Watermark Retirement Communities, the Tucson-based senior living operator, has resolved several significant lawsuits over the past few years, including a $4.25 million federal whistleblower settlement over illegal kickbacks, a $3.5 million California class action over misrepresented care, and two California wage-and-hour class actions totaling $4.9 million. It also won dismissal of a COVID-19 appeal on jurisdictional grounds. Here is what each case alleged, how it was resolved, and which ones remain open for claims.
The $4.25 Million Federal Kickback Settlement
In August 2023, Watermark agreed to pay $4.25 million to settle allegations that it violated the False Claims Act and the federal Anti-Kickback Statute by soliciting and receiving illegal payments from BAYADA Home Health Care in exchange for steering residents to BAYADA for home health services.1HHS Office of Inspector General. Watermark Retirement Communities To Pay $4.25 Million for Allegedly Receiving Kickback in Violation of the False Claims Act
The whistleblower case, United States ex rel. Freedman v. BAYADA Home Health Care, Inc., et al., No. 17-cv-06267 (D.N.J.), was filed by David Freedman, a former BAYADA director of strategic growth. According to the government, Watermark sold two failing Arizona home health agencies to BAYADA for $1.9 million, a price the government called “exorbitant” for struggling agencies. The transaction was alleged to be a disguised purchase of referral privileges: in exchange for the inflated price, Watermark referred its residents nationwide to BAYADA for home health care over a six-year period.2Whistleblowers Attorneys. Watermark Pays $4.25 Million To Settle Whistleblower Lawsuit
Because those referrals were allegedly driven by kickbacks rather than patient need, the resulting Medicare and Medicaid claims BAYADA submitted were considered fraudulently tainted. The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving anything of value to induce referrals for services covered by federal health care programs.3HHS Office of Inspector General. A Roadmap for New Physicians – Fraud and Abuse Laws
BAYADA settled first, paying $17 million in September 2021 to resolve the same allegations, which the government said spanned January 2014 through October 2020.4U.S. Department of Justice. Home Health Agency Operator To Pay $17 Million To Resolve False Claims Act Kickback Allegations As the qui tam relator, Freedman received more than $3 million from the BAYADA settlement and about $765,000 from the Watermark settlement.5McKnight’s Senior Living. $4.25 Million Settlement Resolves Kickback Allegations Tied to Senior Living Operators Sale of 2 Home Health Agencies Both settlements resolved only civil allegations, with no determination of liability by either defendant.6U.S. Department of Justice. Home Health Agency Operator BAYADA To Pay $17 Million To Resolve False Claims Act Allegations of Paying Kickbacks
DeCarlo Class Action Over Misrepresented Care in California
A separate 2023 class action accused Watermark of misrepresenting its ability to provide adequate care services at its California assisted living communities. The case, Joseph DeCarlo v. Watermark Retirement Communities, LLC, No. 2:23-cv-01659 (C.D. Cal.), reached a $3.5 million settlement.7CourtListener. Joseph DeCarlo v. Watermark Retirement Communities, LLC
The settlement class covered people who resided at any of 19 identified Watermark California communities during a class period generally running from March 2019 through April 2025, paid money to Watermark under a residency agreement, and were not subject to a binding arbitration provision.8Justia. Joseph DeCarlo v. Watermark Retirement Communities, LLC – Final Approval Order
On July 23, 2025, Judge Dale S. Fischer granted final approval, calling the settlement “fair, reasonable, and adequate.” The approved terms included the $3.5 million payment and a 30-month injunction addressing the conduct at issue. Named plaintiff Joseph DeCarlo received a $5,000 service award, and any undistributed funds were designated for Groceries for Seniors as a cy pres recipient.8Justia. Joseph DeCarlo v. Watermark Retirement Communities, LLC – Final Approval Order
California Wage and Hour Class Actions
Two California labor class actions brought by former hourly employees have produced settlements totaling $4.9 million. The allegations in both cases are nearly identical: unpaid minimum and overtime wages, missed meal and rest breaks, inaccurate wage statements, unpaid wages at separation, and unfair business practices.
Carillo-Salazar ($2.4 Million, Resolved)
In Carillo-Salazar v. Watermark Services IV, LLC et al. (Case No. JCCP 5176), the class covered all non-exempt Watermark employees in California from January 2016 through May 2022, with a narrower group defined for claims under California’s Private Attorneys General Act. The $2.4 million settlement paid class members on a pro rata basis tied to workweeks worked during the class period, and no claim form was required. Preliminary approval came in March 2023, the opt-out and objection deadline closed August 8, 2023, and a final approval hearing was set for September 8, 2023.9ILYM Group. Notice of Proposed Class Action and PAGA Settlement – Carillo-Salazar v. Watermark Services
Harris ($2.5 Million, Pending Final Approval)
A second, more recent case, Harris, et al. v. Watermark Services IV, LLC (Case No. 23CV035212), was filed in the Superior Court of California, County of Alameda, by Telecia B. Harris and Dillan Burghart. The $2.5 million settlement has received preliminary approval. The deadline for class members to opt out, object, or challenge workweek calculations was May 8, 2026, and the final approval hearing is scheduled for July 14, 2026.10Watermark Services Settlement Info. Watermark Services Settlement Info11Watermark Services Settlement Info. Watermark Services Settlement FAQ
Cannon COVID-19 Negligence Case
Watermark was also a defendant in a closely watched appeal arising from the pandemic. In Cannon v. Watermark Retirement Communities Inc., No. 21-7067 (D.C. Cir.), the estate of Anne Jean Cannon, who died in May 2020 at Watermark’s Blue Bell Place facility in Pennsylvania, sued for negligence and wrongful death. The lawsuit alleged a four-month pattern of abuse and neglect, including failure to prevent falls, failure to assist with daily tasks, failure to prevent physical abuse, inadequate medical care, and the administration of hydroxychloroquine without the consent of Cannon’s medical power of attorney.12Public Citizen. Cannon v. Watermark Retirement Communities Inc.
Watermark sought dismissal under the Public Readiness and Emergency Preparedness (PREP) Act. The federal district court in Pennsylvania denied the motion, finding the unauthorized hydroxychloroquine use fell outside the Act’s protections. Watermark then appealed directly to the D.C. Circuit, which on August 5, 2022 dismissed the appeal for lack of jurisdiction. The court held that the PREP Act’s interlocutory appeal provision reaches only a narrow category of willful misconduct cases required to be filed in the U.S. District Court for the District of Columbia, and the Cannon case was a standard tort claim filed in the Eastern District of Pennsylvania.13FindLaw. Cannon v. Watermark Retirement Communities Inc. The ruling was procedural and did not decide the merits of the underlying negligence claims.
What Current and Former Residents and Employees Should Know
The DeCarlo settlement reached final approval in July 2025, so its claims process has closed. The Carillo-Salazar labor settlement also moved past its deadlines in 2023. The Harris wage-and-hour settlement is the one still live: if you worked as a non-exempt employee for Watermark Services IV in California and received a notice, the final approval hearing is set for July 14, 2026. The federal kickback case is fully resolved as a civil matter, with no admission of liability.