1Money for Nothing
MONEY FOR NOTHING
How private equity has defrauded Medicare,
Medicaid, and other government health
programs, and how that might change
Eileen O’Grady
eileen.ogrady@PEstakeholder.org
FEBRUARY 2021
2 Private Equity Stakeholder Project
Key Points
• The False Claims Act (FCA) is a federal law that establishes liability for individuals or companies that defraud
government programs in the US. It is commonly used against health care companies that defraud Medicaid,
Medicare, and related programs.
• Thereissubstantialoverlapbetweentheprot-seekingbehaviorexhibitedbyprivateequityownersofhealth
care companies and fraudulent activities targeted by the FCA.
• Untilrecently,privateequityownersofhealthcarecompanieswererarelyimplicatedinFCAactions.However,
recent cases, as well as statements from the U.S. Department of Justice (DOJ), suggest that FCA enforcement
againstprivateequityrmsisrampingup.
• TheU.S.DepartmentofJusticehassignaledthatitwillplaceparticularfocusonprivateequityrmswhose
companies have illegally collected CARES Act funds.
• Since 2013, at least 25 health care companies have paid settlements totaling over $570 million for allegedly
violatingtheFCAwhileunderprivateequityownership.Theprivateequityownersofthosecompaniescurrently
ownaround200otherhealthcarecompaniescombined.Exceptinahandfulofcases,theprivateequityowners
were not included in the settlements.
• SeveralcasestudiesdemonstratethevariouswaystheFCAhasbeenenforcedagainstprivateequity-owned
companies,andhowprivateequityhashistoricallybeenimplicatedindefraudingthefederalandstategovernments:
• Diabetic Care Rx(DCRX),aspecialtypharmacyservicescompanyanditsprivateequityownerRiordan,
Lewis & HadensettledanFCAlawsuitthatallegedDCRXengagedinakickbackschemetogenerate
referralsofexpensiveprescriptionsandotherproducts,regardlessofpatientneed,whichwerereimbursed
by TRICARE, the federal health care program for military members and their families.
• South Bay Mental Health Center, a mental health provider owned by H.I.G. Capital, settled an FCA lawsuit
allegingthatSBMHCusedunqualied,unsupervisedmentalhealthworkersandunqualiedsupervisorsto
treatitspatientsinMassachusetts,andthenfraudulentlybilledMassHealth.LitigationagainstH.I.G.forits
role in the alleged fraud is ongoing.
• ImmunotherapydevicemakerTherakos and previous owner The Gores Group together paid to settle allegations
thatTherakospromoteditssystemsforunapprovedusesinpediatricpatientsbetween2006and2012.
• In December 2020, Apria Healthcare a home respiratory services provider owned by the Blackstone Group,
settledallegationsthatitengagedinseveralschemesinviolationoftheFCArelatedtotherentalofnon-
invasive ventilators.
• Benevis (d/b/a Kool Smiles), a dental services organization previously owned by Friedman Fleischer &
Lowe,paid$24milliontosettleallegationsthatitknowinglysubmittedfalseclaimsforpaymenttostate
Medicaid programs for medically unnecessary dental services performed on children insured by Medicaid.
• CRC Healthcare, a behavioral health company previously owned by Bain Capital, paid to settle allegations
that it violated the FCA by providing substandard treatment to adult and adolescent Medicaid patients
suffering from alcohol and drug addiction.
• AppendixAisalistofFCAsettlementsfromthelasteightyearsthatinvolvedprivate-equity-ownedhealthcarecompanies.
3Money for Nothing
Introduction
The health care industry has increasingly been a target
forprivateequityinvestment.Thisisdespitethefactthat
privateequityinvestmentinhealthcarecompaniescarries
substantialrisktopatients,workers,andinvestors.Firms
typicallytakecontrollingownershipstakes,multiple,if
notamajority,ofboardseatsatacquiredcompanies,
andsubstantiallyinuencethehealthcarecompany’s
operationsandgrowthstrategy.Thetypicalprivateequity
investmentplaybook—pursuingoutsizedreturnsover
shorttimehorizonswhileusinghighlevelsofdebt—may
lead behavior that jeopardizes patient care.
Forexample,privateequity-ownedhealthcarecompanies
haveseenthefollowingissues:
i
• Reducedstafng,orllingbedswithoutadequate
stafngratios
• Overreliance on unlicensed staff to reduce labor costs
• Failuretoprovideadequatetraining
• Pressure on physicians to provide unnecessary and
potentially costly services
• Violationofregulationsrequiredforparticipants
inMedicareandMedicaidsuchasanti-kickback
provisions,creatinglitigationrisk
Privateequityinvestmentinhealthcareisexpectedtocontinue.
In2020,healthcareprovedresilienttotheCOVID-19pandemic
and investment in health care outpaced the broader industry.
Additionally, asset managers have record levels of available
capitalearmarkedforhealthcareinvestment;asof2019,private
equityrmshad$29.2billionindrypowerforhealthcare.
1
Privateequityrmsbenetfromthetrillionsofdollars
ofgovernmenthealthcarespending.In2019,Medicare
spendingreached$799.4billionandMedicaidspending
reached$613.5billion.Together,theyaccountedfor
37%ofnationalhealthcareexpenditure.
2
TheCOVID-19
pandemichasincreasedopportunitiesforprivateequityto
collect federal health care dollars.
As of January 21, 2021, the Federal government has
distributed hundreds of billions of dollars to providers
under the Coronavirus Aid, Relief, and Economic Security
Act(CARESAct):$142.8billioningrants,$548.6billionin
loans, and $12.2 billion in contracts.
3
Asprivateequityownershipofhealthcarecompanies
growsandcontinuestobenetfromtaxpayerfunded
healthcarespending,regulatorsareseekingouttoolsto
mitigate the impact of business practices that put patients
andworkersatriskandstrainpublichealthcareresources.
One new tactic used by the regulators to hold private
equityaccountableistheFalseClaimsAct.Thereis
substantialoverlapbetweentherisksassociatedwith
privateequityownershipofhealthcarecompaniesandthe
activitiestargetedbytheFalseClaimsAct;inaneffortto
achievethehighreturnsoftenexpectedbyprivateequity
investors,companies’aggressiveprot-seekingmayresult
in fraudulent activity.
i
See prior reports by Private Equity Stakeholder Project for case studies documenting these risks: Adverse Reaction: How will the ood of private equity
money into health care providers impact access to, cost and quality of care? (November 2019); Understaffed, Unlicensed, and Untrained: Behavioral
Health Under Private Equity (September 2020); Raiding the Safety Net: Leonard Green & Partners Seeks to Walk Away from Prospect Medical Holdings
after Collecting $570 Million in Fees and Dividends (January 2020)
4 Private Equity Stakeholder Project
The False Claims Act
The False Claims Act (FCA) is a federal law that establishes
liability for individuals or companies that defraud governmental
programs. It includes liability for collecting money from the
federal government to which the individual or company may
not be entitled, using false statements to retain that money.
4
The FCA is commonly used to prosecute health care companies
that defraud Medicaid, Medicare, and related programs by
submitting false claims for a variety of activities. Fraudulent
activities may include providing substandard care, providing
medicallyunnecessaryservices,receivingkick-backsforservices
provided,lingclaimsforservicesnotprovided,andproviding
services by unlicensed or improperly licensed providers.
5
Federal FCA actions may be brought by the U.S.
Department of Justice (DOJ) Civil Division. An individual
whistleblowermaybringaquitamaction,linganaction
on behalf of the government.
