$10M False Claims Act Settlement Serves as a Reminder for Skilled Nursing Facilities
The Department of Justice (“DOJ”) recently entered into a $10M settlement with two consulting companies and nine affiliated skilled nursing facilities in Florida and Alabama (the “SNF companies”). The settlement resolves allegations of medically unreasonable and unnecessary therapy provided by these SNF companies.
According to the allegations, between 2009 and 2013 these SNF companies inflated the patient’s Resource Utilization Group (RUG) above the amount of skilled therapy actually required by the patient in order for the SNF companies to receive a higher level of reimbursement. The United States alleged that the SNF companies’ corporate policies and practices encouraged the provision of medically unreasonable and unnecessary therapy without regard to the patients’ clinical needs, resulting in false claims based on inflated RUG levels.
In this case, the lawsuit was filed by several former employees of the SNF companies, known as whistleblowers. The whistleblowers received approximately $2M of the settlement proceeds.
Nursing homes and other long term care facilities should pay careful attention to billing patterns and practices to ensure only medically necessary services are provided and submitted for payment. Failure to do so could result in recoupment of payments, plus significant civil and/or criminal ramifications. As illustrated by the situation described above, employees of a facility are economically incentivized to bring a whistleblower lawsuit, which can then lead to a DOJ investigation. Implementing compliance policies, proper training of staff and conducting periodic audits are all recommended steps to avoid these potential consequences.