Nursing Home & Skilled Nursing Facility (SNF) Fraud Defense
Former DOJ Fraud Section Prosecutors. Nationwide Defense for Nursing Home Owners, SNF Operators, Administrators, Physicians, Therapists, and Healthcare Executives Facing Federal Nursing Home Fraud Investigations and Charges.
Based in Washington, D.C., Armstrong & Bradylyons PLLC defends nursing home owners, skilled nursing facility operators, administrators, medical directors, physicians, therapists, management company executives, and investors in federal nursing home fraud investigations and cases nationwide.
The firm’s healthcare fraud defense practice is built on nearly a decade of combined experience at the nation’s preeminent healthcare fraud enforcement unit: the Healthcare Fraud Unit of DOJ’s Fraud Section. Scott Armstrong, Drew Bradylyons, and Andrea Savdie tried 17 federal jury trials in healthcare fraud cases at DOJ’s Fraud Section involving over $2.8 billion in alleged false and fraudulent claims to federal healthcare programs. The firm uses that experience to defend individuals in nursing home fraud cases at every stage: from the first grand jury subpoena, through federal indictment, and at trial.
Nursing home and SNF fraud is one of the most aggressively prosecuted categories of healthcare fraud. The government uses Medicare cost report audits, Minimum Data Set (MDS) analysis, therapy utilization review, and state Medicaid Fraud Control Unit referrals to identify and prosecute fraud in skilled nursing facilities. The firm defends individuals in every federal district where DOJ, HHS-OIG, and state Medicaid agencies bring nursing home fraud cases.
Armstrong & Bradylyons PLLC defends every nursing home fraud case from the start as if it will go to trial. That is not a slogan. It is the operating principle of the firm, grounded in 25 federal jury trials in complex fraud cases in federal courts across the country.
Trial experience drives results at every stage. Nursing home fraud cases are built on Medicare cost report data, MDS assessment audits, therapy utilization analysis, and financial transaction tracing. They involve allegations of billing for medically unnecessary therapy, inflating patient acuity scores to generate higher reimbursement, diverting Medicaid and Medicare funds through related-party transactions, submitting false cost reports, paying kickbacks for patient referrals, and providing substandard care while billing for skilled services. The firm builds the factual record from the first day of engagement: analyzing billing data, retaining clinical and financial experts, identifying and preparing witnesses, and developing a case theory that can withstand the government’s scrutiny.
The firm’s attorneys know how federal prosecutors build healthcare fraud cases because they built them. Scott Armstrong served for nearly a decade at DOJ’s Fraud Section, where he served as lead trial counsel in 16 federal jury trials, including complex healthcare fraud cases involving Medicare, Medicaid, and Tricare. Drew Bradylyons served as Chief of EDVA’s Financial Crimes and Public Corruption Unit and, before that, supervised the Healthcare Fraud Unit’s Miami Strike Force at DOJ’s Fraud Section. That combined experience provides the firm with an unmatched understanding of how federal healthcare fraud cases are investigated, charged, and tried.
The firm relishes the opportunity to try cases. Its willingness to go to trial and its proven skills at trial provide significant leverage in negotiations with federal prosecutors at every stage of a nursing home fraud case.
Nursing home fraud generates some of the longest sentences in healthcare fraud. The government prosecutes aggressively because nursing home fraud involves vulnerable elderly patients, large federal program expenditures, and conduct that often intersects with patient neglect and harm.
Philip Esformes received 20 years in federal prison for orchestrating a $1.3 billion fraud scheme involving skilled nursing facilities in South Florida. It was the largest healthcare fraud case ever prosecuted by DOJ at the time of sentencing. Kevin Breslin, the former CEO of KBWB-Atrium, was sentenced to 90 months in federal prison and ordered to pay $154 million in restitution for diverting Medicare and Medicaid funds from 23 skilled nursing facilities in Wisconsin. He diverted funds for personal expenses while resident care suffered and employee benefits went unpaid. These are not outlier cases. They reflect DOJ’s sustained enforcement posture against nursing home fraud.
