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Whistleblowers Awarded $24 Million in Nursing Home Fraud Settlement

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On January 12, 2016, a nursing home company and two subsidiaries agreed to pay $125 million to settle a False Claims Act lawsuit alleging that they caused skilled nursing facilities to submit false claims to the government.  The relators’ combined share of $24 million represents just over 19 percent of the government’s recovery.  The case is United States ex rel. Halpin and Fahey v. Kindred Healthcare, Inc., et al., Case No. 1:11cv12139-RGS, and was filed in the U.S. District Court for the District of Massachusetts.

The qui tam action, in which the government intervened, was originally filed by two relators.  Janet Haplin is a physical therapist and former rehabilitation manager for Rehab Care; and Shawn Fahey is an occupational therapist who worked for RehabCare.

Kindred Healthcare purchased RehabCare Group, Inc. and RehabCare Group East Inc. in 2011.  The government’s complaint alleged that the companies submitted claims to Medicare for “rehabilitation therapy services that were not reasonable, necessary and skilled, or that never occurred,” according to the Department of Justice.

Among other violations, DOJ identified a number of practices that resulted in the fraudulent claims, including:

  • Presumptively placing patients in the highest therapy reimbursement level, rather than relying on individualized evaluations to determine the level of care most suitable for each patient’s clinical needs;
  • Scheduling and reporting the provision of therapy to patients even after the patients’ treating therapists had recommended that they be discharged from therapy;
  • Inflating initial reimbursement levels by reporting time spent on initial evaluations as therapy time rather than evaluation time; and
  • Reporting that skilled therapy had been provided to patients when 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).

The government also announced settlements with four skilled nursing facilities for submitting false claims to Medicare related to therapy provided (or not provided) by RehabCare.  According to DOJ, “these settlements include:  A $3.9 million settlement with Wingate Healthcare Inc. and 16 of its facilities in Massachusetts and New York; A $2.2 million settlement with THI of Pennsylvania at Broomall LLC and THI of Texas at Fort Worth LLC; A $1.375 million settlement with Essex Group Management and two of its Massachusetts facilities, Brandon Woods of Dartmouth and Blaire House of Milford and a $750,000 settlement with Frederick County, Maryland, which formerly operated the Citizens Care skilled nursing facility.”

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