Genesis Healthcare to pay $54 million to settle fraudulent billing and poor nursing care claims

Genesis Healthcare will pay the federal government $53.6 million to settle six lawsuits alleging that companies the post-acute care system acquired submitted false Medicare claims for unnecessary treatment and delivered grossly substandard nursing care, the U.S. Justice Department announced Friday.

Kennett Square, Pa.-based Genesis, which is one of the nation's largest investor-owned skilled nursing, senior living and rehabilitation therapy providers with more than 500 skilled-nursing facilities in 34 states, has acquired a number of post-acute care providers over the past several years.

One of its acquisitions and its subsidiaries—Skilled Healthcare Group, Skilled Healthcare and Creekside Hospice—were accused of billing Medicare for hospice services for patients who were not terminally ill and thus not eligible for the Medicare hospice benefits. The federal government also alleged the companies inappropriately billed the CMS for physician evaluation management services from April 2010 through March 2013.

Skilled Healthcare Group and its subsidiaries were acquired by Genesis in February 2015, which was after the conduct at issue in the settlement, the Justice Department noted.

Skilled Healthcare subsidiaries allegedly provided therapy to certain patients longer than necessary or billed more therapy minutes than patients actually received. The companies allegedly assigned patients a higher resource utilization group designation than necessary, which required more skilled therapy and financially overburdened the Medicare, Tricare and Medicaid programs from 2005 through 2013.

One of the companies also allegedly submitted false claims to Medicare and MediCal programs some of its nursing homes for services that were grossly substandard or "worthless" and thus ineligible for payment. Over the period of September 2003 through Jan. 3, 2010, the company allegedly did not meet baseline standards required for government reimbursement and nor provide adequate nurse staffing.

"It's disturbing when healthcare companies bill Medicare and Medicaid to care for vulnerable patients, but provide grossly substandard care and medically unnecessary services just to boost company profits," Steven Ryan, special agent in charge for the HHS' Office of Inspector General, said in a statement.

The final set of allegations involve Sun Healthcare Group, SunDance Rehabilitation Agency and SunDance Rehabilitation Corp. for purportedly submitting false claims to the Medicare Part B program from 2008 through Sept. 27, 2013. The companies allegedly billed for outpatient therapy services provided in the State of Georgia that were not medically necessary or unskilled in nature.

Genesis acquired Sun Healthcare Group, SunDance Rehabilitation Agency and SunDance Rehabilitation in December 2012.

The whistle-blowers, which include seven former employees of companies that were acquired by Genesis, will receive a combined $9.67 million for their efforts.