NEW YORK — Stern Therapy Consultants, a New York-based long-term care therapy provider, has agreed to pay $315,000 to resolve federal allegations that it conspired with a nursing home operator to submit fraudulent Medicare claims for medically unnecessary rehabilitation services, according to the U.S. Attorney's Office for the District of Massachusetts. The settlement, announced March 4, 2026, resolves claims brought under the False Claims Act against the therapy company in connection with a broader fraud scheme spanning 19 skilled nursing facilities.
The Settlement and Allegations
The federal government alleged that between January 2017 and September 2019, Stern conspired with RegalCare Management Group and its affiliated entity RegalCare Management 2.0, along with RegalCare owner Eliyahu Mirlis and executive Hector Caraballo, to cause the submission of false claims to Medicare for unnecessary skilled nursing facility therapy services, according to the U.S. Department of Health and Human Services Office of Inspector General.
As reported by WWLP, Stern therapists acknowledged providing Ultra High Resource Utilization Group therapy services — the highest and most expensive tier of rehabilitation billing — to Medicare patients at RegalCare facilities even after documenting that those patients should stop receiving such services. In some cases, patients themselves told therapists they were physically unable to perform the prescribed therapy, yet billing continued at the elevated rate.
The allegations extended further into what investigators described as systematic record falsification. According to WWLP, Stern also acknowledged that a RegalCare Senior Regional Director who possessed no clinical experience or professional license certified that a terminated Stern employee had completed therapy sessions for a patient, creating documentation to justify billing for services that were never properly delivered.
The Broader Federal Lawsuit
The $315,000 settlement resolves only the claims against Stern Therapy Consultants. The underlying federal lawsuit, which was filed in February 2025, remains ongoing against RegalCare Management Group, Mirlis, and Caraballo, as reported by Skilled Nursing News. That broader case alleges a far more extensive fraud scheme spanning from 2017 through 2023 across 19 skilled nursing facilities in Massachusetts and Connecticut.
According to McKnight's Long-Term Care News, the complaint was filed jointly by the U.S. Attorney's Office and the Massachusetts Attorney General, and originated as a qui tam — or whistleblower — lawsuit under the False Claims Act. The scheme allegedly resulted in millions of dollars in damages to Medicare and Medicaid programs.
As reported by the American Bar Association's Health Law Section, the broader allegations against the remaining defendants include inflating therapy hours to qualify for the highest reimbursement levels, falsifying medical records, directing billing companies to submit claims for incomplete or undocumented services, and coercing therapists into providing unnecessary care. Therapists who refused to provide the unnecessary services were allegedly threatened with adverse employment action, according to Skilled Nursing News.
The Worcester Business Journal reported that RegalCare at Worcester was among 10 Massachusetts skilled nursing facilities named in the lawsuit, with RegalCare also operating facilities in Greenfield and Holyoke in western Massachusetts, according to McKnight's Long-Term Care News.
Federal regulations set strict standards for Medicare reimbursement of skilled nursing facility therapy services. The Resource Utilization Group classification system determines payment rates based on the intensity and medical necessity of therapy provided. Billing at the Ultra High level requires clinical justification demonstrating that patients need the most intensive tier of rehabilitation services.
CMS Inspection History
While the Stern Therapy settlement involves services provided across multiple RegalCare-operated facilities, one facility referenced in broader CMS data that families may research is New Gouverneur Hospital SNF in New York, a 295-bed government-operated skilled nursing facility. According to CMS data, the facility holds an overall rating of 5 out of 5 stars, with a 4-star health inspection rating, 5-star staffing rating, and 5-star quality rating.
CMS records show 14 total deficiencies across 6 inspections on file, with the most recent inspection conducted on October 18, 2022. Deficiencies identified during that inspection included citations related to ensuring residents are free from physical restraints unless medically necessary, timely reporting of suspected abuse or neglect, and developing complete and timely care plans that meet all resident needs. One deficiency carried a scope and severity rating of E, indicating a pattern of noncompliance, while others were rated at level D, indicating isolated incidents.
It is important to note that CMS inspection data reflects point-in-time assessments of individual facilities. The broader fraud allegations against Stern Therapy and RegalCare involved billing practices across a network of 19 facilities, and families should review CMS records for any specific facility where they have concerns about care quality.
Ownership & Operations
The fraud scheme at the center of this case highlights the relationship between nursing home operators and third-party therapy consultants. According to the federal complaint, RegalCare Management Group operated skilled nursing facilities across Massachusetts and Connecticut, while Stern Therapy Consultants was engaged as an outside therapy provider scheduling and delivering rehabilitation services within those facilities. This operator-consultant arrangement is common in the long-term care industry, where skilled nursing facilities frequently contract with specialized therapy companies to provide rehabilitation services billed to Medicare and Medicaid.
The case underscores ongoing federal enforcement efforts targeting fraudulent billing practices in the skilled nursing industry. Neither RegalCare nor Stern Therapy responded to media requests for comment, according to McKnight's Long-Term Care News. The potential penalties for the remaining defendants include treble damages, civil penalties for each false claim submitted, and possible exclusion from federal healthcare programs, as reported by the American Bar Association.
Resources for Families
Families with loved ones in skilled nursing facilities who have concerns about the quality or appropriateness of therapy services should be aware of several reporting avenues. The New York Long-Term Care Ombudsman can be reached at 1-855-582-6769 and serves as an advocate for residents of nursing homes and other long-term care facilities.
The national Administration on Aging's Eldercare Locator can be reached at 1-800-677-1116 to connect callers with local ombudsman programs and other aging services. Additional information about long-term care ombudsman services is available at ltcombudsman.org.
Families can also review any facility's inspection history, staffing data, and quality measures through the CMS Care Compare tool at medicare.gov. If you suspect Medicare or Medicaid fraud involving a nursing home or therapy provider, reports can be filed with the HHS Office of Inspector General at 1-800-HHS-TIPS (1-800-447-8477).
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