6
Until recently, the DOJ rarely intervened in FCA cases against
privateequityrmsforactionscommittedbytheirportfolio
companies.Instead,private-equity-ownedcompanieshave
typically assumed full liability for settlements related to alleged
fraudulent behavior, regardless of the level of involvement in
operationsbythecompany’sprivateequityowners.
However,thisappearstobechanging.Severalrecent
cases underscore a new willingness by the federal
governmenttopursueprivateequityownersofhealthcare
companies that may be violating the FCA.
Now,theCOVID-19pandemicandthemassivefederal
spending to support health care providers has ushered in a
newcauseforFCAactionagainstprivateequity.
US Department of Justice expected to ramp up FCA
enforcement amid COVID-19 pandemic
TheCOVID-19pandemicmayhaveprofoundimplications
for the way the DOJ litigates FCA cases against private
equityownersofhealthcarecompanies.Inaspeechto
theUSChamberofCommerce’sInstituteforLegalReform
in June 2020, then Principal Deputy Assistant Attorney
GeneralEthanDavisindicatedtheDOJwillholdprivate
equityrmsliablefortheirportfoliocompanies’actions
where applicable, especially related to CARES Act funds.
“Our enforcement efforts may also include, in
appropriate cases, private equity rms that sometimes
invest in companies receiving CARES Act funds. When
a private equity rm invests in a company in a highly-
regulated space like health care or the life sciences, the
rm should be aware of laws and regulations designed
to prevent fraud. Where a private equity rm takes an
active role in illegal conduct by the acquired company,
it can expose itself to False Claims Act liability. A
pre-pandemic example is our recent case against the
private equity rm Riordan, Lewis, and Haden, where we
alleged that the defendants violated the False Claims
Act through their involvement in a kickback scheme
to generate referrals of prescriptions for expensive
treatments, regardless of patient need. Where a private
equity rm knowingly engages in fraud related to the
CARES Act, we will hold it accountable.”
7
Thespeechraisesquestionsaboutwhetherprivate
equity-ownedhealthcarecompanieswillbeatincreased
riskforregulatoryactionrelatedtocollectingCOVID-19
stimulusmoney.Privateequityownedcompaniesare
“Whereaprivateequityrm
knowingly engages in fraud
related to the CARES Act, we will
hold it accountable.”
— Principal Deputy Assistant Attorney General Ethan Davis
5Money for Nothing
generally considered ineligible for the Small Business
Administration’sPaycheckProtectionProgram(PPP)loans,
which were designed to provide relief to small businesses
duringthepandemic.Despitethis,manyprivate-equity-
owned companies have collected stimulus funds.
The Data
The lawsuit referenced in the Davis speech is one of the
clearestexamplesoftheDOJbeginningtopursueprivate
equityrmsinrelationtoallegedFCAviolations.Other
FCA lawsuits shed light on the ways in which private
equityownershipofhealthcarecompaniesmayleadto
activities that defraud government programs.
Manyoftheseprivateequityrmsarefrequenthealth
care investors, suggesting that there are substantial due
diligence and operational failures that have enabled the
allegedfraudulentbehavior.Thisraisesquestionsabout
whatstepsinvestorsaretakingtoensurethatotherhealth
care portfolio companies are in compliance with applicable
laws and regulations.
Withahandfulofexceptions,mostofthesecasesdidnot
nametheprivateequityrmsthatownedthecompanies
during the alleged fraudulent activity.
Injustthreecases,privateequityownerswerenamedinthe
settlementagreementsandagreedtopay:DiabeticCare
Rx(Riordan,Lewis,&Hayden),Therakos(TheGoresGroup),
andHolidayRetirement(FortressInvestmentGroup).
8
LitigationagainstH.I.G.Capitalforitsallegedroleinfraud
byitscompanySouthBayMentalHealthCenterisongoing.
Inothercases,theprivateequityrmsortheirexecutiveswere
named in the complaints, but were not named in the settlement
agreements:Benevis/KoolSmiles(Friedman,Fleischer&Lowe),
GenovaDiagnostics(LevineLeichtmanCapitalPartners).
9
The following case studies attempt to analyze how private
equityownershipofhealthcarecompaniesinavarietyof
specialties may have impacted FCA compliance, and how
those FCA actions were litigated.
“Wefoundthatsince2013,atleast25privateequity-ownedhealthcarecompanieshave
paidatotalofatleast$570milliontosettlefalseclaimsactsuitsrelatedtoallegedbilling
fraudthattookplaceunderprivateequityownership.Altogether,theprivateequityrms
thatownedthosecompaniescurrentlyownnearly200otherhealthcarecompanies,many
ofwhichalsobillMedicare,Medicaid,andothergovernmenthealthprograms.”
6 Private Equity Stakeholder Project
Case Studies
Diabetic Care Rx (d/b/a Patient Care America)
Riordan, Lewis & Haden
Specialty pharmacy
TheDOJ’slandmark2019settlementwithDiabetic
CareRx(d/b/aPatientCareAmerica)anditsowner,
LosAngeles-basedprivateequityrmRiordan,Lewis&
Haden(RLH),marksashiftinthefederalgovernment’s
willingnesstoholdprivateequityrmsaccountablefor
their companies that defraud public programs.
InacasesettledSeptember2019for$21.26million,the
DOJallegedthatRLHwasinvolvedinaschemewith
DiabeticCareRx(DCRX)todefraudTRICARE,which
provideshealthinsuranceforactive-dutymilitary,veterans,
and their families.
10
DCRX is a specialty pharmacy operator specializing in renal
nutrition therapy and compounding pharmacy products.
11
Accordingtothecomplaint,DCRXallegedlypaidkickbacks
tomarketerstotargetmilitaryveteransandtheirfamiliesfor
medically unnecessary creams and vitamins. These creams
were“manipulatedbytheDefendantsandmarketersto
ensure the highest possible reimbursement from TRICARE.”
DCRX allegedly paid doctors to prescribe the creams and
vitaminswithoutphysicallyexaminingpatients.
12
Additionally,DCRXanditsmarketerallegedlyimproperly
paid copayments on behalf of patients referred by the
marketerforprescriptionswithoutmakinganeed-based
determination,andsuchpaymentsweremaskedas
originatingwitha“shamcharitableorganization”afliated
withthemarketer.AccordingtotheDOJ,“Thepurposeof
paying or waiving copayments was to induce patients to
purchasemedicationbyeliminatinganynancialbarrierto
their purchase of the drugs.”
13
TheDOJallegedthatRLH“knewofandagreedto”the
DCRXschemeand“nancedthekickbackpaymentsto
themarketers.”
14
“At all relevant times,” the DOJ wrote,
“RLHmanagedandcontrolledPCAonbehalfofthe
privateequityfundthroughtwoRLHpartners,Michel
GlouchevitchandKennethHubbs,whoservedasofcers
and/ordirectorsofPCAandofaholdingcompanywithan
ownership interest in PCA.”
15
ThecomplaintfurthersuggeststhatRLH’shighreturn
expectationsinuenceditssupportforthefraudulentactivity:
“At the time DCRX was acquired, RLH planned to
increase DCRX’s value and sell it for a prot in ve
years….Shortly after DCRX was acquired, Medicare
reimbursement rates dropped for the nutritional
therapy that DCRX provided to End Stage Renal
Disease patients, and DCRX’s revenue correspondingly
dropped. Restoring DCRX’s protability became RLH’s
primary objective.
