Diversicare Healthcare Services and two occupational therapists have agreed to pay nearly $1.4 million to resolve claims that the provider “condoned” therapists who clocked into nursing homes and then left to provide services elsewhere, the Department of Justice said Wednesday.

A former Diversicare employee brought the charges as a whistleblower, alleging that therapy assistants Kellie S. Lemons and Charles M. James falsified occupational therapy records when they worked at Diversicare’s Canterbury facility in Phenix City, AL. The assistants left the nursing home and “moonlighted” for local home health companies while still technically on the clock for Diversicare, according to the US Attorney’s Office for the Middle District of Alabama.

The complaint alleged that Diversicare “permitted and even condoned these practices” and knowingly submitted false claims to Medicare for reimbursement for services not provided.

In all, the three parties will pay $1,378,000 to resolve the False Claims allegations, which represents damages three times the loss caused by the invalid claims and a penalty between roughly $13,500 and $27,000 for each. No breakdown of those fines was provided.

Diversicare is a group of private companies providing long-term care and rehabilitation services in approximately 43 locations across Alabama, Mississippi, Tennessee, Texas and Kansas. 

Once a publicly traded company, Diversicare was bought in 2021 by DAC Acquisitions, a limited liability company managed by Ephram Lahasky. Lahasky is affiliated with more than 100 owned and/or leased skilled nursing facilities in more than 20 states. Many of those facilities have operated under a veil of secrecy, with his use of related parties coming under fire and investigation in New York late last year.

Requests for comment left for marketing staff at Diversicare’s Tennessee headquarters went unanswered at deadline Wednesday afternoon.

Prior CEO Jay Knight left Diversicare quietly in August 2022; his successor, Steve Nee, was appointed in April.

According to the Justice Department, the Canterbury facility is no longer in the Diversicare portfolio as of March 1, 2023. All false claims in the investigation were alleged to have happened between March 1, 2018, and Sept. 25, 2020.