Healthcare News & Insights

Accused pay $30M to resolve alleged False Claims Act violations

The Justice Department recently announced that three contract therapy providers and their management company have agreed to pay $30 million to resolve claims that they violated the False Claims Act.

GavelStethRehabCare Group, Inc., RehabCare Group East, Inc., Rehab Systems of Missouri and Health Systems, Inc., allegedly engaged in a kickback scheme related to the referral of nursing home business.

According to the Justice Department, between March 1, 2006, and Dec. 31, 2011, RehabCare was accused of arranging with Rehab Systems of Missouri to obtain Rehab Systems of Missouri’s contracts to provide therapy to patients living in 60 nursing homes controlled by Rehab Systems majority-owner James Lincoln. In exchange for this stream of referrals, RehabCare allegedly paid Rehab Systems a $400,000 to $600,000 upfront payment and allowed Rehab Systems to retain a percentage of the revenue generated by each referral.

Restructure business arrangement

The claims settled by this agreement, however, are allegations only. There has been no determination of liability. Additionally, as part of this settlement, the entities have agreed to restructure their business arrangement.

“The Anti-Kickback Statute is intended to protect patients and federal healthcare programs from fraud and abuse,” said John Marti, acting U.S. attorney for the District of Minnesota. “We will remain vigilant in pursuing entities that improperly further their financial interest at the expense of the Medicare Trust Fund.”

Whistleblower lawsuit

The settlement resolves allegations originally brought about in a lawsuit filed by a whistleblower under the False Claims Act. The whistleblower, in this case, will receive $700,000 as its share of the recovery.

“Healthcare providers that attempt to profit from illegal kickbacks will be held accountable,” said Stuart Delery, assistant attorney general for the Justice Department’s Civil Division. “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”

This civil settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative.

Since January 2009, the Justice Department has recovered more than $17.1 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal healthcare programs.












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