A federal healthcare fraud investigation into a skilled nursing facility rarely stops at the facility's door. When the Department of Justice opens a case over billing for worthless services, inflated staffing reports, or unsupported therapy minutes, the person who owns or runs the facility is often the real target. Kevin Breslin, former chief executive of a 23-facility Wisconsin nursing home operator, found that out in November 2025: a federal court sentenced him to 90 months in prison and ordered $146 million in restitution for diverting resident-care funds.
From Facility Audit to Operator Investigation
A nursing home investigation usually opens with a records request to the facility: cost reports, staffing logs, therapy documentation. That request can be addressed to the operator personally, not only the corporate entity. DOJ's civil side uses a civil investigative demand to compel documents and testimony before filing suit, detailed in our guide to responding to a civil investigative demand. Prosecutors building a criminal case use a grand jury subpoena, reaching personal financial records and staff communications; the two tracks can run in parallel. The Justice Manual, at section 9-28.000, directs prosecutors to focus on culpable individuals from the start of a corporate case and bars a corporate resolution from shielding an individual absent extraordinary circumstances approved at senior levels of the Department.
Worthless Services, Staffing and Therapy Theories
Three theories drive nursing home fraud investigations of operators. Worthless services means billing Medicaid or Medicare for care so deficient it amounts to no care at all; in a 2023 settlement, the landlord and three former operators of a New York nursing home, Leon Melohn, Alan Schwartz, Jeffrey Vegh, and Jack Jaffa, personally paid $7,168,000 to resolve allegations of medication errors, falls, and pressure ulcers caused by understaffing. Staffing fraud targets records submitted to state surveyors or federal cost reports that overstate the nursing hours actually provided. Therapy fraud targets billing for rehabilitation minutes or levels of care the documentation does not support. Each theory can run as a civil False Claims Act case, a criminal health care fraud charge, or both. Our article on billing error or fraud explains how investigators sort an honest mistake from a fraud theory, a distinction that often decides an operator's track.
The KBWB-Atrium Case: When the Theory Turns Criminal
KBWB-Atrium shows how a diversion theory becomes operator-level criminal exposure. Breslin pleaded guilty to health care fraud and tax conspiracy on December 17, 2024; KBWB Operations LLC, doing business as Atrium Health and Senior Living, pleaded guilty on January 21, 2025. The government traced Medicare and Medicaid funds meant for resident care into owner distributions Breslin and the company's other owners took instead of paying vendors, payroll taxes, and employee benefits, regardless of the facilities' financial condition. Assistant Attorney General Brett A. Shumate said health care fraud "drives prices up for all Americans and can cause serious negative outcomes for patients." The restitution and forfeiture order attached to Breslin individually, not only to the corporation.
A 90-month sentence for one nursing home executive shows DOJ's individual accountability policy is not theoretical: the government pursued the operator as hard as the company.
What an Investigation Asks of the Operator Personally
An investigation reaches well past the facility's billing system. Investigators ask about referral arrangements with hospitals, home health agencies, and physician groups, the relationships the anti-kickback statute and Stark Law govern when a referral source holds a financial stake in the facility's census. They ask who set staffing ratios, who signed cost reports, and who controlled resident trust accounts. An operator who has not retained counsel before these interviews risks admissions that attach to them personally. A documented compliance program, the subject of our guide to building an effective compliance program, is evidence of intent an operator cannot reconstruct after the subpoena arrives.
Why Early Legal Counsel Is Critical
It is critical that nursing home operators and administrators promptly retain experienced healthcare defense counsel upon receiving a civil investigative demand, grand jury subpoena, or any other sign of a government inquiry. Early legal intervention can protect the operator's rights, ensure appropriate responses to government requests, avoid inadvertent admissions during interviews, and preserve relevant defenses. Delaying legal representation can significantly affect the outcome of a matter and expose the operator to personal criminal and civil liability that a facility-level response alone will not resolve.
How Health Law Alliance Can Help
Health Law Alliance's healthcare fraud defense attorneys defend healthcare professionals and companies under federal investigation, and the firm's skilled nursing facility audit defense practice handles the related facility-level audit. Health Law Alliance's attorneys have overseen 2,000+ audits and handled 5,000+ matters, with 25+ years of experience. If your facility or your own conduct as an operator is the subject of a civil investigative demand, grand jury subpoena, or related government inquiry, contact Health Law Alliance for a free, confidential consultation.
