Kindred subsidiary to pay $125 million to settle false-claims allegations

Nursing home therapy giant RehabCare has agreed to pay the government $125 million to settle a whistle-blower lawsuit alleging it knowingly caused facilities it contracted with to inappropriately bill Medicare for services.

Attempts to reach RehabCare and its parent company, Kentucky-based Kindred Healthcare, for comment were not immediately successful Tuesday morning. But the settlement did not include a determination of liability.

RehabCare provides contracted rehabilitation therapy to more than 1,000 skilled-nursing facilities. Kindred had operating revenue of $5 billion in 2014, according to the Modern Healthcare financial database.

In the lawsuit, the whistle-blowers and government alleged that RehabCare set unrealistic financial goals and scheduled therapy to get maximum reimbursements regardless of patients' actual needs.

Among other things, RehabCare allegedly scheduled and reported therapy after the patients' treating therapists had recommended they be discharged from therapy. It also allegedly reported that skilled therapy had been provided to patients who were sleeping at the time or otherwise unable to undergo or benefit from therapy.

The provider also allegedly placed patients in the highest therapy reimbursement levels rather than determining their levels of care based on individualized evaluations.

The U.S. Justice Department also announced Tuesday settlements with four skilled-nursing facilities for their roles in submitting false claims to Medicare based on therapy provided by RehabCare. Those settlements include:
  • Wingate Healthcare Inc. and 16 of its facilities in Massachusetts and New York for $3.9 million.
  • THI of Pennsylvania at Broomall and THI of Texas at Fort Worth for $2.2 million.
  • Essex Group Management and two of its Massachusetts facilities for $1.375 million.
  • Frederick County, Maryland, which formerly operated Citizens Care skilled-nursing facility, for $750,000.
Attempts to reach the facilities’ operators for comment were not immediately successful Tuesday.

In 2015 and 2014, the Justice Department also announced settlements with four other skilled-nursing facility providers.

Two whistle-blowers filed the original lawsuit against RehabCare: Janet Halpin, a physical therapist and former rehabilitation manager for RehabCare; and Shawn Fahey, an occupational therapist who worked for RehabCare. Under the False Claims Act, whistle-blowers may file lawsuits on behalf of the government, and the government can then choose to intervene in those suits as it did here. In successful whistle-blower cases, whistle-blowers are entitled to a portion of the money recovered by the government. In this case, Halpin and Fahey will receive a total of nearly $24 million.

Lisa Schencker

Lisa Schencker covers legal issues and enforcement agencies. Before joining Modern Healthcare in 2014, she was an education reporter for the Salt Lake Tribune and before that wrote for the Bakersfield Californian and the Scranton (Pa.) Times-Tribune. She has bachelor’s and master’s degrees in journalism from the University of Illinois at Urbana-Champaign.

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