Watermark Retirement will pay $4.5 million to settle Bayada-linked whistleblower case

Watermark Retirement Communities LLC agreed to pay $4.5 million to settle a whistleblower case alleging that it had an illegal agreement to refer residents to Pennsauken-based Bayada Home Health Care Inc., the U.S. Attorney for the District of New Jersey announced Thursday.

The alleged kickback scheme came to light through a whistleblower suit filed in New Jersey in 2017. That suit alleged that in 2014, Bayada overpaid for two Watermark home-health agencies in Arizona to induce referrals of Medicare beneficiaries living at Watermark’s facilities in Arizona, Connecticut, Delaware, Florida, and Pennsylvania.

Two years ago, Bayada, whose national operations include partial ownership of Thomas Jefferson University’s home health and hospice services, agreed to pay $17 million for its part in the alleged scheme. Neither party has admitted liability.

“Whether you pay them or receive them, kickbacks undermine the integrity of our health care system,” U.S. Attorney Philip R. Sellinger said in a news release. “Patients need to know the health care referrals they receive are in their best interest, not in the best interest of someone else’s bottom line.”

The whistleblower, David Freedman, will receive $765,000 from the new settlement. Freedman, who was Bayada’s director of strategic growth from 2009 to 2016, received $3 million from the 2021 settlement for his role in exposing the alleged fraud, which occurred between early 2014 and October 2020.

Watermark spokesperson Vicki Doyle said in an email Friday: “We firmly deny that we did anything unlawful, and, in fact, we cooperated fully with the DOJ in the investigation. We have entered into this settlement as the cost and distraction of litigation likely would have exceeded the amount required to resolve it through prevailing on the merits.”

Two years ago, Bayada denied the allegations and said it opted to settle “to avoid the significant expense of protracted litigation and allow our focus to remain on providing high quality home health care to our patients.”

Watermark, based in Tucson, Ariz., operates 79 retirement communities nationwide, including three in the Philadelphia area. They are The Watermark at Bellingham in West Chester, Blue Bell Place in Blue Bell, and Rockland Place in Wilmington. Watermark also operated The Springs at Watermark in Center City until November 2022, when its lease was terminated.

Bayada, which converted to nonprofit status in 2018, had $1.6 billion in revenue in 2021, according to its audited financial statement. It has continued to expand through acquisitions, buying Abramson Senior Care’s home-health and hospice businesses this year for an undisclosed price.

In June 2022, Bayada paid $31.7 million for 51% of Thomas Jefferson University’s home-health and hospice businesses, which now operate as a joint venture.