WNY nursing home fraud settlement could total $9M

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State and federal officials are negotiating a settlement in a false claims case that could cost a western New York nursing home operator $9 million.

The defendants in the complaint filed under the state and federal False Claims Acts are Safire Rehabilitation of Northtowns LLC, Safire Rehabilitation of Southtowns LLC, and Rehab Alternatives PLLC.

Safire Northtowns owns one facility with 100 beds in the Buffalo area, while Safire Southtowns owns two, each with 120 beds.

Former Safire employee Laura Ciavarella filed a whistleblower lawsuit in December 2020. The U.S. Attorney and the state of New York filed a joint notice of intervention in March.

United States District Court Chief Judge Elizabeth A. Wolford directed the state and federal government attorneys to serve their complaints on the defendants by June 16.

In a letter sent to Wolford Wednesday officials of the U.S. Attorney’s Office asked for more time to work out a deal with the defendants.

“Recently, the United States and the state of New York have agreed in principle, subject to approvals by the United States Attorney and the New York Attorney General, to resolve the United States’ and state of New York’s allegations against defendants for $9 million,” wrote Michael DiGiacomo, United States Attorney for the Western District of New York.

“While the parties are committed to working in good faith to expeditiously resolve this matter, we anticipate that it may take beyond June 16, 2026, to finalize settlement agreements,” DiGiacomo wrote.

Ciavarella also filed the complaint against Safire and Rehab Alternatives for violations of the False Claims Act anti-retaliation provisions and the New York Healthcare Whistleblower Law.

The alleged violations of the False Claims Acts are based on claims submitted to the government for physical therapy and occupational therapy for Medicare and Medicaid recipients.

“Safire improperly required its therapists to administer more therapy that is medically necessary in order to obtain a higher reimbursement … Safire regularly falsified therapy minutes to reflect a higher level of therapy than was performed,” according to the complaint.

Safire and Rehab Alternatives’ violations of the anti-retaliation provisions of the federal False Claims Act and the New York Healthcare Whistleblower Law arise from Ciavarella’s termination after she raised concerns about Safire’s allegedly improper rehabilitation billing practices and patient safety concerns, according to the suit.

In early 2020 Safire began outsourcing its therapy department to Rehab Alternatives, which was expected to hire the Safire workers onto the Rehab Alternatives payroll.

Ciavarella raised concerns about Safire’s billing practices and patient care practices on numerous occasions but was rebuffed, according to the complaint.

When Rehab Alternatives took over the therapy department Ciavarella was not rehired.

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