Nursing Home Lawyer-Owner is Convicted of $33 Million Health Fraud

Nursing home lawyer-owner is convicted of health fraud
The Daily Report by Katheryn Hayes Tucker  -  April 5, 2012
Judge finds that U.S. paid defendant $33 million for 'worthless services'

A federal judge this week convicted George D. Houser, a Harvard-educated lawyer and member of the State Bar of Georgia, of failing to provide services in three nursing homes for which he collected $32.9 million in Medicare and Medicaid payments. Houser, 63, was also convicted of failing to pay $800,000 in employee payroll taxes and failing to file personal income tax returns. After a monthlong bench trial, Judge Harold L. Murphy of the Northern District of Georgia issued his order with findings of fact and conclusions of law on Monday, according to a statement released Tuesday by the U.S. attorney's office. The statement said it was the first time a defendant has been convicted in a federal court trial for submitting payment claims for "worthless services." The court concluded that the evidence showed "a long-term pattern and practice of conditions at defendant's nursing homes that were so poor, including food shortages bordering on starvation, leaking roofs, virtually no nursing or housekeeping supplies, poor sanitary conditions, major staff shortages and safety concerns that, in essence, any services that defendant actually provided were of no value to the residents." Sentencing has been tentatively set for June. Houser faces a maximum sentence of 20 years in prison and a $250,000 fine on the health care fraud charges, the government statement said. Houser declined to comment Wednesday. He previously has denied wrongdoing in the criminal case and in a related civil case in which he and his company were ordered to pay $43.5 million to the family of a man found to have died of malnourishment and dehydration in one of the nursing homes. Houser had court-appointed counsel in the criminal case, Michael Trost and William Morrison. Trost said Wednesday that Houser's case will be appealed, although he was not sure who would handle it. He added that the government's "novel civil theory of fraud" is likely to be a key issue. The two assistant U.S. attorneys who prosecuted the criminal case—Glenn Baker and William Traynor—presented evidence indicating that Houser diverted $8 million of federal health care reimbursements to his own personal use, according to the U.S. attorney's statement. The items he is accused of purchasing with the money include: $4.2 million for real estate on which he planned to develop hotels in Atlanta, Brunswick and Rome; a $1.4 million house in Atlanta for his ex-wife in lieu of alimony; two Mercedes-Benz automobiles, furniture and vacations for himself and his current wife. The government also accused Houser of writing bad checks to employees, leading to staffing shortages; failing to pay vendors for such essentials as utilities and garbage pickup; and failing to repair leaking roofs and broken air-conditioning units. The nursing homes—two in Rome (Mount Berry and Moran Lake, with 100 patients each) and one in Brunswick (Wildwood, with 200 patients)—were part of a company Houser inherited from his parents, who started the business in 1963. The nursing homes have since been closed by the Georgia Department of Human Resources Office of Regulatory Services. The U.S. attorney's statement said a state surveyor who inspected the Moran Lake nursing home in Rome testified that the heat, flies, filth and stench created an environment that was "appalling and horrendous."  "It almost defies the imagination to believe that someone would use millions of dollars in Medicare and Medicaid money to buy real estate for hotels and a house while his elderly and defenseless nursing home residents went hungry and lived in filth and mold," U.S. Attorney Sally Quillian Yates said in the statement. "We will continue to aggressively protect our most vulnerable citizens and hold accountable those who prey on the elderly and steal precious health-care dollars."  Houser didn't fare any better before a jury in a 2010 civil trial in Floyd County. A Rome Judicial Circuit Superior Court jury returned a $43.5 million verdict against Houser and his company, Forum Group, in favor of plaintiff Loretta Turhune. Her father, Morris Ellison, died eight months after entering Moran Lake nursing home for post-operative rehabilitation. The medical examiner testified at the trial that the autopsy revealed Ellison died of malnourishment, dehydration and an undiagnosed, untreated broken hip. Turhune's lawyers, Michael A. Prieto of Perrotta, Cahn & Prieto in Cartersville and Stephen G. Lowry of Harris Penn Lowry DelCampo, said their post-trial conversations revealed that jurors were "absolutely disgusted."  The plaintiffs lawyers have had difficulty collecting that verdict, however. Houser filed for bankruptcy protection in the middle of the trial, claiming between $20 million and $100 million in assets. And although Prieto and Lowry staked their claim with the bankruptcy court, it was superseded by the government's indictment, which includes a forfeiture provision.  Houser represented himself in the civil trial, and also in an unsuccessful motion for a new trial last October. He filed briefs blaming the patient, who he claimed was difficult to care for because of "violent dementia," and accusing Rome Judicial Circuit Judge J. Bryant Durham Jr. of mishandling his trial.