Real estate investment trust Ventas, Louisville, Ky., confirmed last week that the company and its primary tenant, Vencor, have reached a $130 million settlement of Medicare and Medicaid fraud charges with the U.S. Justice Department.
The settlement, first reported on March 2 in Modern Healthcare's Daily Dose, includes a $104 million payment by Ventas and a $26 million payment by bankrupt long-term-care provider Vencor, said Ventas spokeswoman Lisabeth Weiner.
Under the settlement, which the government has yet to announce, Vencor and Ventas will admit no liability. Both will be required to sign a corporate integrity agreement, which has not yet been released.
Vencor first publicly acknowledged that it was under investigation for possible Medicare fraud in its Nov. 14, 1998, filing with the Securities and Exchange Commission. The first-known whistleblower suit against Vencor was filed in 1997 in U.S. District Court in Tampa, Fla. It alleged that Vencor double-billed Medicare for radiologic, respiratory and pharmaceutical services for nursing home residents. Vencor provided those services through a subsidiary called Vencare and charged Vencor's nursing homes, which billed Medicare. Eleven whistleblower suits were filed against Vencor, Weiner said.
Meanwhile, Vencor will continue to make payments on $80 million owed to the federal government for Medicare overpayments unrelated to fraud. The company has repaid about $15 million of that amount.
The settlement terms, laid out before a federal bankruptcy judge in December, received court approval on March 1 as part of the approval of Vencor's financial reorganization plan, Weiner said (March 5, p. 6). The company filed for Chapter 11 bankruptcy in September 1999.
Ventas will make a $34 million payment to the government the day the reorganization plan becomes effective, which will be no later than May 1, and spread the remaining $70 million in payments over five years. Vencor spun off its physical assets to form Ventas in 1998.
When it emerges from bankruptcy once the reorganization is completed, Vencor will be renamed Kindred Healthcare. It operates 295 nursing homes in 31 states and 56 hospitals in 23 states.