…In November 2013, RLH initiated DCRX’s entry into
the business of non-sterile compounding of topical
creams for ‘pain management’ to capitalize on ‘the
“Asaninvestorinhealthcarecompanies,RLHkneworshouldhaveknownwhen
it acquired PCA in July 2012, that health care providers that bill federal health
careprogramsaresubjecttolawsandregulationsdesignedtopreventfraud,
including the [Anti-Kickback Statute].”
19
7Money for Nothing
extraordinarily high protability of this therapy,’ which
RLH anticipated could result in a ‘quick and dramatic
payback’ on its investment in DCRX.”
16
The“painmanagementinitiative”wasledbyRLH’s
representativesonDCRX’sboard,Glouchevitchand
Hubbs.
17
AsofJanuary2021,Glouchevitchremainsa
ManagingPartneratRLH.
18
RLHownsmultipleotherhealthcarecompanies,including
SilveradoSeniorLivingandtheChartisGroup.
20
Riordan, Lewis & Haden Health Care Investments
COMPANY TYPE
SilveradoSeniorLiving Elder care
theChartisGroup Healthcareadvisoryservices
RLH’sSilveradoSeniorLivingisfacingongoinglitigation
for wrongful death and elder abuse and neglect related to
COVID-19infectionsatitsSouthernCaliforniafacility,where
close 100 residents and staff tested positive for the virus
and14died.ItwasoneofCalifornia’sworstoutbreaksatan
assisted living facility. Silverado also received a PPP loan of
between $5 and $10 million dollars.
22
South Bay Mental Health Center – H.I.G. Capital
Mental health
TheDOJ’spendingFCAlawsuitagainstH.I.G.Capitalrelated
totherm’smentalhealthcompanyrepresentsanother
landmarkcaseforFCAactionagainstprivateequityrms.
In2012H.I.G.createdmentalhealthcompanyCommunity
Intervention Services (CIS), which it used to buy up mental
health providers and addiction treatment centers. It
subsequentlyacquiredMassachusetts-basedSouthBayMental
Health(nowknownasSouthBayCommunityServices
23
).
24
InFebruary2018,SouthBayMentalHealthCenter
(SBMHC)agreedtopay$4milliontotheCommonwealth
of Massachusetts to settle allegations of billing fraud that
occurredunderH.I.G.’sownership.
25
The whistleblower
lawsuit,joinedbyMassachusettsAttorneyGeneral
MauraHealey,allegedthatSBMHCfraudulentlybilled
Massachusetts’MedicaidProgramformentalhealthcare
servicesprovidedtopatientsbyunlicensed,unqualied,
and unsupervised staff members at 17 clinics across the
state.Inastatement,Healey’sofcewrotethatthecompany
“provided substandard care to many vulnerable patients and
fraudulentlybilledthestateforitsinadequateservices.”
26
Inararemove,thelawsuitalsonamedH.I.G.Capitalasa
defendant.AttorneyGeneralHealeyallegedthatH.I.G.
“knewthatSBMHCwasprovidingservicesinviolation
ofregulatoryrequirementsanddidnotbringSMBHC
operationsintocomplianceormakeanyattemptstorepay
themoneyowedtoMassHealth,asrequiredbylaw.”HIG
allegedlycitedthelargeprotmarginsasareasonto
acquirethecompany.
27
8 Private Equity Stakeholder Project
H.I.G.hasfailedinmultipleattemptstohavethecase
againstitdismissed.“BecauseitisallegedthatH.I.G.
members and principals formed a majority of the C.I.S.
and South Bay Boards, and were directly involved in the
operationsofSouthBay,themotiontodismisstheH.I.G.
entities is also denied. A parent may be liable for the
submission of false claims by a subsidiary where the parent
had direct involvement in the claims process.”
28
The U.S. District Court for the District of Massachusetts held
thatH.I.G.couldbeliablebecauseits“membersandprincipals
formed a majority of the C.I.S. and South Bay Boards, and were
directly involved in the operations of South Bay.”
29
AsofSeptember2018,themajorityofC.I.S.’sve-
memberboardofdirectorswereH.I.G.executives;board
membersEricTencer,NickScola,andStevenLoosewere
allprincipalsormanagingdirectorsatH.I.G.(Scolaisnow
atprivateequityrmAbryPartners).
30
AsofJanuary2021,thelawsuitagainstH.I.G.isinmediation.
BeginninginOctober2020,H.I.G.beganquietlywinding
down operations at CIS. It sold three of its subsidiaries to
anotherprivateequity-ownedmentalhealthcompany:
Access Family Services (AFS), Family Behavioral Resources
(FBR) and Autism Education and Research Institute (AERI).
31
ThenonJanuary5,2021,CISledforbankruptcy.Itsold
itsremainingmentalhealthproviders,SBMHCandFutures
BehavioralHealth,toadifferentprivateequity-owned
mental health company.
H.I.G.ownsnumerousotherhealthcompanies,
32
including
St.CroixHospiceandPinnacleGIPartners,whichitacquired
inthenalmonthsof2020.
33
H.I.G.alsoownsWellpath,a
prison and detention healthcare company that has made
headlines for the numerous lawsuits, complaints, and federal
enforcement actions against it related to patient care.
34
H.I.G. Capital Health Care Investments
COMPANY TYPE
Apollo Endosurgery Endoscopic surgical products
Arvelle Therapeutics Biopharmaceuticals
BarnetDulaneyPerkins Eye care
BioVectra Pharmaceutical CDMO
CardioFocus Medical devices
Clarify Medical Laserhairremoval
Clarus Therapeutics Biopharmaceuticals
Community Intervention Services Behavioral health
CrothallLaundryServices Healthcarelaundryservices
Eruptr Healthcaremarketing
Exagen Marketingforrheumatologists
HalexIstar Pharmaceuticals
HealthSTAR Pharmaceuticalmarketing
Iconic Therapeutics Biopharmaceuticals
Intact Vascular Medical devices
InterDent Dental services
Iron Bow Healthtech
Jenny Craig Weight management
JustHomeHealthcareServices Behavioral health
COMPANY TYPE
MedPro Advantage Dermatology
Medusind Revenue cycle management
Neurana Pharmaceuticals Pharmaceuticals
Nevakar Pharmaceuticals
Nutrinia Pharmaceuticals
OnTargetLaboratories Pharmaceuticals
Orbus Therapeutics Pharmaceuticals
PinnacleGIPartners Digestive health
Reliant Rehabilitation Physical therapy
RxSight Medical devices
SageHospice Hospice
SoleoHealth Pharmaceuticals
Southwestern Eye Center Eye care
St.CroixHospice Hospice
Taconic Biosciences Pharmaceuticals
TLCVision Eye care
US MED Medical supplies
Vernacare Medical supplies
Wellpath Correctional health
9Money for Nothing
Therakos – The Gores Group
Immunotherapy treatment manufacturer
Therakosisamakerofimmunotherapytreatmentdevices
usedinthetreatmentofbloodcancer.TheGoresGroup
purchasedTherakosfromasubsidiaryofJohnson&Johnson
in 2012 and owned it until 2015.
35
In November 2020,
Therakos’formerowners,includingtheGoresGroup,agreed
to pay $11.5 million to resolve False Claims Act allegations.
TheUSgovernmentallegedthatbetween2006and2015,
Therakosmarketedandpromotedadevice/drugdelivery
system to treat pediatric patients for uses not approved
bytheFDA.Becausethebulkoftheallegationsreferred
toactionsthattookplacepriortotheGoresGroup’s
ownership,theprivateequityrmwasmadetopaya
$1.5 million settlement to resolve allegations that the
prohibited sales and promotion practices continued after
itpurchasedTherakos.