In 2025, DOJ sued RegalCare Management Group and 19 affiliated skilled nursing facilities in Massachusetts and Connecticut for fraudulent therapy billing spanning 2017 through 2023. The lawsuit names the facility owner, an executive, and a therapy consultant for personal liability. In the 2025 National Health Care Fraud Takedown, Centers Health Care agreed to pay more than $6 million to resolve allegations that 44 skilled nursing facilities submitted Medicare cost reports containing false statements about related-party transactions. DOJ’s Fraud Section 2025 Year in Review highlighted a corporate guilty plea for healthcare fraud and tax conspiracy related to the diversion of CMS funds intended for the benefit of SNF residents.
The enforcement extends beyond billing fraud. State Medicaid Fraud Control Units investigate patient neglect and abuse within nursing homes. New Jersey’s Office of the State Comptroller found that two nursing home owners funneled $92 million of the $134.8 million they received in Medicaid funds to companies they or their relatives controlled. New York’s Attorney General has secured over $70 million in settlements and reforms from nursing home operators in recent years. Federal and state investigations frequently run in parallel.
CMS suspended $5.7 billion in suspected fraudulent Medicare payments in 2025. The Health Care Fraud Data Fusion Center combines data from DOJ, HHS-OIG, FBI, and CMS to detect anomalous billing in real time. Skilled nursing facilities with utilization patterns that diverge from national norms are being identified faster than ever before.
The firm’s nursing home fraud defense practice is built on healthcare fraud trial experience, deep knowledge of Medicare SNF billing rules and Medicaid reimbursement requirements, and years of experience investigating and prosecuting complex healthcare fraud cases at DOJ’s Fraud Section. These tools are deployed at every phase of a case.
Challenging the Government’s Therapy Utilization and PDPM Analysis
Federal prosecutors allege that skilled nursing facilities inflated therapy billing by providing medically unnecessary physical, occupational, and speech therapy to increase reimbursement. Under the Patient-Driven Payment Model (PDPM), effective since October 2019, CMS assigns payment rates based on clinical characteristics documented in the Minimum Data Set (MDS). The firm retains rehabilitation experts to evaluate whether therapy services were clinically appropriate, challenges the government’s statistical methodology for identifying outlier facilities, and demonstrates that therapy utilization was driven by legitimate clinical need.
Defending Medicare Cost Reports and Related-Party Transactions
The government scrutinizes Medicare cost reports for false statements, undisclosed related-party transactions, and inflated expenses. Federal prosecutors allege that nursing home owners funnel Medicare and Medicaid funds through management companies, staffing agencies, real estate entities, and supply companies that they or their family members control. The firm analyzes related-party transactions against CMS Provider Reimbursement Manual requirements, evaluates fair market value, and challenges the government’s characterization of legitimate business structures as fraudulent fund diversion.
Challenging the Government’s MDS Assessment and Patient Classification Analysis
The Minimum Data Set (MDS) assessment drives reimbursement for SNF patients under Medicare. The government alleges that facilities inflated MDS scores to place patients into higher-reimbursing PDPM categories. The firm retains MDS coordinators and clinical nursing experts to evaluate whether MDS coding was clinically accurate and supported by the patient’s documented condition. Coding complexity is not fraud. The firm ensures that distinction is drawn with clinical precision.
Challenging the Government’s Proof of Knowledge and Intent
Federal healthcare fraud requires proof of willful and knowing fraud. Clinical decisions about therapy protocols, MDS assessments, and patient care levels involve professional judgment. Business decisions about corporate structure and related-party transactions involve legitimate operational considerations. The firm builds the factual record to demonstrate good faith. Where the government relies on cooperating witness testimony to establish intent, the firm attacks the reliability, credibility, and motivations of those witnesses. The firm’s attorneys have extensive experience cross-examining cooperating witnesses in federal healthcare fraud trials.
Federal nursing home fraud investigations target individuals at every level of the facility’s operations: from the owners who control the business and its finances, to the administrators who manage daily operations, the physicians who order treatment, the therapists who deliver and document services, and the management companies that provide corporate support. Armstrong & Bradylyons PLLC defends these individuals in federal investigations, after indictment, and at trial.
