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Grace Healthcare Settles False Claims Act Case for $2.7 Million

Grace Healthcare, LLC and its affiliated company, Grace Ancillary Services, LLC (collectively “Grace”) based in Chattanooga, Tennessee, have agreed to settle a qui tam lawsuit for $2.7 million. Grace Healthcare is a nursing home manager. Grace Ancillary provided physical, occupational and speech therapy in some of the nursing facilities managed by Grace Healthcare.

The government alleged that between 2007 and 2011, Grace set quotas for its therapists to encourage them to perform large amounts of therapy per patient in order to meet Grace’s target for Medicare revenue, whether or not the patients actually needed that amount of therapy. As a result, it was alleged that Grace’s therapists billed Medicare for unnecessary rehabilitation services in violation of the False Claims Act. The allegations first surfaced in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by a former Grace employee.

As his reward under the qui tam provisions of the False Claims Act, whistleblower Doug Ottinger will receive $405,000 of the settlement amount.