Department of Justice Seal




(202) 514-2007


TDD (202) 514-1888



WASHINGTON, DC - National Healthcare Corporation (NHC) will pay the United States $27 million to resolve allegations under the False Claims Act that the company submitted falsely inflated reports to Medicare, the Justice Department announced today. The government alleged that beginning in 1991 the company submitted nursing home cost reports that falsely claimed that facility staff members spent more time caring for Medicare patients than they actually did in order to collect additional money from the federal health care program.

The complaint against NHC alleges that the company submitted cost reports that included false claims for reimbursement. NHC, headquartered in Murfreesboro, Tennessee, owns, leases or provides services to 105 nursing homes nationwide.

"Today's settlement by the Justice Department demonstrates the government's determination to combat health care fraud by providers," said David W. Ogden, Assistant Attorney General of the Department of Justice's Civil Division.

The complaint alleges that the cost reports overstated the number of hours that the nursing staff spent taking care of Medicare patients. The hours submitted on the cost reports were contradicted by the nursing staff's time records. The lawsuit also alleges that certain personnel at some nursing homes were billed as performing therapy on Medicare patients when they did not do that type of work. By billing these employees as performing therapy, the homes received additional payments from Medicare.

"Our Office will continue to aggressively address false statements made by providers, which adversely affect our nation's federal health care programs," added Donna A. Bucella, the United States Attorney for the Middle District of Florida.

The suit was initially brought in 1996 by Philip Charles Braeuning, a former nursing home administrator at Palm Gardens of Orlando, a facility then-managed by NHC. The United States intervened in the suit on March 18, 1997. Under the False Claims Act, those who file false claims against the federal government may be subject to three times the damages caused and penalties of $5,000 to $10,000 per violation. Under certain circumstances, the whistleblower is entitled to a portion of the government's recovery. The United States has agreed to pay Mr. Braeuning 20 percent of the settlement, as it is collected.

As a condition of the settlement of this case, NHC entered into a Corporate Integrity Agreement with the Office of Inspector General of the United States Department of Health and Human Services.

"This settlement reflects our determination to hold accountable dishonest providers and to recover every dollar owed Medicare," said June Gibbs Brown, Inspector General for the Department of Health and Human Services. "The message should be clear that we will not tolerate the misuse of our nation's scarce health resources."

The case has been investigated by the Office of Inspector General of the Department of Health and Human Services. Audit assistance was provided by the Office of Audit Services of the Office of Inspector General of the Department of Health and Human Services.

The lawsuit is filed in the Middle District of Florida as United States ex rel. Braeuning v. National Healthcare, Limited Partnership, et al., No. 97-2715.