The Department of Justice recently announced settlement agreements totaling over $133 million with the nation’s largest nursing home rehabilitation therapy provider, RehabCare, now a part of Kindred Healthcare, of Louisville, Kentucky, and with four nursing facility operators, Wingate Healthcare, Essex Group Management, Fundamental Administrative Services and Frederick County, Maryland.

The settlements resolve allegations that RehabCare and these nursing facility operators falsely inflated therapy reimbursement claims to Medicare. The false claims were based on unreasonable, unnecessary, or unskilled therapy, or on therapy that never occurred.

“These False Claims Act settlements address allegations that RehabCare and its nursing facility customers engaged in a systematic and broad-ranging scheme to increase profits by delivering, or purporting to deliver, therapy in a manner that was focused on increasing Medicare reimbursement rather than on the clinical needs of patients,” U.S. Attorney Carmen M. Ortiz said in a statement. “The complaint outlines the extent and sophistication of this fraud, and the government’s continuing work to ensure that the provision of care in skilled nursing facilities is based on patients’ clinical needs.”

The complaint alleges that RehabCare’s schemes included the following:

• Presumptively placing patients in the highest therapy category, rather than relying on individualized evaluations to determine the level of care most suitable for each patient’s clinical needs
• “Ramping,” i.e., during the period prior to Oct. 1, 2011, boosting the amount of reported therapy during so-called “assessment reference periods,” thereby causing and enabling nursing facilities to bill for the care of their Medicare patients at the highest therapy reimbursement level, while providing materially less therapy to those same patients outside the assessment reference periods when the nursing facilities were not required to report to Medicare the amount of provided therapy
• Scheduling and reporting the provision of therapy to patients even after the patients’ treating therapists had recommended that they be discharged from therapy
• Arbitrarily shifting the number of minutes of planned therapy between different therapy disciplines to ensure targeted therapy reimbursement levels were achieved, regardless of the clinical need for the therapy
• Providing significantly higher amounts of therapy at the end of a therapy measurement period not due to medical necessity but to reach the minimum time threshold for the highest therapy reimbursement level and thus to cause and enable nursing facilities to bill for the care of their Medicare patients accordingly, even though the patients were receiving materially less therapy on preceding days
• Inflating initial reimbursement levels by reporting time spent on initial evaluations as therapy time in violation of the Medicare prohibition on counting initial evaluation time as therapy time
• Reporting that skilled therapy had been provided to patients when in fact the patients were asleep or otherwise unable to undergo or benefit from skilled therapy, e.g., when a patient had been transitioned to palliative end-of-life care
• Reporting estimated or rounded minutes instead of reporting the actual minutes of therapy provided

The settlements announced today include a $125 million settlement with RehabCare; a $3.9 million settlement with Wingate Healthcare and 16 of its nursing facilities in Massachusetts and New York; a $1.375 million settlement with Essex Group Management and two of its Massachusetts nursing facilities, Brandon Woods of Dartmouth and Blaire House of Milford; a $2.2 million settlement with Fundamental and two of its nursing facilities, Broomall (Pennsylvania) Rehabilitation and Nursing Center and The Courtyards at Fort Worth, Texas; and a $750,000 settlement with Frederick County, Maryland, which formerly operated the Citizens Care nursing facility in Frederick, Maryland.