Representative Cases - Skilled Nursing Facilities $125M settlement


BOSTON, January 12, 2016

Jeff Newman Law today announced that RehabCare Group Inc. (RehabCare) and Kindred Healthcare Inc.(Kindred), its parent company, (Kindred/RehabCare) has agreed to settle a False Claims Act (FCA), qui tam lawsuit alleging Medicare billing fraud in providing therapy services in skilled nursing facilities (SNF’s) in states across the country. Kindred/RehabCare has agreed to pay $125 million to the United States of America.

Jeff Newman Law represents Relators Janet Halpin and Shawn Fahey, who sued RehabCare/Kindred in the U.S. District Court in Boston under the whistleblower provisions of the federal False Claims Act. Halpin is a former Rehab Manager for Kindred/RehabCare at a skilled nursing facility in Haverhill Massachusetts. Relator Shawn Fahey, a licensed Occupational Therapist who worked for RehabCare in another skilled nursing facility in Haverhill Massachusetts. Both had first-hand knowledge of the company’s wrongdoings.

The whistleblower provisions of the federal law permits private citizens known as “relators” to bring lawsuits on behalf of the Government to and receive a portion of the proceeds of any settlement or judgment. “This particular settlement is an excellent example of what the False Claims Act is designed to encourage,” said Jeffrey Newman, who filed the December 2011 suit. “When a person has sufficient information about a major fraud against the government, this law provides strong incentive to come forward.

Kindred/RehabCare are like many other companies in the United States, provide Occupational, Physical and Speech therapy rehabilitative services to patients in skilled nursing facilities, much of which is covered by Medicare or other federal health programs.

According to the qui tam action filed by Attorney Newman on behalf of the relators in December 2011, Kindred /RehabCare caused its SNF customer to bill for unreasonable and unnecessary rehabilitation therapy. Many of the patients were billed to Medicare at the highest resource utilization group (RUG) rate, ultra high, during the patient’s Medicare A stay at the facility. The Complaint alleged that the company submitted fraudulent bills to Medicare in that the services billed for were excessive and unrelated to individual patient needs, as required by laws and regulations.

The United States Government intervened in the case in February 2015. The Government’s intervention 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 October 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; and
  • Reporting estimated or rounded minutes instead of reporting the actual minutes of therapy provided.

“Janet Halpin and Shawn Fahey helped the federal government recover millions of dollars in fraudulent payments to RehabCare, “said Jeffrey Newman. “The services provided to patients across the country were not based on their medical needs but rather increasing company profits. Ms. Halpin and Ms. Fahey have done a service to the taxpayers by recognizing and reporting the fraudulent scheme to the Government.”

The federal investigation was led by Assistant United States Attorney Gregg Shapiro and Assistant United States Attorney Patrick Callahan and Kriss Basil. “AUSA Gregg Shapiro and AUSA Patrick Callahan and Kriss Basil worked relentlessly for several years in cooperation with our firm and their extraordinary diligence and persistence resulted in the exposure of the activities that were alleged, to the benefit of patients now in skilled nursing facilities throughout the nation,” said Newman. The Department of Justice Trial Attorneys on the case were Christelle Klovers and Rohith Srinivas.

The agreed to whistleblower award to the relators is $23,888,000 plus interest.

Jeff Newman Law is a public interest firm handling complex litigation, representing whistleblowers in various kinds of cases including Medicare fraud, military contract fraud, pharmaceutical company cases, financial fraud and tax evasion cases where a broad range of public interest is at stake.

For further information, contact Jeffrey A. Newman at Jeff Newman Law at 617-823-3217 or by email to Mr. Newman at