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Department of Justice
U.S. Attorney’s Office
District of Massachusetts

FOR IMMEDIATE RELEASE
Friday, September 5, 2014

Three Companies To Pay $3.75 Million For Submitting False Claims For Rehabilitation Therapy

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Boston – Life Care Services LLC (LCS), a Des Moines, Iowa-based manager of skilled nursing facilities, its affiliate, group purchasing organization Care Purchasing Services LLC (CPS), and CoreCare V, LLP, d/b/a ParkVista, a skilled nursing facility in Fullerton, Calif., have entered into agreements to pay a total of $3.75 million to resolve allegations that they submitted, or caused the submission of, false claims for rehabilitation therapy purportedly provided by RehabCare Group East, Inc. (RehabCare), a subsidiary of Kindred Healthcare, Inc.

“Patients in skilled nursing facilities and their families should have confidence that the facilities are not allowing therapy companies to manipulate the therapy they provide based on financial motives,” said Carmen M. Ortiz, United States Attorney for the District of Massachusetts. “Settlements like this one show that, when a facility contracts with an outside rehabilitation therapy provider, the facility has a continuing responsibility to ensure that the provider is not engaged in conduct that causes the submission of false claims to Medicare.”

LCS has operated and managed skilled nursing facilities across the country, including ParkVista and, until 2013, a facility in Massachusetts. The settlements resolve allegations that ParkVista submitted, and LCS caused both ParkVista and the Massachusetts facility to submit, false claims that sought inflated amounts of Medicare reimbursement based on the provision of unreasonable or unnecessary rehabilitation therapy that was dictated by financial considerations rather than patient needs. LCS’ affiliate, CPS, referred RehabCare to ParkVista and the Massachusetts facility. The United States alleges that LCS and ParkVista failed 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,” thereby causing ParkVista and the Massachusetts facility to bill for their Medicare patients at the highest therapy reimbursement level, and then providing less therapy to those same patients outside the assessment reference periods, when the facilities were not required to report to Medicare the amount of therapy RehabCare was providing to their patients. In that way, RehabCare and the facilities “ramped up” Medicare patients’ therapy minutes when it served to maximize the reimbursement rate and correspondingly reduced the patients’ therapy minutes, regardless of patient need, when the time spent on that therapy would not affect the Medicare reimbursement rate. The government alleges that, as a result of RehabCare’s practice of “ramping,” ParkVista and the Massachusetts facility often billed Medicare for their patients’ care at the highest therapy-based levels, even though the patients often were not receiving therapy at those levels.

The settlements further resolve allegations that LCS and ParkVista failed to prevent other RehabCare practices designed to inflate Medicare reimbursement, including: (1) in lieu of using individualized evaluations to determine the level of care most suitable for each patient’s clinical needs, presumptively placing patients in the highest reimbursement level unless it was shown that the patients could not tolerate that amount of therapy; (2) providing 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 therapy disciplines to ensure targeted reimbursement levels were achieved; (4) providing significantly higher amounts of therapy on the final day of an assessment reference period in order to achieve the minimum level of therapy necessary to achieve the highest RUG level; and (5) reporting estimated or rounded minutes instead of reporting the actual minutes of therapy provided.

As recounted in the settlement agreement with LCS and CPS, the United States alleges that LCS had a reduced incentive to monitor RehabCare adequately, since RehabCare was paying CPS three percent of the revenues RehabCare received from those facilities. Finally, the settlement with LCS and CPS resolves the United States’ allegation that CPS accepted a kickback from RehabCare in the form of the “free” services of a RehabCare employee.

“The provision of Medicare benefits must be dictated by patient need, not the fiscal interests of providers,” said Assistant Attorney General Stuart F. Delery for the Justice Department’s Civil Division. “Today’s settlement demonstrates the Department’s commitment to safeguarding both Medicare beneficiaries and taxpayer dollars by holding accountable all entities involved in billing for unnecessary services.”

This matter was investigated by the Department of Health and Human Services, Office of the Inspector General and the Federal Bureau of Investigation, and was handled by District of Massachusetts Assistant United States Attorneys Gregg Shapiro and Patrick Callahan and Department of Justice Trial Attorneys Christelle Klovers and Rohith Srinivas.

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Updated December 15, 2014