State to get $1.7M to settle Hale Nani suit

By Mike Gordon
Advertiser Staff Writer

The state attorney general yesterday announced a $1.7 million settlement with the state's largest long-term- care provider over billing irregularities. The settlement with Beverly Enterprises, Hawai'i, includes a Medicaid program reimbursement and a substantial penalty, as well as a $250,000 reward for the two employees who initiated the investigation into Hale Nani Rehabilitation and Nursing Center.

Beverly Enterprises operates the 280-bed Hale Nani facility on Pensacola Street and the 109-bed Beverly Manor facility on Kamehameha IV Rd .

Prompted by the suit from employees Margaret Goodman and Terri McCallops, the attorney general's Medicaid Investigations Division discovered "questionable practices" including falsification of records, irregular patient prescription practices and kickback schemes for medication.

In some cases, nurses responsible for patient care were told to leave gaps in patient reports so they could later insert whatever was needed to justify billing for a service, said Deputy Attorney General Michael Parrish.

"It's a good settlement," Parrish said. "They are getting more than a slap on the wrist. They falsified records."

No one at the care home would comment on the settlement. Dave Kowalski, executive director at Hale Nani, referred questions to a corporate office in Arkansas that was closed. "I'm not allowed to comment," he said yesterday. "There is no one in Hawai'i who can comment on this issue."

Goodman and McCallops filed their civil suit in state court under the Qui Tam Act of 2001.

Qui Tam investigations are sealed, usually because of an ongoing criminal investigation, Parrish said. The attorney general can look at the case, drop it or take control of the investigation. Typically it will investigate and try to reach a settlement, he said.

The law allows citizens, on behalf of the government, to sue any organization that has taken money, goods or services from the state illegally.

Under the settlement, Beverly must pay:

• $130,923.66 in restitution to the state Medicaid program,

• a $619,076.34 penalty,

• a $200,000 reimbursement to the Medicaid Investigations Division for costs and expenses associated with the investigation,

• a $37,092.37 reimbursement to the federal Medicaid program for costs related to patient care, and

• the $250,000 reward.

Beverly also is obligated to automatically pay the state $500,000 if it fails to change the way it runs Hale Nani within three years, Parrish said.

The problems at Hale Nani occurred between 1996 and 2003.

In July, two employees pleaded no contest to one count of falsifying business records. Each was fined, but their convictions were deferred.

Reach Mike Gordon at mgordon@honoluluadvertiser.com or 525-8012.