36
“Whilephysiciansarefreetoexercisetheirindependent
medical judgment to prescribe medications for uses
beyond FDA approved indications, pharmaceutical and
devicecompaniescannotinterferewithdoctors’judgment
by allegedly pushing the sale of their drugs or devices
fornon-FDAapproveduses,especiallyinvulnerable
populations,” said U.S. Attorney William McSwain said in
November 2020. “That is what allegedly happened here,
andmyOfcewillcontinuetoinvestigatesuchcasesand
hold companies accountable when there could be an
effect on pediatric or other vulnerable patients.”
37
InDecember2013,theGoresGroupcollectedadebt-
fundeddividendfromTherakos,takingoutatleast$73.5
millioninnewdebtonTherakostopayitselfa$74.2
million dividend.
38
Apria Healthcare – The Blackstone Group
Respiratory home health
ApriaHealthcareprovideshomerespiratorytherapy,home
infusiontherapyandhomemedicalequipment.Private
equityrmtheBlackstoneGrouphasownedApriasinceit
tookthecompanyprivateinOctober2008.
39
On December
21, 2020, the US Attorney for the Southern District of New
YorkannouncedthatApriaagreedtopay$40.5millionto
settle allegations of fraudulent billing practices.
40
According to the lawsuit, Apria engaged in several
schemes in violation of the FCA related to the rental of
non-invasiveventilators(NIVs).Apriaallegedlyexpanded
itsuseofNIVsbecauseprogramslikeMedicaidpaidas
much as $1,400 per month to cover their costs.
41
In a press release announcing the settlement, the US
Attorney’sOfcewrote:
“…while Apria knew that it was responsible for
monitoring patients’ utilization of their NIVs and to
stop billing when NIVs were no longer being used, it
did not have enough staff, or “respiratory therapists,”
to conduct such monitoring. As a result, Apria
routinely billed Medicare and other programs when it
10 Private Equity Stakeholder Project
did not know whether NIVs were still being used by
patients and, therefore, remained medically necessary.
Further, even when Apria had information indicating
that patients were no longer using their NIVs, it often
continued to bill the federal health programs.”
42
ThoughBlackstoneownedApriaforthedurationof
theallegedfraudulentactivityandmultipleBlackstone
executivesserveonApria’sboard,
43
it was not a party in
the lawsuit.
InApril2020,ApriaCEOStarckapplaudedthefederal
CentersforMedicare&MedicaidServices’(CMS)’
relaxationofMedicarebillingrulesforhomerespiratory
therapiesinresponsetotheCOVID-19pandemic,noting
that“burdensomepaperworkandproof of delivery
requirementshavebeenrelaxed,”(emphasisadded)
and further urged CMS to delay implementation of a
competitive bidding payment system.
44
Despite the impending fraud settlement, on December 11
Apriacompleteda$260milliondividendrecapitalization,
takingondebttopaya$210dividendtoprivateequity
ownerBlackstoneandotherowners.
45
ThedividendsfaroutstripApriaHealthcare’sprots.Since
2018(throughSeptember2020),Apriahasgenerated
$84.7milliontotalinoperatingprots.
47
Additionally,ApriaappearstohavepaidBlackstonemillions
of dollars in fees. Under a fee agreement signed when
BlackstonetookoverthecompanyinOctober2008,Apria
paysBlackstoneanannualmanagementfeeofequaltothe
greaterof$7millionor2%oftheCompany’sEBITDAfor
the preceding year, as well as a $1.2 million fee for the year
endedDecember2008(duringwhichBlackstoneowned
April for less than three months). Under the agreement,
Apriaalsopaysatransactionfeeequalto1%thevalueofany
transactions(e.g.acquisition,divestiture,disposition,merger,
Recent dividends collected from Apria:
46
DATE
AMOUNT FUNDING
Dec-20
$200.3milliondividendtostockholders+$9.7millionto
stockappreciationrights(SARs)holders(i.e.execs)
$260millionofIncrementalTermLoans.
Jun-19 $175milliontostockholdersandSARsholders
$150millionTermLoanfromCitizensBankandsyndicate
of lenders
Jul-18 $75 million
11Money for Nothing
consolidation,restructuring,renancing,recapitalization).
The agreement was set to terminate twelve years from the
dateoftheagreement—October28,2020.
48
NeilSimpkins,aSeniorManagingDirectoratBlackstone,
ledthecompany’sacquisitionofApriaandhasbeenon
Apria’sboardsinceBlackstoneacquiredthecompanyin
2008.
49
SimpkinsalsoledBlackstone’s2004acquisition
ofVanguardHealthSystems,whichin2015settledFalse
Claims Act allegations for upcoding Medicare billings and
violatingtheAnti-KickbackStatute.
50
Blackstoneisoneofthelargesthealthcareinvestorsinthe
US,with55healthcareinvestmentstotaling$26.2billion
since 2007.
51
Kool Smiles/Benevis – Friedman Fleischer & Lowe
Dental services organization
InJanuary2018,dentalservicesproviderBenevis(d/b/a
KoolSmiles)paid$23.9milliontosettleFCAallegations
that it performed and billed for medically unnecessary
dental services performed on children insured by
Medicaid.
52
Theallegedactivitytookplaceentirelyunder
theownershipofprivateequityrmFriedmanFleischer&
Lowe(FFL).
The DOJ alleged that Benevis facilities submitted claims
forperformingmedicallyunnecessarytoothextractions
and root canals on babies, and sought payments for baby
root canals that were never performed. The DOJ also
alleged that Benevis “routinely pressured and incentivized
dentists to meet production goals through a system
thatdisciplined‘unproductive’dentistsandawarded
‘productive’dentistswithsubstantialcashbonuses
based on the revenue generated by the procedures they
performed.”
53
TheDOJfoundthatthefraudulentactivitytookplace
at130ofBenevis-afliatedclinics,whichsubmittedfalse
claims to 17 different state Medicaid programs.
54
FFLacquiredBenevisin2004.
55
Theallegedfraudtook
placebetweenJanuary2009andDecember2011.
56
The Blackstone Group Health Care Investments
COMPANY TYPE
ApriaHealthcare Respiratory care
ChangeHealthcare Revenue cycle management
PrecisionMedicineGroup Precision medicine
Sema4 Healthtech
AnnexonBiosciences Biopharmaceuticals
Reata Pharmaceuticals Pharmaceuticals
Alnyam Pharmaceuticals Pharmaceuticals
Geo-Young Pharmaceuticals
AYUMI Pharmaceutical Pharmaceuticals
Center for Autism and Related
Disorders
Behavioral health
Med Imagem Medical imaging
NantPharma Pharmaceuticals
NUA Surgical Medical devices
TeamHealth Physician staffing
XinRongMedicalGroup Medical devices
“ The DOJ alleged that Benevis
facilitiessubmittedclaimsfor
performingmedicallyunnecessary
tooth extractions and root canals
onbabies,andsoughtpayments
for baby root canals that were
neverperformed.”
12 Private Equity Stakeholder Project
WhileFFLultimatelywasnotapartytothesettlement,the
amendedcomplainthighlightshowthecompany’shigh
returnexpectationsplayedaroleintheallegedfraud:
“Not only did FFL’s interest in the prots of portfolio
companies provide a signicant incentive to maximize
those prots, FFL also intended to sponsor additional
private equity funds, and its success in attracting
investors in subsequent funds would depend greatly
on the returns earned by investors in existing funds
managed by it.”
