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Nursing Home Operators Indicted on Fraud Charges

October 16, 2006
A Massachusetts grand jury has indicted three people on charges of massive fraud in the operation of five nursing homes in the state.

Brothers Joel K. Logan, of Norwell, and Todd Logan of Braintree, Massachusetts are charged with patient neglect, Medicaid Fraud, theft of nursing home patients' personal funds, conspiracy to steal those funds, and with embezzlement of employee wage deductions intended for funding 401(k) retirement contributions, and life and disability insurance premiums.

Their nephew, Gregory J. Logan, of Kingston, Massachusetts, who served as the administrator for one of the nursing homes, has also been charged with conspiracy and with embezzlement of residents' funds.

The indictments follow a three-year investigation conducted by the state's Medicaid Fraud Control Unit and the Fair Labor and Business Practices Division, both part of the Massachusetts Attorney General's Business and Labor Protection Bureau, along with assistance from the U.S. Department of Labor's Employee Benefits Security Administration.

A Norfolk County Grand Jury returned a total of 26 indictments against Joel, Todd, and Gregory Logan, and the former nursing home facilities. The facilities involved include: Elihu White Nursing & Rehabilitation Center, formerly of Braintree, Pond Meadow Healthcare Facility, Inc., formerly of Weymouth, Atrium Nursing and Rehabilitation Center, formerly of Middleborough, Logan Nursing & Rehabilitation Center, formerly of Braintree, and Crestview Healthcare Facility, Inc., formerly of Quincy.

The charges stem from allegations that, during January 2001 through June 2003, the Logans, and their corporations, diverted funds received under the state's Medicaid program for their own personal use while failing to provide basic goods and services which, as Medicaid providers, they were required to provide to the facilities' residents.

State officials said the investigation determined that the facilities frequently experienced shortages of food, medicine, linens, and personal hygiene items, interruption of pest control services, and accumulation of medical waste, due to nonpayment of vendors, while at the same time the defendants used the nursing home facilities' assets to fund various personal expenditures, including horse racing activities and luxury boat payments.

The Medicaid Fraud Unit's investigation additionally determined that on multiple occasions during May 10, 2002 through January 10, 2003, Joel, Todd and Gregory Logan removed a total of $82,000 from the Patients Needs Accounts ("PNA") for three of the homes, Pond Meadow, Elihu White, and Logan Nursing & Rehabilitation, for purposes unrelated to the residents' own use. PNA accounts are statutorily regulated accounts held in trust for the sole personal use and benefit of nursing home residents.

Massachusetts Medicaid regulations specify that a nursing home facility may not use PNA funds for any purposes other than the personal use of the nursing home residents, under any circumstances.

The indictments also allege that during July 2002, and during November 2002 through June 2003, Joel and Todd Logan failed to remit approximately $55,000 in deductions withheld from employee wages for the purpose of funding the employer-sponsored 401(k) Plan, a type of investment plan where eligible employees may establish individual retirement accounts.

In total, approximately 25 plan participants were affected, excluding approximately 20 Logan family members and corporate insiders. Additionally, during August 30, 2002 through June 6, 2003, the indictments charge that Joel and Todd Logan failed to remit $22,583.64 in employee wage withholding intended to fund short-term disability policies through Colonial Life Insurance, and individual life insurance policies with Boston Mutual.

Four of the nursing homes were forced into receivership during June 2003, and the fifth nursing home, Crestview, went into receivership a year later, during July 2004, based on allegations of financial mismanagement. Each of the nursing homes was either sold-off to other nursing home operators or were closed by the court-appointed receiver.

The indictments come on the heels of $560,000 in judgments obtained by the Attorney General's Office in June against four of the nursing home owners for contempt penalties, receivership costs, and attorneys' fees incurred in investigating and prosecuting a contempt case.

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