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FOR IMMEDIATE RELEASE
Friday, January 17, 2014
Nationwide Contract Therapy Providers to Pay $30 Million to Resolve False Claims Act Allegations

Contract therapy providers RehabCare Group Inc., RehabCare Group East Inc. and Rehab Systems of Missouri and management company Health Systems Inc. have agreed to pay $30 million to resolve claims that they violated the False Claims Act by engaging in a kickback scheme related to the referral of nursing home business, the Justice Department announced today.   Additionally, as part of this settlement, the entities have agreed to restructure their business arrangement.

 

“Health care providers that attempt to profit from illegal kickbacks will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”

 

Between March 1, 2006, and Dec. 31, 2011, RehabCare allegedly arranged with Rehab Systems of Missouri to obtain Rehab Systems of Missouri ’s contracts to provide therapy to patients residing in 60 nursing homes controlled by Rehab Systems majority-owner James Lincoln.   In exchange for this stream of referrals, RehabCare allegedly paid Rehab Systems a $400,000 to $600,000 upfront payment and allowed Rehab Systems to retain a percentage of the revenue generated by each referral.  

 

“The Anti-Kickback Statute is intended to protect patients and federal health care programs from fraud and abuse,” said Acting U.S. Attorney for the District of Minnesota John Marti.   “We will remain vigilant in pursuing entities that improperly further their financial interest at the expense of the Medicare Trust Fund.”

 

“This settlement sends a message to those who seek to improperly take advantage of the Medicare program,” said U.S. Department of Health and Human Services Office of Inspector General Special Agent in Charge Gerald T. Roy.   “The Office of the Inspector General, Kansas City Regional Office will continue to work aggressively to eliminate this type of misconduct from our health care system.”

 

“The FBI will continue to work with its partners to combat this type of abuse,” said Special Agent in Charge of the FBI’s Minneapolis Office J. Chris Warrener.   “It remains committed to the elimination of fraud to ensure the integrity of federal health care programs.”

 

This civil settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered more than $17.1 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.

 

The settlement resolves allegations originally brought in a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  The whistleblower will receive $5.7 million as its share of the recovery in this case.                

 

The case was handled by the U.S. Attorney’s Office for the District of Minnesota with assistance from the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Eastern District of Missouri, the Federal Bureau of Investigation and the U.S. Department of Health and Human Services Office of Inspector General.  This action was supported by the Elder Justice and Nursing Home Initiative that coordinates the department’s activities combating elder abuse, neglect and financial exploitation, especially as they impact beneficiaries of Medicare, Medicaid and other federal health care programs. 

 

The lawsuit is captioned U.S. ex rel. Health Dimensions Rehabilitation Inc. v. RehabCare Group Inc., et. al., Case No. 4:12-cv-00848 AGF (E.D. Mo.).   The claims settled by this agreement are allegations only; there has been no determination of liability. 

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