57
“FFL…established the business requirements necessary
to attain the desired rate of return from the Kool Smiles
clinics and directed [Benevis] to undertake these steps
necessary to achieve those returns knowing that those
returns would and did include the submission of false
Medicaid claims. Accordingly, FFL and Capital Partners
II are liable for the submission of those false claims as
detailed herein.”
58
The almost $24 million settlement Benevis paid was
reportedly the second largest FCA dental settlement in
history.InMarch2018,twomonthsafterthesettlement,
BeneviswasrecapitalizedbyprivateequityrmsLittlejohn
&Co.andTailwindCapital.
60
BenevisledforChapter11
bankruptcytwoyearslater—inAugust2020.
61
AsofDecember2020,FFLownssixotherhealthcare
companies:AutismLearningPartners,EyemartExpress,
OrthodonticPartners,SummitBehavioralHealthcare,
VersantHealth,WellstreetUrgentCare.
62
Friedman Fleischer & Lowe Health Care Investments
COMPANY TYPE
AutismLearningPartners Behavioral health
EyemartExpress Eye care
Orthodontic Partners Orthodontic services
SummitBehavioralHealthcare Behavioral health
VersantHealth Eye care
Wellstreet Urgent Care Urgent care
CRC Healthcare - Bain Capital
Addiction treatment
InApril2014,BainCapital-ownedCRCHealthcareagreedto
pay$9.25milliontosettleanFCAlawsuit.CRCHealthcarewas
a behavioral health company specializing in addiction treatment
foradultsandyouth.TheDOJallegedthatforsixyears,a
CRCfacilityinTennesseeknowinglysubmittedfalseclaimsby
consistently providing substandard care to adult and adolescent
patients suffering from alcohol and drug addiction.
63
BainCapitalacquiredCRCinFebruary2006,theyearthe
alleged fraudulent activity began.
64
13Money for Nothing
Allegations against CRC included admitting patients in
excessofstatecapacitylaws,failingtomaintainadequate
staff-patientratios,havingservicesprovidedbystaffthat
werenotproperlylicensed,failingtomakealicensed
psychiatristavailabletopatients,anddouble-billing
Medicaid for prescriptions given to patients.
65
A former CRC employee acted as whistleblower for the
lawsuit in response to a patient death at the Tennessee
facility.Thewhistlebloweralsodescribednding12
patientssittingontheooroutsidethenurses’station
becausetheyweresickandtheofcewasclosed.
66
The
state of Tennessee effectively closed the facility in 2011
after three patients died over the span of a year. In
October2014,sixmonthsaftersettlingtheallegationsof
fraud,BainreachedanagreementwithAcadiaHealthcare
toacquireCRC.
68
As of December 2020, Bain lists ten health care companies
initsportfolio:AveannaHealthcare,Cerevel,GrupoNotre
DameIntermédica,IQVIA,KestraMedicalTechnologies,
QuVa Pharma, Stada, Surgery Partners, U.S. Renal Care,
and Zelis.
69
Bain Capital Health Care Investments
COMPANY TYPE
AveannaHealthcare Homehealth
Cerevel Neuroscience
GrupoNotreDame
Intermédica
Healthanddentalplans
(Brazil)
KestraMedicalTechnologies Medical devices
QuVa Pharma Pharmaceuticals
STADA Pharmaceuticals
Surgery Partners Surgery centers
U.S. Renal Care Dialysis centers
Zelis Healthtech
14 Private Equity Stakeholder Project
Appendix A:
PE-Owned Health Care Companies that Paid FCA Settlements
Below is list of health care companies that have paid settlements within the last eight years for allegations of violating
theFalseClaimsActwhileunderprivateequityownership.
AccentCare/Guardian
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
OakHillCapitalPartners Homehealthand
hospice
2015 AscensionHealth,Vetcor,KansasMedical
Center,CannonCountyHospital,Vantage
Oncology
$3,000,000
Advanced Pain Management
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
ChicagoGrowthPartners Pain management 2020 Advanced Pain Management, Caprion,
EndoGastricSolutions,ScribeAmerica,
Zogenix
$1,000,000
Apria Healthcare
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
BlackstoneGroup Respiratory medical
supplies
2020 ApriaHealthcare,ChangeHealthcare,
PrecisionMedicineGroup,Sema4,Annexon
Biosciences, Reata Pharmaceuticals,
AlnyamPharmaceuticals,Geo-Young,
AYUMI Pharmaceutical, Center for Autism
and Related Disorders, Med Imagem,
NantPharma, NUA Surgical, XinRong
MedicalGroup,TeamHealth
$40,500,000
Athenahealth
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
Veritas Capital, Evergreen
Coast Capital (Elliott
Management)
Medical billing tech 2020 VeritasCapital:Athenahealth,Cotiviti,
GainwellTechnologies
$18,250,000
15Money for Nothing
Benevis/Kool Smiles
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
Friedman,Fleischer&Lowe Pediatric dental
services
2018 AutismLearningPartners,EyemartExpress,
Orthodontic Partners, Summit Behavioral
Healthcare,VersantHealth,Wellstreet
Urgent Care
$23,900,000
Community Intervention Services
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
H.I.G. Mental health 2018 Apollo Endosurgery, Arvelle Therapeutics,
BarnetDulaneyPerkins,BioVectra,
CardioFocus, Clarify Medical, Clarus
Therapeutics, Community Intervention
Services,CrothallLaundryServices,Eruptr,
Exagen,HealthSTAR,IconicTherapeutics,
Intact Vascular, InterDent, Iron Bow, Jenny
Craig,JustHomeHealthcareServices,
MedPro Advantage, Medusind, Neurana
Pharmaceuticals,Nevakar,Nutrinia,On
TargetLaboratories,OrbusTherapeutics,
PinnacleGIPartners,ReliantRehabilitation,
RxSight,SageHospice,SoleoHealth,
SouthwesternEyeCenter,St.CroixHospice,
TaconicBiosciences,TLCVision,USMED,
Vernacare, Wellpath
$4,000,000
Compassus
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
Cressey&Company Hospice 2014 Concentra,D4C,HHAeXchange,People
PetsandVets,RestorixHealth,Verisys,
VetCor
$3,920,000
Consulate Health Care (fka La Vie Rehab)
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
Warburg Pincus Skillednursingand
rehab
2017 AlignmentHealthcare,Amcare,Apteki
Gemini,CityMD,EverCare,HaiHe
Pharmaceutical,Helix,HTDK,Hygeia,Jinxin
Fertility, Modernizing Medicine, Outset,
Polyplys Transfection, Qualifacts, Quantum
Health,SOCTelemed,SoteraHealth,
Vertice, WebPT
$225,000,000
16 Private Equity Stakeholder Project
Cordant Health Solutions
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
Waud Capital Drug testing 2020 APDerm,Apotheco,ConciergeHomeCare,
CordantHealthSolutions,Heart+Paw,
Health&SafetyInstitute,IvyRehab,
PharmacyPartners,GIAlliance,Unifeye
Vision Partners
$11,900,000
CRC Healthcare
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
Bain Capital Addiction treatment 2014 AveannaHealthcare,Cerevel,Grupo
NotreDameIntermédica,KestraMedical
Technologies, QuVa Pharma, Stada, Surgery
Partners, U.S. Renal Care, Zelis
$9,250,000
Curo Health Services
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
GTCR Homehealthand
hospice
2017 AMRI,Ceba-TechSpecialtySolutions,Cole-
Parmer,CorzaHealth,MaravaiLifeSciences,
Regatta Medical, Riverchase Dermatology,