Defense of Nursing Home Owners and Operators
The firm defends the founders, owners, and operators of nursing homes, skilled nursing facilities, and long-term care facilities in federal fraud, Anti-Kickback Statute, and money laundering investigations and prosecutions. Nursing home owners are primary enforcement targets. Prosecutors pursue owners who allegedly directed fraudulent therapy billing, designed related-party transaction structures to divert Medicare and Medicaid funds, submitted false cost reports, paid kickbacks for patient referrals, or operated facilities where patient care was substandard while billing for skilled services. The firm defends nursing home owners by challenging the government’s evidence of personal knowledge, direction, and intent.
Defense of Administrators and Directors of Nursing
The firm defends nursing home administrators, directors of nursing, and clinical managers in federal nursing home fraud cases. Administrators face criminal exposure when the government alleges they directed or facilitated fraudulent billing practices, inflated staffing levels on cost reports, participated in schemes to divert funds from patient care, or failed to report known compliance violations. The firm defends administrators by challenging the government’s evidence of personal involvement and intent, and by establishing that the administrator acted within the scope of legitimate professional responsibilities.
Defense of Physicians and Medical Directors
The firm defends physicians, medical directors, and nurse practitioners who face federal charges in nursing home fraud cases. Physicians face exposure when the government alleges they ordered medically unnecessary therapy or skilled services, signed orders for patients they did not adequately evaluate, served as sham medical directors for facilities, or received kickbacks for patient admissions or referrals. The firm defends physicians by establishing the clinical basis for treatment decisions and challenging the government’s evidence of fraudulent intent.
Defense of Therapists and Rehabilitation Professionals
The firm defends physical therapists, occupational therapists, speech therapists, and rehabilitation directors in federal nursing home fraud investigations. Therapists face criminal exposure when the government alleges they documented therapy minutes that were not provided, inflated the complexity of therapy services, reported evaluation time as treatment time, or documented therapy for patients who were asleep or otherwise unable to participate. The firm defends therapists by challenging the government’s clinical characterization and establishing the legitimacy of the therapeutic services provided.
Defense of Management Company Executives and Investors
The firm defends management company executives, management services organization (MSO) operators, and investors in nursing home chains. Federal prosecutors and the False Claims Act reach individuals beyond the facility level: corporate executives, management company operators, and investors who exercised operational control. The firm defends these individuals against fraud, conspiracy, money laundering, and tax charges arising from nursing home operations.
Federal nursing home fraud investigations follow a pattern. Understanding that pattern is the first step to defending against it. Scott Armstrong and Drew Bradylyons built these types of cases as senior prosecutors at DOJ’s Fraud Section. They know how federal investigators identify targets, develop evidence, and present cases to grand juries.
Therapy Utilization and PDPM Analysis
The investigation often begins with billing data. HHS-OIG, CMS, and the FBI use claims data analytics to identify skilled nursing facilities with therapy utilization that deviates from national and regional benchmarks. The government flags facilities with per-patient therapy minutes that exceed peer averages, therapy intensity that spikes at the end of measurement periods, high volumes of concurrent therapy sessions, and therapy billing that does not correspond to documented staffing levels. Under the legacy RUG-IV system, the government focused on facilities that maximized therapy minutes to achieve higher Resource Utilization Groups. Under the PDPM, the focus has shifted to MDS coding accuracy and clinical group assignment.
Medicare Cost Report Audits and Related-Party Analysis
Federal investigators and CMS Medicare Administrative Contractors audit Medicare cost reports for false statements, undisclosed related-party transactions, and inflated expenses. The government traces financial flows between the nursing home and entities owned by the same individuals or their family members. Investigators compare payments to related entities against fair market value benchmarks. They examine whether management fees, staffing costs, rent, and supply charges were inflated to extract Medicaid and Medicare funds from the facility. Cost report fraud carries both criminal and civil liability.
MDS Assessment Audits
Federal investigators scrutinize Minimum Data Set (MDS) assessments for accuracy. Under the PDPM, MDS data drives the patient’s clinical classification and payment rate. The government examines whether facilities inflated functional limitation scores, speech-language pathology group assignments, nursing case-mix levels, or non-therapy ancillary scores to generate higher reimbursement. Investigators compare MDS assessments against hospital discharge documentation, physician records, and independent clinical evaluations. Facilities whose MDS scoring consistently places patients into higher-reimbursing categories than peer facilities are flagged for investigation.
