Ensign Group announces tentative settlement in overbilling allegations

The Ensign Group, Mission Viejo, Calif., has earmarked $48 million toward a tentative settlement agreement with the U.S. Justice Department that would resolve allegations that it overbilled Medicare.

Ensign, which operates post-acute and urgent-care facilities, has been under investigation since 2006, when regulators first delved into claims it submitted for rehabilitation services provided by six of its skilled-nursing facilities in Southern California.

Under the terms of the agreement-in-principle, Ensign will make a lump-sum payment in the second or third quarter of this year and enter into a corporate integrity agreement with HHS' inspector general's office. The agreement requires approval from the Justice Department, the inspector general's office and the court.

Ensign said in a news release that it put aside $15 million in reserves in the fourth quarter of last year, and expects to increase that amount by an additional $33 million this year.

The company added that it denies engaging in any illegal conduct and that the settlement is not an admission of wrongdoing.

The Justice Department closed the criminal portion of its investigation in December 2011, according to Ensign's annual report. But the next month, investigators issued a subpoena for patient records and other documents from six Southern California skilled-nursing facilities.

The documents were dated from 2007 to 2011. Ensign's external and independent internal auditors also received subpoenas.

While Ensign said it does not expect the settlement to have long-term financial implications, it lowered its 2013 earnings guidance to account for monitoring expenses associated with the corporate integrity agreement as well as $2.5 million in annual interest it will pay on a portion of the settlement amount.

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