SoteraHealth/Sterigenics,TerSera
Therapeutics, Transaction Data Systems
$12,210,000
Diabetic Care Rx/Patient Care America
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
Riordan,Lewis,&Hayden Specialty pharmacy 2019 SilveradoSeniorLiving,theChartisGroup $21,360,000
Diagnostic Imaging Group
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
Evercore Capital Partners Outpatient
diagnostic imaging
2014 No current health care investments $15,500,000
Early Autism Project (Chancelight)
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
Trimaran Capital Partners Autism treatment 2018 No current health care investments $8,800,000
17Money for Nothing
EmCare/Envision
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
Onex,ClaytonDubilier&Rice Physician staffing 2017 Onex:AcaciumGroup,Carestream,SCPHealth $29,600,000
Encore Rehabilitation
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
GlencoeCapitaland
StockwellCapital;
RevelstrokeCapitalPartners
Rehabilitation
therapy
2020 Revelstroke:Carrus,CEIVisionPartners,
CrossroadsTreatmentCenters,DataLink,
Encore Rehabilitation Services, Family Care
Center,FastPaceHealth,OrthoAlliance,
Sound Physicians, The Care Team, US Renal
Care, Upstream Rehabilitation
ClaytonDubilier&Rice:Aglion,Covetrus,
Cynosure,DriveDevilbissHealthcare,Healogics,
HuntsworthHealth,SmileDirectClub
$4,030,000
Genova Diagnostics
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
LevineLeichtmanCapital
Partners
Clinical laboratory
services
2020 GenovaDiagnostics,CaringBrands,Capsa
Healthcare,MonteNido,Suvet,Therapeutic
Research Center
$43,000,000
Golden Living
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
Fillmore Capital Partners Skillednursing
facilities
2013 AlixaRx,GoldenLivingCenters $613,300
Greenway Health
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
VistaEquityPartners Electronic health
records systems
2019 Alegeus,Allocate,GreenwayHealth $57,250,000
Holiday Retirement
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
Fortress Investment Senior living 2016 HolidayRetirement,BrookdaleSenior
Living,WatermarkatLoganSquare,
HealthSmart
$8,860,000
18 Private Equity Stakeholder Project
Interim Healthcare
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
HalifaxGroup;Levine
LeichtmanCapitalPartners
Homecare,
hospice, and
healthcare staffing
2020 HalifaxGroup:ChanceLightBehavioral
Health,Burke,PromptCare,FamiliaDental
$1,750,000
Reliant Rehabilitation
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
DWHealthcarePartners Rehabilitation
therapy
2018 360BehavioralHealth,Aequor,Champion,
CareXM,Cefaly,EHE,Hydrafacial,Med-
PharmexInc.,PentecHealth,SoClean,
Spectrum Solutions, Willow Wood
$6,100,000
Therakos
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
TheGoresGroup Immunotherapy 2020 No current health care investments $11,500,000
TridentUSA
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
AudaxGroupandFrazier
HealthcarePartners;
Formation Capital
Diagnostic services 2019 AudaxGroup:42NorthDental,Active
Day, Altasciences Clinical Research, Aspen
SurgicalProducts,AxiaWomen’sHealth,
BelmontMedical,theChartisGroup,
Corrona,GastroHealth,GlobalNephrology
Solutions,HOPco,KatenaProductsLifemark
Health,MediridanBehavioralHealth,
PhoenixPhysicalTherapy,StatLabMedical
Products,UnitedUrologyGroup
FrazierHealthcarePartners:AccuityDelivery
Systems, Adare Pharma Solutions, Alteon
Health,AppianRx,CaravelAutismHealth,
Comprehensive Pharmacy Services, Safe
Global,EptamPrecision,Leiters,Matrix
MedicalNetwork,MedData,Northfield
Medical,OHI,Parata,PCIPharmaServices,
PentecHealth,theCoreInstitute,United
Derm Partners, United Digestive, Vein
Clinics of America
FormationCapital:TridentUSA,HC-One,
Extendicare,ConsulateHealthCare
$8,500,000
19Money for Nothing
Vanguard Health Systems
OWNER TYPE
SETTLEMENT
YEAR
OTHER HEALTHCARE COMPANIES
OWNED BY PE FIRM
SETTLEMENT
AMOUNT
BlackstoneGroup Healthsystem 2015 ApriaHealthcare,ChangeHealthcare,
PrecisionMedicineGroup,Sema4,Annexon
Biosciences, Reata Pharmaceuticals,
AlnyamPharmaceuticals,Geo-Young,
AYUMI Pharmaceutical, Center for Autism
and Related Disorders, Med Imagem,
NantPharma, NUA Surgical, XinRong
MedicalGroup,TeamHealth
$2,900,000
20 Private Equity Stakeholder Project
References
1. “TheHealthcarePEInvestmentLandscape,”PitchbookQ32020healthcareanalystreport,September2020.
2. https://www.cms.gov/les/document/highlights.pdf
3. COVIDStimulusWatchdatabasebyGoodJobsFirst.https://covidstimuluswatch.org/accessedJanuary21,2021.
4. CentersforMedicareandMedicaidServicesFalseClaimsActprimer.https://downloads.cms.gov/cmsgov/archived-downloads/
SMDL/downloads/SMD032207Att2.pdf
5. JohnsHopkinsMedicineFederal&StateFalseClaimsAct/WhistleblowerProtectionsPolicy.https://www.hopkinsmedicine.org/
johns_hopkins_healthcare/providers_physicians/health_care_fraud_and_abuse/Federal_State_False_Claims_Act_Whistleblower_
Protections_Policy.html
6. Ibid.
7. DepartmentofJustice“PrincipalDeputyAssistantAttorneyGeneralEthanP.DavisdeliversremarksontheFalseClaimsActat
theU.S.ChamberofCommerce’sInstituteforLegalReform,”June26,2020inWashingtonD.C.https://www.justice.gov/civil/
speech/principal-deputy-assistant-attorney-general-ethan-p-davis-delivers-remarks-false-claims
8. DiabeticCareRx:DepartmentofJustice,“CompoundingPharmacy,TwoofItsExecutives,andPrivateEquityFirmAgreetoPay
$21.36MilliontoResolveFalseClaimsActAllegations,”September18,2019.https://www.justice.gov/opa/pr/compounding-
pharmacy-two-its-executives-and-private-equity-rm-agree-pay-2136-million
Therakos:DepartmentofJustice,“FormerOwnersofTherakos,Inc.Pay$11.5MilliontoResolveFalseClaimsActAllegations
ofPromotionofDrug-DeviceSystemforUnapprovedUsestoPediatricPatients,”November19,2020.https://www.justice.gov/
usao-edpa/pr/former-owners-therakos-inc-pay-115-million-resolve-false-claims-act-allegations
HolidayRetirement:DepartmentofJustice,“UnitedStatesRecoversover$8MillioninFalseClaimsActSettlementsforFraud
AgainsttheVAandMedicare,”May5,2016.https://www.justice.gov/usao-or/pr/united-states-recovers-over-8-million-false-
claims-act-settlements-fraud-against-va-and
9. Benevis/KoolSmiles:UnitedStatesofAmericaet.al.vNCDRLLCetal.ThirdAmendedComplaintPursuanttotheFederal
FalseClaimsAct.CivilActionNo.4:11-cv-792.https://bergermontague.com/wp-content/uploads/2018/01/Kool-Smiles-Third-
Amended-Complaint.pdf
GenovaDiagnostics:UnitedStatesofAmerica&StateofNorthCarolina,exrel.DarrlLandis,M.D.vGenovaDiagnostics,Inc.,et
al.1:17cv341.https://www.scribd.com/document/459200338/Genova-Complaint
10. DepartmentofJustice,“CompoundingPharmacy,TwoofItsExecutives,andPrivateEquityFirmAgreetoPay$21.36Millionto
ResolveFalseClaimsActAllegations,”September18,2019.https://www.justice.gov/opa/pr/compounding-pharmacy-two-its-
