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NEWS & FEATURES

Assisted Living Giant Is Focus of Federal Probe

The federal government is investigating the operation of Emeritus, which operates facilities in Orlando, Ocoee, Lake Mary, Apopka, Oviedo and Winter Springs

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The federal government is investigating the operations of the nation's largest assisted living company, Emeritus Senior Living, according to a company official.

Karen Lucas, a spokeswoman for the company, described the investigation as a routine civil probe, and said Emeritus was "cooperating fully" with the federal authorities.

A person with direct knowledge of the investigation portrayed it as two-pronged effort involving both the Justice Department and the inspector general for the U.S. Department of Health and Human Services. Since January of 2013, investigators have been exploring allegations of improper Medicaid billing, as well as other aspects of the company's business dealings, the person said.

News of the investigation, reported here for the first time, comes as the company prepares to merge with another major assisted living chain, Brookdale Senior Living, in a $2.8 billion deal. The planned merger was announced last week.

"As a matter of policy, we will not comment on a pending investigation beyond confirming its existence, because cooperation includes not publicly airing information that might compromise or influence the government's review," Lucas said.

The Health and Human Services department oversees the Medicare and Medicaid insurance programs and its inspectors often focus on billing issues, including efforts to bilk the programs through fraudulent requests for reimbursement.

Emily Langlie, a spokeswoman for the Justice Department, would not discuss the probe. The Health and Human Services department also would not comment.

A Brookdale spokeswoman declined to say if the federal investigation was discussed by the two companies in the negotiations leading to the announced merger.

"We are limited in what we can say due to the transaction," said the spokeswoman, Julie Davis.

In the past, Emeritus has encountered problems with its Medicaid billing practices in Texas, where it paid $1.86 million to settle fraud charges in 2007. The state Attorney General's office alleged that Emeritus improperly billed for services provided at 11 of its facilities in the state and "routinely submitted false claims to the Texas Medicaid program." Under the terms of the settlement the company denied any wrongdoing.

Emeritus, a Seattle-based chain that has grown enormously in recent years, was the subject of a ProPublica/PBS "Frontline" series in 2013 that focused on the company's business practices, its entanglements with regulators in numerous states and its lengthy record of safety lapses. Over the past two decades, Emeritus has evolved from a small regional player into a publicly traded outfit with approximately 500 facilities spread across the country and nearly $2 billion in annual revenue. Its facilities provide housing, meals and day-to-day help to the elderly and disabled.

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