Medicaid Fraud Control Unit Investigations
Every state has a Medicaid Fraud Control Unit (MFCU) that investigates and prosecutes fraud in Medicaid-funded nursing home care. MFCUs also investigate patient abuse and neglect within nursing homes. MFCU investigations frequently precede or run in parallel with federal criminal investigations. In New York, the Attorney General’s MFCU has secured over $70 million in settlements from nursing home operators. In New Jersey, the Office of the State Comptroller found that two nursing home owners diverted $92 million in Medicaid funds through related-party transactions. MFCU findings often form the evidentiary foundation for federal prosecutions.
Patient and Employee Interviews
Federal agents from the FBI and HHS-OIG interview current and former employees, therapists, nurses, administrators, and patients’ family members. They look for cooperating witnesses who can testify about whether therapy was actually provided as documented, whether patients were actually receiving skilled care, whether staffing levels matched what was reported to CMS, whether management directed the inflation of MDS assessments or therapy documentation, and whether funds were diverted from patient care. Cooperating witnesses provide the narrative that connects data anomalies to individual intent.
Financial Tracing and Fund Diversion Analysis
Federal investigators and IRS Criminal Investigation trace financial flows from the nursing home through its corporate structure. They map every related-party transaction, identify personal expenditures paid with facility funds, trace Medicaid and Medicare payments through nominee accounts and shell companies, and reconstruct the facility’s true financial picture. Financial tracing is a central component of nursing home fraud prosecutions involving fund diversion, tax fraud, and money laundering.
Search Warrants and Electronic Evidence
Federal agents routinely seek and execute search warrants for cell phones, laptops, and cloud-based accounts in nursing home fraud investigations. These warrants target communications between owners, administrators, management company executives, and billing staff that reveal knowledge of fraudulent billing, directives to inflate MDS assessments or therapy documentation, discussions about related-party transactions, and efforts to conceal the true ownership or financial structure of the facility. Federal agents obtain cloud warrants under 18 U.S.C. § 2703 of the Stored Communications Act.
Federal nursing home fraud prosecutions draw on several criminal statutes. Nursing home cases are distinctive because they often combine traditional billing fraud charges with fund diversion, tax, and money laundering charges. The government charges aggressively and stacks counts.
Healthcare Fraud (18 U.S.C. § 1347)
The primary charging statute in nursing home fraud cases. Healthcare fraud makes it a federal crime to knowingly and willfully execute a scheme to defraud any healthcare benefit program. In nursing home cases, this statute targets billing for medically unnecessary therapy, inflating MDS assessments to generate higher reimbursement, billing for skilled services not rendered, and submitting false cost reports. The penalty is up to 10 years of imprisonment per count. If the fraud results in serious bodily injury, the maximum increases to 20 years. If it results in death, a life sentence is possible. In nursing home cases involving patient harm, this enhancement carries real weight.
Wire Fraud (18 U.S.C. § 1343)
The government frequently charges wire fraud alongside healthcare fraud. Wire fraud carries a maximum penalty of 20 years of imprisonment per count. In nursing home cases, wire fraud captures the electronic submission of false claims, electronic transfers of diverted funds, and interstate communications in furtherance of the fraud scheme.
Anti-Kickback Statute (42 U.S.C. § 1320a-7b)
The Anti-Kickback Statute is charged in nursing home fraud cases when the government alleges that facilities paid kickbacks for patient admissions. Prosecutors target kickbacks to hospital discharge planners, physicians, assisted living facility operators, and other referral sources. Violations carry up to 10 years of imprisonment per violation.
Money Laundering (18 U.S.C. §§ 1956, 1957)
Money laundering charges are common in nursing home fraud cases involving fund diversion. The government charges money laundering when it alleges that owners conducted financial transactions involving fraud proceeds, moved funds through related-party entities to conceal their origin, or used diverted Medicare and Medicaid funds for personal expenses, real estate, or luxury purchases. Money laundering carries up to 20 years of imprisonment per count.