executives-and-private-equity-rm-agree-pay-2136-million
11. PatientCareAmericawebsite:https://pcacorp.com/services/.AccessedJanuary2021.
12. UNITEDSTATESOFAMERICAexrel.MARISELACARMENMEDRANOandADALOPEZv.DIABETICCARERX,LLC,d/b/a
PATIENTCAREAMERICAetal,UnitedStatesofAmerica’sComplaintinIntervention,CASENO.15-62617-CIV-BLOOM.https://
media.mcguirewoods.com/publications/2019/US-ex-rel-Medrano-v-Diabetic-Care-Govt-Compl-in-Intervention.pdfpg.2.
13. U.S.vDCRX.https://media.mcguirewoods.com/publications/2019/US-ex-rel-Medrano-v-Diabetic-Care-Govt-Compl-in-
Intervention.pdf. p.g. 22
14. DepartmentofJustice,“CompoundingPharmacy,TwoofItsExecutives,andPrivateEquityFirmAgreetoPay$21.36Millionto
ResolveFalseClaimsActAllegations,”September18,2019.https://www.justice.gov/opa/pr/compounding-pharmacy-two-its-
executives-and-private-equity-rm-agree-pay-2136-million
15. U.S.vDCRX.https://media.mcguirewoods.com/publications/2019/US-ex-rel-Medrano-v-Diabetic-Care-Govt-Compl-in-
Intervention.pdf. pg. 3.
21Money for Nothing
16.U.S.vDCRX.https://media.mcguirewoods.com/publications/2019/US-ex-rel-Medrano-v-Diabetic-Care-Govt-Compl-in-
Intervention.pdf. pg. 10.
17. Ibid.
18.RLHEquityPartnersemployeebio.http://www.rlhequity.com/team/michel-glouchevitch/.AccessedJanuary2021.
19.https://media.mcguirewoods.com/publications/2019/US-ex-rel-Medrano-v-Diabetic-Care-Govt-Compl-in-Intervention.pdfpg.28.
20. RLHEquityPartnerswebsite.http://www.rlhequity.com/portfolio/.AccessedJanuary20,2021.
21. HarrietRyan,“UpscalehomefordementiapatientssuedoverdeathsinCOVID-19outbreak,”LosAngelesTimes,December15,
2020.https://www.latimes.com/california/story/2020-12-15/upscale-dementia-home-sued-covid-19-deaths
22. COVIDStimulusWatchdatabasebyGoodJobsFirst.https://data.covidstimuluswatch.org/individual-record/silverado-senior-
living-holdings-inc.AccessedJanuary2021.
23. “BehavioralHealthOrganizationAnnouncesRebrandtoSouthBayCommunityServices,”PressreleasebySouthBayCommunity
Services,May3,2016.https://southbaycommunityservices.com/behavioral-health-organization-announces-rebrand-to-south-bay-
community-services/
24. “H.I.G.GrowthPartnersAnnouncestheFormationofCommunityInterventionServicesandCompletestheAcquisitionofSouth
BayMentalHealth,”HIGCapitalpressrelease,April17,2012.https://www.businesswire.com/news/home/20120417005989/
en/H.I.G.-Growth-Partners-Announces-the-Formation-of-Community-Intervention-Services-and-Completes-the-Acquisition-of-
South-Bay-Mental-Health
25. OfceofAttorneyGeneralMauraHealey,“MentalHealthCentertoPay$4MillionunderAGSettlementforIllegallyBilling
MassHealthforUnlicensedPatientCare,”Pressrelease,February8,2018.https://www.mass.gov/news/mental-health-center-to-
pay-4-million-under-ag-settlement-for-illegally-billing-masshealth-for
26.https://dlbjbjzgnk95t.cloudfront.net/0999000/999329/https-ecf-mad-uscourts-gov-doc1-09518463625.pdfOfceofAttorney
GeneralMauraHealey,“AGHealeySuesMentalHealthCenterforIllegallyBillingMassHealthforUnlicensedandUnsupervised
PatientCare,”Pressrelease,January9,2018.https://www.mass.gov/news/ag-healey-sues-mental-health-center-for-illegally-
billing-masshealth-for-unlicensed-and
27. OfceofAttorneyGeneralMauraHealey,“AGHealeySuesMentalHealthCenterforIllegallyBillingMassHealthforUnlicensed
andUnsupervisedPatientCare,”Pressrelease,January9,2018.https://www.mass.gov/news/ag-healey-sues-mental-health-
center-for-illegally-billing-masshealth-for-unlicensed-and
28.Massachusettsexrel.Martino-Flemingv.S.BayMentalHealthCtr.,Inc.,CivilActionNo.15-13065-PBS.https://casetext.com/
case/united-states-ex-rel-martino-eming-v-s-bay-mental-health-ctr-inc
29.Massachusettsexrel.Martino-Flemingv.S.BayMentalHealthCtr.,Inc.,CivilActionNo.15-13065-PBS.https://www.bclplaw.
com/images/content/1/6/v2/162247/Martino-Fleming-US-Decision-2018-09-21-PACER-version.pdf
30. Massachusettsexrel.Martino-Flemingv.S.BayMentalHealthCtr.,Inc.,CivilActionNo.15-13065-PBS.https://casetext.com/
case/massachusetts-ex-rel-martino-eming-v-s-bay-mental-health-ctr-inc
31. “PathwaysAcquiresThreeSubsidiariesofCommunityInterventionServices,Inc.(CIS),”Pressrelease,October6,2020.https://
www.businesswire.com/news/home/20201006005812/en/Pathways-Acquires-Three-Subsidiaries-of-Community-Intervention-
Services-Inc.-CIS
32. H.I.G.Capitalwebsite.https://higcapital.com/portfolio/sector/83/active/all.AccessedJanuary,2021.
33. “H.I.G.GrowthPartnersCompletesStrategicTransactionwithTheCenterforDigestiveHealthandPinnacleGIPartners,”Press
release,December1,2020.https://www.businesswire.com/news/home/20201201005243/en/H.I.G.-Growth-Partners-Completes-
Strategic-Transaction-with-The-Center-for-Digestive-Health-and-Pinnacle-GI-Partners;“TheVistriaGroupReachesAgreementto
SellSt.CroixHospice,”Pressrelease,October19,2020.https://www.prnewswire.com/news-releases/the-vistria-group-reaches-
agreement-to-sell-st-croix-hospice-301154947.html
34. MarshaMcLeod,“ThePrivateOption,”TheAtlantic,September12,2019.https://www.theatlantic.com/politics/archive/2019/09/
private-equitys-grip-on-jail-health-care/597871/
22 Private Equity Stakeholder Project
35. ChadBray,“MallinckrodtPharmaceuticalstoAcquireTherakosfor$1.33Billion,”TheNewYorkTimes,August10,2015.https://
www.nytimes.com/2015/08/11/business/dealbook/mallinckrodt-to-acquire-therakos-for-1-33-billion.html
36.DepartmentofJustice,“FormerOwnersofTherakos,Inc.Pay$11.5MilliontoResolveFalseClaimsActAllegationsofPromotion
ofDrug-DeviceSystemforUnapprovedUsestoPediatricPatients,”November19,2020.
https://www.justice.gov/usao-edpa/pr/former-owners-therakos-inc-pay-115-million-resolve-false-claims-act-allegations
37. DepartmentofJustice,“FormerOwnersofTherakos,Inc.Pay$11.5MilliontoResolveFalseClaimsActAllegationsofPromotion
ofDrug-DeviceSystemforUnapprovedUsestoPediatricPatients,”November19,2020.
