Two Companies to Pay $3.75 Million for Allegedly Causing Submission of Claims for Unreasonable or Unnecessary Rehabilitation Therapy at Skilled Nursing Facilities

Life Care Services LLC (LCS), a manager of skilled nursing facilities based in Des Moines, Iowa, and CoreCare V LLP, doing business as ParkVista, a skilled nursing facility in Fullerton, California, have agreed to pay a total of $3.75 million to the government for causing the submission of false claims to Medicare for unreasonable or unnecessary rehabilitation therapy purportedly provided by RehabCare Group East Inc., a subsidiary of Kindred Healthcare Inc. 

“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.”

LCS has operated and managed skilled nursing facilities across the country, including ParkVista and, until 2013, a facility in Massachusetts.  At the suggestion of LCS, ParkVista and the Massachusetts facility hired RehabCare to provide rehabilitation therapy services at their facilities. 

The settlement resolves allegations that ParkVista submitted and LCS caused both ParkVista and the Massachusetts facility to submit false claims for rehabilitation therapy.  The government alleges that LCS and ParkVista failed to prevent RehabCare from providing unreasonable or unnecessary therapy to patients in order to increase Medicare reimbursement to the facilities.  The government contended that the reported therapy did not reflect the lower amounts of therapy generally provided to patients over the course of their stay. 

The settlement further resolves allegations that LCS and ParkVista failed to prevent other RehabCare practices designed to inflate Medicare reimbursement, including: 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; 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; arbitrarily shifting the number of minutes of planned therapy between therapy disciplines to ensure targeted reimbursement levels were achieved; and reporting estimated or rounded minutes instead of reporting the actual minutes of therapy provided. 

“Patients in skilled nursing facilities and the patients’ families should be able to have confidence that the facilities are not allowing therapy companies to manipulate the amount of therapy being provided based on financial motives,” said U.S. Attorney Carmen M. Ortiz 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.”

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $22.4 billion through False Claims Act cases, with more than $14.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The case was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Massachusetts, with assistance from the U.S. Department of Health and Human Services-Office of the Inspector General and the FBI .  The claims resolved by the settlements are allegations only, and there has been no determination of liability.