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U.S. Joins Case Against Healthessentials Solutions
for Alleged False Claims Billings to Medicare

WASHINGTON - The United States has intervened in three qui tam suits accusing HealthEssentials Solutions Inc. (HES) of false claims billings to Medicare, the Justice Department announced today. Specifically, HES is accused of upcoding – the practice of improperly assigning a diagnosis code to a patient discharge that is not supported by the medical record for the purpose of obtaining a higher level of reimbursement. Additionally, it is alleged that the Kentucky-based provider of geriatric care knowingly charged Medicare for medically unnecessary services.

The three separate suits were filed in U.S. District Court in Louisville, Ky., by former employees of HES under the qui tam or whistleblower provisions of the False Claims Act. In addition to HES, the complaints name three individual defendants: HES Chief Executive Officer Michael Barr Chief Financial Officer, Norman Pfaadt; and Karen Stone, who worked in HES’s billing department. The suits have since been consolidated into a single case.

Under the qui tam statute, a private party, known as a “relator,” can file an action on behalf of the United States and receive a portion of the recovery. Under the False Claims Act, the United States may recover three times the amount of its losses plus civil penalties.

“The government’s intervention in this case demonstrates the Department’s continued commitment to stamp out fraudulent practices that threaten the integrity of the Medicare Trust Fund,” said Assistant Attorney General Peter D. Keisler, of the Justice Department’s Civil Division.

The complaints state that the company’s nurse practitioners provided services to federal health care program beneficiaries in nursing homes, assisted living facilities, and private homes. On its Medicare claims, HES had to select a billing code that accurately described the level of service and the location where the service was provided.

The complaints allege that HES upcoded in two ways in order to obtain greater reimbursement. First, HES used higher level billing codes than appropriate based on the services actually rendered. Second, HES billed for services that were provided in an assisted living facility, improperly using billing codes that describe services provided in a patient’s home. In addition to the upcoding allegation, the complaints allege that HES provided and billed for services that were not medically necessary. Medicare does not pay for services unless they are medically indicated and necessary for the health and well-being of the patient.

The investigation of the allegations in the qui tam complaints was conducted by the U.S. Attorney's Office in Louisville, Ky., the Department's Civil Division, and the Office of Inspector General of the Department of Health and Human Services.