38.https://www.justice.gov/usao-edpa/pr/former-owners-therakos-inc-pay-115-million-resolve-false-claims-act-allegations
39.Moody’sInvestorService,“Moody’ssaysTherakos’dividendrecapiscreditnegativebuthasnoratingimpact,”Dece,ber5,2013.
https://www.moodys.com/research/Moodys-says-Therakos-dividend-recap-is-credit-negative-but-has--PR_288127;Pitchbook,
accessed December 2020.
“BlackstoneCompletesAcquisitionofApriaHealthcareGroupInc,”Blackstonepressrelease,October28,2008.https://www.
blackstone.com/press-releases/article/blackstone-completes-acquisition-of-apria-healthcare-group-inc/
40. DepartmentofJustice,“ActingManhattanU.S.AttorneyAnnounces$40.5MillionSettlementWithDurableMedicalEquipment
ProviderApriaHealthcareForFraudulentBillingPractices,”December21,2020.https://www.justice.gov/usao-sdny/pr/acting-
manhattan-us-attorney-announces-405-million-settlement-durable-medical-equipment
41. Ibid.
42. Ibid.
43. MichaelAudetandNeilSimkins,ApriaHealthcarewebsite.https://www.apria.com/investor-relations/board-of-directors/,
accessed Dec 31, 2020.
44. “Here’sSomethingFedsDidRightonCOVID-19,”MedpageToday,Apr6,2020.
https://www.medpagetoday.com/infectiousdisease/covid19/85803
45. Apria,Inc.S-1lingtotheSecuritiesandExchangeCommission,January15,2021.https://www.sec.gov/Archives/edgar/
data/1735803/000119312521010085/d62545ds1.htm
46.Apria,Inc.S-1lingtotheSecuritiesandExchangeCommission,January15,2021.https://www.sec.gov/Archives/edgar/
data/1735803/000119312521010085/d62545ds1.htm
47. Ibid.
48.APRIAHEALTHCAREGROUPINC.S-4lingtotheUSSecuritiesandExchangeCommission,July16,2010.https://www.sec.gov/
Archives/edgar/data/820609/000119312510160027/ds4.htm
49.Blackstonewebsite:https://www.blackstone.com/people/neil-simpkins/.AccessedFebruary2021.
50. DepartmentofJustice,“VanguardHealthSystems,Inc.AgreesToPay$2.9MillionToSettleFalseClaimsActAllegations,”June
15,2015.https://www.justice.gov/usao-mdtn/pr/vanguard-health-systems-inc-agrees-pay-29-million-settle-false-claims-act-
allegations
51. Pitchbook,“TheHealthcarePEInvestmentLandscape”Q32020report.
52. DepartmentofJustice,“DentalManagementCompanyBenevisandItsAfliatedKoolSmilesDentalClinicstoPay$23.9Million
toSettleFalseClaimsActAllegationsRelatingtoMedicallyUnnecessaryPediatricDentalServices,”January10,2018.https://
www.justice.gov/opa/pr/dental-management-company-benevis-and-its-afliated-kool-smiles-dental-clinics-pay-239
53. Ibid.
54. Ibid.
55. FFLPartnerswebsite.https://www.fpartners.com/investments/benevis.AccessedJanuary2021.
56.DepartmentofJustice,“DentalManagementCompanyBenevisandItsAfliatedKoolSmilesDentalClinicstoPay$23.9Million
toSettleFalseClaimsActAllegationsRelatingtoMedicallyUnnecessaryPediatricDentalServices,”January10,2018.https://
www.justice.gov/opa/pr/dental-management-company-benevis-and-its-afliated-kool-smiles-dental-clinics-pay-239
23Money for Nothing
57. Benevis/KoolSmiles:UnitedStatesofAmericaet.al.vNCDRLLCetal.ThirdAmendedComplaintPursuanttotheFederal
FalseClaimsAct.CivilActionNo.4:11-cv-792.https://bergermontague.com/wp-content/uploads/2018/01/Kool-Smiles-Third-
Amended-Complaint.pdfpg.16.
58.Benevis/KoolSmiles:UnitedStatesofAmericaet.al.vNCDRLLCetal.ThirdAmendedComplaintPursuanttotheFederal
FalseClaimsAct.CivilActionNo.4:11-cv-792.https://bergermontague.com/wp-content/uploads/2018/01/Kool-Smiles-Third-
Amended-Complaint.pdfpg.20.
59.“Berger&Montague,P.C.WhistleblowerTeamLeadsSecondLargestEverFalseClaimsActDentalCase,RecoveringMoreThan
$23.9Million,”pressrelease,January10,2018.https://www.prnewswire.com/news-releases/berger--montague-pc-whistleblower-
team-leads-second-largest-ever-false-claims-act-dental-case-recovering-more-than-239-million-300581018.html
60.“BenevisAppointsIndustryVeteranRichBeckmanasChiefExecutiveOfcer,”pressrelease,April12,2019.https://www.
businesswire.com/news/home/20190412005087/en/Benevis-Appoints-Industry-Veteran-Rich-Beckman-as-Chief-Executive-Ofcer
61.MichaelW.Davis,“BenevisFilesforChapter11Bankruptcy,”DentistryToday,August13,2020.https://www.dentistrytoday.com/
news/todays-dental-news/item/6793-benevis-les-for-chapter-11-bankruptcy
62.FFLPartnerswebsite.https://www.fpartners.com/portfolio.AccessedJanuary2021.
63.DepartmentofJustice,“TennesseeSubstanceAbuseTreatmentFacilityAgreestoResolveFalseClaimsActAllegationsfor$9.25
Million,”April16,2014.https://www.justice.gov/opa/pr/tennessee-substance-abuse-treatment-facility-agrees-resolve-false-
claims-act-allegations-925
64.“BainnalizesCRCpurchase,”InfrastructureInvestor,Mar20,2006.
https://www.infrastructureinvestor.com/bain-nalises-crc-purchase/
65.DepartmentofJustice,“TennesseeSubstanceAbuseTreatmentFacilityAgreestoResolveFalseClaimsActAllegationsfor$9.25
Million,”April16,2014.https://www.justice.gov/opa/pr/tennessee-substance-abuse-treatment-facility-agrees-resolve-false-
claims-act-allegations-925
66.WalterFRoche,“NewLifeLodgewhistlebloweractedafterdeathofpatient,”TheTennessean,April22,2014.https://www.
tennessean.com/story/news/health/2014/04/21/woman-whose-complaints-led-state-federal-investigation-new-life-lodge-says-
death-patient-led-act/7982135/
67.NateRau,“AcadiatobuyCRCHealth,ownerofNewLifeLodge,”TheTennessean,October29,2014.https://www.tennessean.
com/story/money/industries/health-care/2014/10/29/acadia-buy-crc-health-owner-new-life-lodge/18146249/
68.Ibid.
69.BainCapitalwebsite.https://www.baincapitalprivateequity.com/portfolio.AccessedJanuary2021.
pestakeholder.org
