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Press Release

Contract Rehabilitation Therapy Providers Agree to Pay $8.4 Million to Resolve False Claims Act Allegations Relating to the Provision of Medically Unnecessary Therapy Services

For Immediate Release
Office of Public Affairs

Select Medical Corporation and Encore GC Acquisition LLC have agreed to pay $8.4 million to resolve allegations that Select Medical Rehabilitation Services Inc. (SMRS) violated the False Claims Act by knowingly causing 12 skilled nursing facilities (SNFs) in New York and New Jersey to submit false claims to Medicare for rehabilitation therapy services that were not reasonable, necessary or skilled. Select Medical Corporation was the prior parent company of SMRS, while Encore GC Acquisition LLC is the successor-in-interest to SMRS. The alleged conduct occurred prior to Encore’s acquisition of SMRS. 

From 1997 through March 31, 2016, SMRS offered contract rehabilitation therapy services to SNFs across the country. The United States alleged that, at various times between Jan. 1, 2010, through March 31, 2016, SMRS contracted with 12 SNFs in New York and New Jersey to provide rehabilitation therapy services. The United States alleged that SMRS’ corporate policies and practices encouraged and resulted in the provision of medically unnecessary, unreasonable and unskilled therapy services being provided to patients at the 12 SNFs. 

“Today’s settlement reflects our commitment to protect patients and taxpayers by ensuring that the care provided to Medicare beneficiaries is dictated by their individual clinical needs and not by a provider’s financial interests,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “Contract rehabilitation therapy companies, like other health care providers, will be held accountable if they knowingly provide patients with unnecessary services that waste taxpayer dollars.”

“Skilled nursing facility residents and their families must be assured that the care and therapy that residents receive is based on medical need, not greed,” said Acting U.S. Attorney Rachael A. Honig for the District of New Jersey. “We must also protect the taxpayers by ensuring that Medicare pays only for appropriate services performed for legitimate medical purposes. We will hold all health care providers who violate the False Claims Act responsible for their actions.”

“Sticking taxpayers with a hefty bill for unnecessary health care services will never be tolerated,” said Special Agent in Charge Scott J. Lampert of the Department of Health and Human Services, Office of the Inspector General (HHS-OIG). “Working closely with our law enforcement partners, we will tirelessly pursue unscrupulous health care companies to protect patients and federal health care programs.”  

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Melissa Vail, a former SMRS employee. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned U.S. ex rel. Doe v. Select Medical Corporation et al.,No. 2:16-cv-03569 (D.N.J.). 

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of New Jersey, with assistance from HHS-OIG and the FBI Newark Field Office.

The investigation and resolution of this matter illustrate the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The matter was handled by Trial Attorney Yolonda Campbell of the Civil Division and Assistant U.S. Attorney Marihug Cedeño for the District of New Jersey.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Updated July 14, 2021

False Claims Act
Press Release Number: 21-625