The Grand Nursing Home Lawsuit: $21.3M Settlement and Federal Oversight

The Grand nursing home lawsuit ended in July 2024 with a $21.3 million federal settlement in which Strauss Ventures LLC, doing business as The Grand Healthcare System, and 12 affiliated skilled nursing facilities resolved False Claims Act allegations that they billed Medicare, Medicaid, and TRICARE for rehabilitation therapy that was unnecessary, never provided, or falsely documented. Separately, families of former residents have filed negligence and wrongful death suits against individual Grand facilities. With interest across a five-year payment schedule, the federal recovery could exceed $23 million.¹

What the Federal Settlement Resolved

The Department of Justice announced the settlement on July 10, 2024. The government alleged that between January 2014 and September 2019, corporate officials at The Grand enforced quotas dictating how long patients stayed in therapy and what percentage of residents were billed at the highest reimbursement levels under Medicare’s Resource Utilization Group system. Those quotas were applied without regard to whether individual patients actually needed the therapy being billed. At the Pawling, New York facility, similar Medicaid fraud allegedly continued through June 2021.²

As part of the deal, The Grand made specific admissions. The company acknowledged that supervisory officials who did not personally treat patients falsified information in medical records, manipulated therapy-minutes data in electronic recordkeeping systems, and discouraged patient discharges to keep billing at elevated levels.³ Therapists were pressured to continue treating patients who were too sick or who refused treatment, according to the allegations.¹

Who Filed the Case

The case began as a qui tam whistleblower lawsuit filed in 2019 by two former rehabilitation therapy providers, Stacey Rosenberger and Kelley Retig. Under the False Claims Act, private citizens can sue on the government’s behalf and share in any recovery. Rosenberger and Retig are set to receive approximately $4,047,000 from the settlement.³

The suit was captioned United States ex rel. Rosenberger and Retig v. Strauss Ventures, LLC, et al., docketed as No. 1:19-cv-1311 in the U.S. District Court for the Northern District of New York. The investigation involved the DOJ’s Civil Division and Fraud Section, the U.S. Attorney’s Office for the Northern District of New York, the HHS Office of Inspector General, the FBI’s Albany Field Office, the Defense Criminal Investigative Service, and the New York State Attorney General’s Office.²

Which Facilities Are Covered

The 12 facilities named in the settlement all operate under the “Grand Rehabilitation and Nursing” brand. They include locations in Queens, Guilderland, Mohawk, Barnwell, South Point, Utica, River Valley, Chittenango, Great Neck, Rome, Pawling, and Batavia.⁴

Ongoing Federal Oversight

The Grand entered a five-year Corporate Integrity Agreement with the HHS Office of Inspector General, effective July 2, 2024, with an estimated completion date of July 2029. The agreement requires annual independent reviews of whether the therapy services The Grand bills for are medically necessary and accurately documented. It covers all 12 facilities named in the settlement.⁴

The company remains operational under that agreement.¹

Who Owns The Grand and Who Is Personally on the Hook

The Grand Healthcare System is headquartered in Valley Stream, New York, and is owned and operated through Strauss Ventures LLC. Jeremy Strauss is CEO and majority owner. He personally signed an unconditional guarantee to cover all settlement payments.¹

Negligence and Wrongful Death Suits Against Grand Facilities

Separately from the federal billing case, families of former residents have sued individual Grand facilities. Two suits filed in 2024 involve The Grand at Guilderland.

In June 2024, the family of Laura Hallenbeck, who died in December 2021 at age 62, filed a $10 million lawsuit against The Grand at Guilderland in Albany County Supreme Court. The complaint alleged that staff negligently failed to diagnose a urinary tract infection, which progressed to pneumonia and sepsis. The suit also claimed that staff mistakenly performed blood tests on Hallenbeck’s husband instead of on her and gave incorrect medical information to the hospital where she was transferred, delaying potentially life-saving treatment. A related suit had been filed by the same plaintiff in December 2023.⁵⁶

In September 2024, Kathleen Ogborn filed suit on behalf of the estate of Robert Ogborn Sr. against The Grand at Guilderland, the Delmar Center for Rehabilitation and Nursing, and Albany Medical Center. The complaint alleged that the defendants were negligent, reckless, and careless in their care of Robert Ogborn between March and November 2022, resulting in the development or worsening of bed sores, infections, conscious pain and suffering, and deprivation of dignity. The defendants declined to comment on the pending litigation as of the filing date.⁷

Prior Federal Action Against The Grand

The 2024 fraud settlement was not the company’s first federal case. On December 5, 2016, Judge William F. Kuntz of the U.S. District Court for the Eastern District of New York approved a consent judgment requiring The Grand Healthcare System and Jeremy Strauss to pay $2,006,796 in back wages and liquidated damages to 844 employees across five facilities, plus $133,470 in civil penalties.⁸

The affected locations were The Grand at Chittenango, Queens, Pawling, Rome, and the Guilderland Center Rehabilitation and Extended Care Facility.⁹ The Department of Labor found the company had misclassified employees as exempt from overtime, paid workers only for scheduled rather than actual hours, docked pay for short rest breaks, failed to compensate for meal breaks employees worked through, and did not maintain accurate time records. The violations covered 2013 through 2016.⁸

Earlier investigations of the Pawling and Rome locations between 2005 and 2013 had already produced nearly $130,000 in back wages for 146 employees and $20,460 in civil penalties.¹⁰ The 2016 judgment also required the company to hire an independent auditor for quarterly compliance reviews, install an automated timekeeping system, and train facility managers on wage-and-hour law.⁸

1
McKnight’s Long-Term Care News. Grand Health Care Settles With DOJ for $21M in Rehab Upcoding Case
2
U.S. Department of Justice. Grand Health Care System and Twelve Affiliated Skilled Nursing Facilities Pay $21.3M
3
U.S. Department of Justice. Grand Health Care System and 12 Affiliated Skilled Nursing Facilities Pay $21.3M for Allegedly Providing and Billing for Fraudulent Rehab Therapy Services
4
HHS Office of Inspector General. Strauss Ventures LLC d/b/a The Grand Healthcare System
5
Times Union. Guilderland Nursing Home Sued for $10 Million
6
Altamont Enterprise. Suit Alleges Negligence During Intended Short Stay at Nursing Home Led to Death
7
Altamont Enterprise. Grand Nursing Home Named in Another Negligence Lawsuit
8
U.S. Department of Labor. Judge Orders Queens-Based The Grand Healthcare System, Partial Owner Jeremy Strauss, To Pay More Than $2M
9
Utica Observer-Dispatch. Nursing Home Chain To Pay
10
Poughkeepsie Journal. Grand Pawling Employees Receive Over $300K Following Labor Law Violations