False Claims Act (31 U.S.C. §§ 3729–3733) and False Statements (18 U.S.C. § 1001)
The False Claims Act is the government’s primary civil enforcement tool. In nursing home cases, the FCA targets false therapy billing, inflated cost reports, and undisclosed related-party transactions. FCA penalties include treble damages and per-claim penalties. False statements on Medicare cost reports carry independent criminal liability under 18 U.S.C. § 1001. Many nursing home investigations run parallel criminal and civil tracks.
Tax Fraud (26 U.S.C. §§ 7201, 7206)
Nursing home fraud cases involving fund diversion frequently include tax fraud charges. When owners divert facility funds for personal use through inflated related-party payments and fail to report the income, the government adds tax evasion or filing false returns charges. IRS Criminal Investigation participates in these investigations. Tax evasion carries up to five years per count.
Federal Program Exclusion and Collateral Consequences
Beyond incarceration and fines, a conviction or settlement in a nursing home fraud case triggers mandatory exclusion from Medicare, Medicaid, and all federal healthcare programs under the authority of HHS-OIG. For nursing home owners and operators, exclusion means the facility can no longer bill any federal healthcare program. For physicians and licensed professionals, exclusion effectively ends a career. State licensing boards may initiate independent disciplinary proceedings. CMS may terminate the facility’s Medicare provider agreement.
What Types of Nursing Home Fraud Does the Government Prosecute?
Federal prosecutors target several categories of nursing home fraud. The most common are billing for medically unnecessary therapy (physical, occupational, and speech therapy), inflating MDS assessments to generate higher reimbursement under the PDPM, submitting false Medicare cost reports with undisclosed related-party transactions, diverting Medicaid and Medicare funds for personal use through management companies and related entities, paying kickbacks for patient admissions, and billing for skilled services not rendered or not rendered as documented.
The government also prosecutes nursing home operators who provide substandard care while billing for skilled services. Where patient harm or death results from the conduct, the enhanced penalties under 18 U.S.C. § 1347 apply.
What Is MDS Fraud and How Does It Create Federal Exposure?
The Minimum Data Set (MDS) is a standardized assessment tool that skilled nursing facilities must complete for every Medicare and Medicaid patient. Under the Patient-Driven Payment Model (PDPM), MDS data determines the patient’s clinical classification and payment rate. Facilities that inflate MDS scores to place patients into higher-reimbursing categories face federal healthcare fraud charges.
The government detects MDS fraud by comparing a facility’s patient classification patterns against peer facilities in the same market. Facilities whose MDS scoring consistently generates higher-reimbursing clinical groups, nursing case-mix levels, or non-therapy ancillary scores than comparable facilities are flagged for investigation. An experienced healthcare fraud defense attorney retains MDS and clinical nursing experts to demonstrate that MDS coding was clinically accurate.
What Are the Penalties for a Federal Nursing Home Fraud Conviction?
The penalties are among the most severe in healthcare fraud. Healthcare fraud carries up to 10 years per count, increasing to 20 years if the fraud results in serious bodily injury and a life sentence if it results in death. Wire fraud carries up to 20 years per count. Money laundering carries up to 20 years per count. Tax evasion carries up to five years per count.
Philip Esformes received 20 years for a $1.3 billion nursing home fraud scheme. Kevin Breslin received 90 months and was ordered to pay $154 million in restitution for diverting funds from 23 skilled nursing facilities. Beyond prison, defendants face restitution, forfeiture, and mandatory exclusion from all federal healthcare programs.
How Do Related-Party Transactions Create Federal Criminal Exposure?
Federal prosecutors scrutinize financial relationships between nursing homes and companies owned by the same individuals or their family members. Nursing home owners frequently create management companies, staffing agencies, real estate entities, and supply companies that provide services to the facility. These are related-party transactions.
Related-party transactions are not inherently illegal. They become criminal when the government proves that the transactions were designed to extract Medicare and Medicaid funds from the facility at inflated prices, that the related entities did not provide services commensurate with the payments received, or that the transactions were not disclosed on Medicare cost reports as required by CMS regulations. The firm analyzes related-party transactions against CMS Provider Reimbursement Manual requirements and fair market value benchmarks.
What Defenses Are Available in a Federal Nursing Home Fraud Case?
The available defenses depend on the specific allegations. Common defenses include the following:
Therapy necessity. Retaining independent rehabilitation experts to demonstrate that therapy services were clinically appropriate and consistent with the patient’s documented condition.
