Stern Therapy Consultants, a provider of long-term care therapy based in New York, has agreed to pay $315,000 to settle allegations that it was involved in causing false claims to be submitted to Medicare. The alleged conduct took place between January 1, 2017 and September 30, 2019.
According to the settlement agreement, Stern conspired with RegalCare Management Group, LLC, RegalCare Management 2.0 (collectively referred to as RegalCare), Eliyahu Mirlis (RegalCare’s owner), and Hector Caraballo (a RegalCare executive) to submit claims for unnecessary skilled nursing facility therapy services. These allegations were part of a False Claims Act complaint filed by the government in February 2025 against Stern and the other parties.
Skilled nursing facilities provide transitional inpatient care after hospital stays of at least 72 hours. Federal healthcare programs such as Medicare reimburse these facilities for services deemed medically reasonable and necessary. The False Claims Act prohibits submitting or causing the submission of false claims for payment from federal healthcare programs.
The settlement agreement states that Stern admitted its therapists provided Ultra High Resource Utilization Group (RUG) rehabilitation therapy services—the most intensive and highest reimbursed category—to RegalCare’s Medicare patients even after documentation indicated those patients should no longer receive such services. In some cases, patients told therapists they could not perform or refused the therapy but were still documented as receiving it. Additionally, Stern admitted that its Senior Regional Director for RegalCare facilities—who lacked clinical experience or licensure—certified that a terminated former employee had completed Ultra High RUG therapy services without confirming whether those services had actually been performed.
This settlement resolves the government’s complaint against Stern regarding these practices. The case against RegalCare, Mirlis, and Caraballo remains ongoing.
The allegations against Stern were brought under the whistleblower provision of the False Claims Act. This allows private individuals to file lawsuits on behalf of the government over false claims and potentially share in any recovery. In this case, the whistleblower will receive $61,875 from the settlement proceeds.
United States Attorney Leah B. Foley stated: “Stern Therapy Consultants has agreed to resolve allegations that it caused false claims for unnecessary skilled nursing facility therapy services.” Roberto Coviello, Special Agent in Charge of the U.S. Department of Health & Human Services’ Office of Inspector General joined Foley in announcing the resolution.
Assistant U.S. Attorneys Steven Sharobem and Olivia Benjamin from the Affirmative Civil Enforcement Unit are handling this matter.