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Press Release

New York Catholic Nursing Chain to Pay $3.5 Million to Resolve Allegations Concerning Claims for Rehabilitation Therapy

For Immediate Release
U.S. Attorney's Office, District of Massachusetts

BOSTON – A New York operator of skilled nursing facilities entered into an agreement with the United States to pay $3.5 million to resolve allegations concerning inflated Medicare claims for rehabilitation therapy.

The Catholic Health Care System, a/k/a ArchCare, entered into an agreement concerning claims for therapy purportedly provided by its subcontractor, Physical and Occupational Rehabilitation Therapy and Speech-Pathology Services, PLLC, an affiliate of RehabCare Group East, Inc. (RehabCare), and Kindred Healthcare, Inc.

ArchCare operates Terence Cardinal Cooke Health Care Center in New York City and Ferncliff Nursing Home in Rhinebeck, New York, and it previously operated Kateri Residence in New York City (collectively, the ArchCare facilities).  This settlement resolves allegations that the three ArchCare facilities submitted claims to Medicare that sought inflated amounts of reimbursement based on either the provision of unreasonable or unnecessary rehabilitation therapy, or false reports of therapy being delivered.

The United States alleges that, prior to Oct. 1, 2011, the ArchCare facilities failed to take sufficient steps to prevent RehabCare from engaging in a pattern and practice of providing high levels of therapy that were not reasonable or necessary during so-called “assessment reference periods,” when Archcare was required to report to Medicare the amount of therapy it was providing to its patients.  ArchCare billed Medicare patients at the highest therapy reimbursement level, but RehabCare then provided less therapy to those same patients outside the assessment reference periods, when the facilities were not required to report to Medicare the amount of provided therapy.  As a result of this practice by RehabCare, ArchCare frequently billed Medicare for its patients’ care at the highest therapy-based levels, even though the patients often were not receiving therapy at those levels.

“This settlement is part of the government’s continuing effort to ensure that the provision of care in skilled nursing facilities is based on patients’ clinical needs and not tied to the financial targets of the companies providing their care,” said United States Attorney Carmen M. Ortiz.  “To its credit, ArchCare cooperated with the government’s investigation and took steps to address the issues that were revealed during the investigation.”

This settlement further resolves allegations that ArchCare failed to prevent other RehabCare practices designed to inflate Medicare reimbursement, including:  (1) presumptively placing patients in the highest reimbursement level unless it was shown that the patients could not tolerate that amount of therapy, rather than using individualized evaluations to determine the level of care most suitable for each patient’s clinical needs; (2) planning the minimum number of minutes of therapy required to bill at the highest reimbursement level while discouraging the provision of therapy in amounts beyond that minimum threshold, despite the Medicare requirement that the amount of care provided be determined by patients’ clinical needs; (3) arbitrarily shifting the number of minutes of planned therapy between different therapy disciplines to ensure targeted reimbursement levels were achieved; (4) reporting that time spent on initial evaluations was therapy time in order to avoid the Medicare prohibition on counting initial evaluation time as reimbursable therapy time; (5) reporting that time spent providing unskilled palliative care was time spent on reimbursable skilled therapy; and (6) reporting estimated or rounded minutes instead of reporting the actual minutes of therapy provided.

The government took ArchCare’s cooperation and its current practices into account in reaching the resolution being announced today.

This matter was investigated by the Department of Health and Human Services, Office of the Inspector General, and the Federal Bureau of Investigation.  The case was handled by Assistant U.S. Attorneys Gregg Shapiro and Patrick Callahan of Ortiz’s Affirmative Civil Enforcement Unit and Department of Justice Trial Attorneys Christelle Klovers and Rohith Srinivas.

Updated March 2, 2015