MDS accuracy. Retaining MDS coordinators and clinical nursing experts to validate that MDS coding was clinically supported.
Legitimate business structure. Demonstrating that related-party transactions were conducted at fair market value and properly disclosed on cost reports.
Good faith reliance. Presenting evidence of compliance programs, reliance on legal counsel, or CMS guidance.
Cross-examining cooperators. Attacking the credibility of cooperating witnesses with plea agreements and sentencing incentives.
Scott Armstrong and Drew Bradylyons leverage their significant federal trial experience as former prosecutors to anticipate the government’s trial strategy and develop an aggressive, evidence-based defense.
What Triggers a Federal Nursing Home Fraud Investigation?
Federal nursing home fraud investigations are typically triggered by CMS claims data analytics identifying billing outliers, Medicare Administrative Contractor cost report audits, state Medicaid Fraud Control Unit referrals, qui tam whistleblower complaints filed by former employees under the False Claims Act, HHS-OIG audits, state survey agency findings, and complaints from patients or their family members.
Common red flags include unusually high therapy utilization, disproportionate MDS scoring relative to peer facilities, cost reports with large related-party payments, rapid ownership changes, and patient complaints about quality of care.
What Is the Difference Between RUG-IV and PDPM and Why Does It Matter for Fraud Exposure?
Before October 2019, Medicare reimbursed SNFs under the Resource Utilization Group (RUG-IV) system, which tied payment rates to the number of therapy minutes provided. This created an incentive to maximize therapy volume. The government prosecuted facilities that inflated therapy minutes to achieve higher RUG categories.
In October 2019, CMS replaced RUG-IV with the Patient-Driven Payment Model (PDPM). PDPM ties reimbursement to patient characteristics documented in the MDS rather than to the volume of therapy provided. The enforcement focus has shifted from therapy minutes to MDS coding accuracy, clinical group assignment, and non-therapy ancillary scoring. Facilities face exposure under both systems: for historical RUG-IV billing and for current PDPM-era MDS coding.
Can a Nursing Home Owner Be Held Personally Liable for Fraud?
Yes. The corporate structure does not protect nursing home owners from personal criminal liability. Federal prosecutors pursue owners individually using theories of conspiracy and aiding and abetting. If an owner directed or knew about fraudulent billing, fund diversion, or kickback arrangements, the owner faces personal criminal charges.
In 2025, DOJ’s lawsuit against RegalCare named the facility owner personally for fraudulent therapy billing. Kevin Breslin was personally sentenced to 90 months and ordered to pay $154 million in restitution for conduct at facilities he operated through his management company. Philip Esformes received 20 years personally for the conduct of his facility network.
What Role Do State Medicaid Fraud Control Units Play in Nursing Home Investigations?
Every state has a Medicaid Fraud Control Unit (MFCU) that investigates and prosecutes Medicaid fraud in nursing homes. MFCUs also investigate patient abuse and neglect. Congress created MFCUs specifically to address fraud and abuse in nursing homes.
MFCU investigations frequently run in parallel with federal criminal cases. State findings and evidence are shared with federal prosecutors. Statements made in state proceedings can be used in federal court. New York’s MFCU has secured over $70 million in nursing home settlements and reforms. An experienced defense attorney navigates both federal and state tracks simultaneously.
Does Armstrong & Bradylyons Handle Nursing Home Fraud Cases Nationwide?
Yes. Armstrong & Bradylyons PLLC defends individuals in federal nursing home fraud investigations and prosecutions nationwide. The firm can practice in every federal district court in the country.
Nursing home fraud enforcement is active across many federal districts, with significant cases in the Southern District of Florida, the Western District of Wisconsin, the Southern and Eastern Districts of New York, the District of New Jersey, the District of Massachusetts, and the Central District of California. State Medicaid Fraud Control Units operate in every state.
Scott Armstrong and Drew Bradylyons have tried healthcare fraud cases and handled investigations in federal courts throughout the country during their combined 25-year DOJ career. The firm is based in Washington, D.C. and represents clients in every jurisdiction where DOJ, CMS, HHS-OIG, and state MFCUs investigate and prosecute nursing home fraud cases.