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Therapy Providers Settles Whistleblower’s Allegations

Three affiliated nationwide therapy providers and a Missouri-based nursing home owner have agreed to pay $30 million settle allegations made by a whistleblower in a qui tam lawsuit that they violated the False Claims Act and the Anti-Kickback Statute.  RehabCare Group, Inc., RehabCare Group East, Inc. (“Rehab”), Rehab Systems of Missouri (“Rehab Missouri”), and Health Systems, Inc. (“HSI”), were named in a quit tam lawsuit initiated in the United States District Court for the District of Minnesota.  After the United States joined the lawsuit, it was transferred to the United States District Court for the Eastern District of Missouri.

According to the whistleblower Health Dimensions Rehabilitation, Inc. (“Health Dimensions”), Rehab, Rehab Missouri, and HSI engaged in an improper kickback arrangement that resulted in the submission of false claims to Medicare for rehabilitative services provided to nursing home patients.    Health Dimensions is a Minnesota-based competitor of Rehab that provides physical, speech and occupational therapy in various settings, including nursing homes.

According to the qui tam complaint, the allegations involve Rehab Missouri’s contracts to provide therapy services in nursing homes owned by HSI.  According to the government, James Lincoln is the majority owner of both HSI and Rehab Missouri. The whistleblower and government alleged that Rehab and Rehab Missouri entered into an agreement around February 2006 that specified that Rehab Missouri and HSI would refer therapy patients in HSI’s nursing homes to Rehab in exchange for a one-time payment to Rehab Missouri of $600,000 and a percentage of the profits generated by the therapy services performed by Rehab.  According to the government, after the agreement was finalized, Rehab Missouri essentially ceased operations with the exception of collecting its percentage of the therapy profits which has exceeded $10 million.

The whistleblower contended that the initial payment to Rehab Missouri and the subsequent revenue stream allegedly shared by HSI and Rehab Missouri constituted illegal kickbacks under the Anti-Kickback Statute.  The Anti-Kickback Statute prohibits the exchange of anything of value to induce the referral of Medicare patients. The qui tam complaint alleged that Rehab knowingly submitted false claims to Medicare for therapy services that were provided to patients who were referred as part of the improper kickback scheme.  The government contended that thousands of patients were referred by Rehab Missouri to Rehab after the agreement was entered into in 2006.

Of the $30 million dollar settlement amount, the whistleblower will receive approximately $700,000 as its reward under the qui tam provisions of the False Claims Act.  To read more about whistleblower rewards, click here.

Business Litigation | False Claims Act & Whistle-blower Cases