government
be awarded three times the damages sustained in an amount to be proved at trial; and (b)

that a civil penalty of $11,000 be imposed for each and every false claim that defendants
presented or cause to be presented to the U.S. and/or to any of the state governments; and

(c) that pre-and post-judgment interest be awarded, along with reasonable attorneys' fees,
costs, and expenses incurred by the relator in prosecuting this case; and'(d) that the

relator be awarded the maximum percentage of the government's recovery allowed
pursuant the False Claims Act; in addition, the relator requests any additional relief the

court may deem appropriate.

l4l.

Trial by jury is demanded.

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BY RELATOR RICHARD MEESKE BY AND THROUGH HIS
I.INDERSIGNED COUNSEL:

Respectfully Submitted,

FOLEY & MANSFTELD, P.L.L.P.

linois Bar # 6281475
55 W. Monroe St., Ste. 3430
Chicago, IL 60603
(3t2) 254-3801
(312)2s4-3801 [FAX]
Email : j sarvyer(rlfol elrnansfi

el d. co

rr

And:
NOT ADMITTED IN ILLTNOIS:
ZacharyA. Kitts
Virginia Bar # 47052
Justin Gilbert
Virginia Bar #74083
K&G Law Group, PLLC
3554 Chain Bridge Road, Suite 400
Fairfax, Virginia 22030
Phone: 703-649-5500
Fax: 703-649-6363
Email: zkitts@kglawpllc.com
Email : j gilbert@kglarnpllc.com
Counsel for Relator Richard Meeske

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