The USJustice Department has announced that KBWB Operations LLC, which did business as Atrium Health and Senior Living (KBWB-Atrium), and former Chief Executive Officer and Managing Member Kevin Breslin of KBWB-Atrium, both pleaded guilty to one count of health care fraud and one count of tax conspiracy related to the operation of numerous skilled nursing facilities.

Breslin, 58, of Hoboken, New Jersey, pleaded guilty in the U.S. District Court for the Western District of Wisconsin on Dec. 17, 2024. KBWB-Atrium pleaded guilty in the same court on Jan. 21. Breslin is one of six owners of KBWB-Atrium. KBWB-Atrium’s corporate headquarters was located in Little Falls, New Jersey, and its Midwest corporate office was located in Appleton, Wisconsin. KBWB-Atrium operated and owned nursing facilities in New Jersey, Wisconsin, and Michigan.

On Feb. 1, 2023, a Wisconsin grand jury returned a 12-count indictment against defendants Breslin and KBWB-Atrium (collectively the defendants) charging health care fraud and tax conspiracy, among other charges. According to court documents, from approximately Jan. 1, 2015, to in or about September 2018, KBWB-Atrium operated and owned 23 skilled nursing facilities in Wisconsin, and Breslin was responsible for overseeing all of KBWB-Atrium’s operations. The primary source of income for the KBWB-Atrium Wisconsin skilled nursing facilities was federal Medicare and Medicaid funds from the Centers for Medicare and Medicaid Services (CMS).

According to court documents, the defendants’ alleged health care fraud scheme involved unlawfully diverting CMS funds intended for the operation, management, maintenance, and care of the residents of the KBWB-Atrium Wisconsin skilled nursing facilities for other purposes and personal expenses. The defendants allegedly prioritized distributions and guaranteed payments to KBWB-Atrium’s owners regardless of KBWB-Atrium’s financial situation. The defendants’ alleged actions resulted in failing to meet the required federal regulations governing skilled nursing facilities, including not operating the KBWB-Atrium Wisconsin skilled nursing facilities in a manner that would enhance residents’ quality of life. According to court documents, the defendants also knew that vendors were not being paid for extended periods of time or some were not paid at all for their services. Additionally, defendants allegedly failed to pay third-party administrators monies deducted from KBWB-Atrium employees’ paychecks for insurance premiums and 401(k) plan contributions.

As a part of the tax conspiracy alleged in court documents, Breslin, acting on behalf of KBWB-Atrium, directed that income taxes and employment taxes withheld from KBWB-Atrium Wisconsin employees’ paychecks not be paid over to the IRS. This caused employees to prepare tax returns listing those withholdings as having been paid to the IRS, which was false.

Importantly, this conviction is not for the developing offence of failure to prevent fraud.