Maryland Attorney General Brian E. Frosh has accused NMS of illegally kicking out residents and in many cases dropping them off at homeless shelters or inadequate facilities. (Jonathan Newton/The Washington Post)

A nursing home operator in Maryland aggressively and illegally booted residents from its facilities to maximize payments it collected from public health plans and in many cases dropped the residents off at homeless shelters or inadequate living facilities, the state’s attorney general alleged in a sweeping lawsuit filed Wednesday in Montgomery County Circuit Court.

The lawsuit asserts that the firm, Neiswanger Management Services (NMS), was acutely aware of the reimbursement differences between federal Medicare and the lesser rates paid by Medicaid, which uses state and federal money to provide health coverage for low-income patients.

NMS’s motive, according to the attorney general: Leave bed space for new Medicare patients, who yield more than $500 a day in reimbursements, compared with roughly half that for Medicaid.

The nursing home operation discharged patients without their consent once their Medicare coverage ran out and without the planning the state requires for placing them in a “safe and secure environment,” the lawsuit says.

“They put hundreds of vulnerable patients at risk, and we think what they did was illegal,” said Attorney General Brian E. Frosh (D). More than 700 people likely reside in the nursing home operator’s five facilities in Maryland, the lawsuit said.

After being discharged from an NMS nursing home, Andrew Edwards, 31, said the company moved him to a “nightmare” of a housing facility. (Courtesy of Andrew Edwards.)

The company, based in Hyattsville, said Wednesday that it has done nothing wrong.

“NMS strongly denies any wrongdoing and disputes the entirety of the attorney general’s allegations in this matter,” said Mark Yost, the company’s chief executive. “We intend to prove our case and will respond in the appropriate forum in due time.”

The 62-page lawsuit covers the often complicated world of Medicare payments for people who are discharged from hospitals to a nursing home. According to the attorney general, NMS aggressively seeks these clients and then aggressively seeks to get them out after 100 days, when the Medicare reimbursements for that type of care run out.

NMS kicked out patients even if their bills had been paid and did so without properly setting them up in their next living facility, Frosh said. Further, the patients whose income levels made them eligible to switch to Medicaid after the 100-day window closed also were booted because the nursing facility would have made less off Medicaid, according to the lawsuit.

“They maximized the highest public payments, which is Medicare,” he added. “When that ends, they will take Medicaid, but only if they have empty beds.”

When NMS issued “involuntary discharge notices” to its residents, it almost always said it was doing so because the residents failed to pay or failed to arrange for payment by Medicare, Medicaid or a third-party payer, according to the litigation.

The attorney general’s office compared the number of discharge notices at NMS’s five nursing homes with those at 225 other nursing homes. Over a 17-month period ending May 31, NMS facilities issued 1,061 discharge notices, the attorney general said, compared with 510 such notices at the state’s other nursing homes combined.

“That just smacks you in the face,” Frosh said. “They’re doing something that nobody else is doing.”

One former resident of an NMS facility in Hagerstown, Andrew Edwards, said Wednesday in an interview that his stay at the nursing home was fine. Edwards, 31, is cited by name as an example in the state’s lawsuit.

“All the nurses were good,” he said. “The therapy was great.” He suffers from kidney disease, needs dialysis and used a walker, the lawsuit and he said.

The problem with Edwards’s care, the lawsuit alleges, occurred after an NMS staff member loaded him into a vehicle with a woman, assuring Edwards that she would take him to an assisted-living facility. Instead, the lawsuit asserts, she drove him to a house in Baltimore with no handicap accessibility. On his second day there, weakened by a missed dialysis treatment, he told the house owner that he needed to go to a hospital, the lawsuit states.

Edwards was left at the door of St. Agnes Hospital, where he received emergency dialysis, according to the lawsuit.

A social worker got Edwards to a better living facility, Edwards said in an interview.

“I’m glad that I am out of that place,” he said of the previous house. “It was like a nightmare staying there.”

Frosh said his office was troubled by finding at least three unlicensed senior living facilities where NMS patients ended up.

“We uncovered that stuff in our investigation of NMS and were very concerned about it,” he said.