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Justice News

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

FOR IMMEDIATE RELEASE
Tuesday, January 12, 2016

United States Recovers Over $133 Million For Fraudulent Nursing Home Therapy Claims

BOSTON – United States Attorney Carmen M. Ortiz announced today settlement agreements totaling over $133 million with the nation’s largest nursing home rehabilitation therapy provider, RehabCare, now a part of Kindred Healthcare, of Louisville, Ky., and with four skilled nursing facility operators, Wingate Healthcare, Essex Group Management, Fundamental Administrative Services, and Frederick County (Maryland).  The settlements resolve allegations that RehabCare and these nursing facility operators falsely inflated therapy reimbursement claims to Medicare.  The false claims were based on unreasonable, unnecessary, or unskilled therapy, or on therapy that never occurred.

In conjunction with the finalization of the settlement, the government’s complaint and exhibits against RehabCare were unsealed. 

“These False Claims Act settlements address allegations that RehabCare and its nursing facility customers engaged in a systematic and broad-ranging scheme to increase profits by delivering, or purporting to deliver, therapy in a manner that was focused on increasing Medicare reimbursement rather than on the clinical needs of patients,” said U.S. Attorney Ortiz.  “The complaint outlines the extent and sophistication of this fraud, and the government’s continuing work to ensure that the provision of care in skilled nursing facilities is based on patients’ clinical needs.”

The complaint alleges that RehabCare’s schemes included the following:

  • Presumptively placing patients in the highest therapy category, rather than relying on individualized evaluations to determine the level of care most suitable for each patient’s clinical needs;

  • “Ramping,” i.e., during the period prior to October 1, 2011, boosting the amount of reported therapy during so-called “assessment reference periods,” thereby causing and enabling nursing facilities to bill for the care of their Medicare patients at the highest therapy reimbursement level, while providing materially less therapy to those same patients outside the assessment reference periods when the nursing facilities were not required to report to Medicare the amount of provided therapy;

    Scheduling and reporting the provision of therapy to patients even after the patients’ treating therapists had recommended that they be discharged from therapy;

  • Arbitrarily shifting the number of minutes of planned therapy between different therapy disciplines to ensure targeted therapy reimbursement levels were achieved, regardless of the clinical need for the therapy;

  • Providing significantly higher amounts of therapy at the end of a therapy measurement period not due to medical necessity but to reach the minimum time threshold for the highest therapy reimbursement level and thus to cause and enable nursing facilities to bill for the care of their Medicare patients accordingly, even though the patients were receiving materially less therapy on preceding days;

  • Inflating initial reimbursement levels by reporting time spent on initial evaluations as therapy time in violation of the Medicare prohibition on counting initial evaluation time as therapy time;

  • Reporting that skilled therapy had been provided to patients when in fact the patients were asleep or otherwise unable to undergo or benefit from skilled therapy, e.g., when a patient had been transitioned to palliative end-of-life care; and

  • Reporting estimated or rounded minutes instead of reporting the actual minutes of therapy provided.

“Medicare beneficiaries are entitled to receive care that is dictated by their clinical needs rather than the fiscal interests of healthcare providers,” said Acting Assistant Attorney General Benjamin C. Mizer for the Justice Department’s Civil Division.  “All providers, whether contractors or direct billers of taxpayer-funded federal healthcare programs, must be held accountable when their actions knowingly cause bills for unnecessary services.”

“Patients and taxpayers rightly expect nothing less than suitable, high-quality health care,” said Phillip M. Coyne, Special Agent in Charge, Office of Inspector General of the U.S. Department of Health and Human Service’s Boston Regional Office.  “Providers more concerned with increasing Medicare profits, though, can expect an aggressive investigation and prosecution.”

"Whether it’s false billing or unnecessary medical treatments, the FBI will continue to aggressively investigate healthcare providers that fraudulently bill Medicare,” said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division.  “Together, with our law enforcement partners, we’ll pursue those individuals and institutions that look to abuse the healthcare system in favor of their bottom line."

The settlements announced today include:  a $125 million settlement with RehabCare; a $3.9 million settlement with Wingate Healthcare and 16 of its nursing facilities in Massachusetts and New York; a $1.375 million settlement with Essex Group Management and two of its Massachusetts nursing facilities, Brandon Woods of Dartmouth and Blaire House of Milford; a $2.2 million settlement with Fundamental and two of its nursing facilities, Broomall (Pennsylvania) Rehabilitation and Nursing Center and The Courtyards at Fort Worth (Texas); and a $750,000 settlement with Frederick County, Maryland, which formerly operated the Citizens Care nursing facility in Frederick, Md.

Several other nursing facility operators previously settled with the United States for their role in submitting to Medicare claims that were false because of RehabCare’s alleged misconduct:

HHS Hotline.  The government encourages anyone with information about the practices described in the government’s complaint, or similar practices involving rehabilitation therapy in nursing facilities, to contact the Department of Health and Human Services, Office of Inspector General hotline via telephone, 1-800-HHS-TIPS (1-800-447-8477), or in writing via https://forms.oig.hhs.gov/hotlineoperations/.

The settlements with RehabCare and Wingate Healthcare arise from a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act.  See United States ex rel. Halpin and Fahey v. Kindred Healthcare, Inc., No. 11-12139-RGS (D. Mass.).  The False Claims Act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. 

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

COMPLAINT & EXHIBITS

Updated January 12, 2016