Genesis Healthcare To Pay $53.6 Million To Settle Medical Necessity Allegations In Billing For Rehab And Hospice Care

Posted On Wednesday, June 21, 2017

What Happened?

On Friday, DOJ announced that Genesis Healthcare, Inc. had agreed to terms, including the payment of $53,639,288.04, to settle six separate lawsuits and investigations that alleged violations of the False Claims Act relating to allegations that Genesis had billed for medically unnecessary therapy and hospice services, and “grossly substandard” nursing care. The settlement covers operations at Genesis subsidiaries that it had acquired after most if not all of the conduct complained of had occurred. 

The Rundown

Hospice and Rehabilitation

The agreement reached with DOJ includes settlement of allegations that from 2010 through March of 2013, Genesis subsidiary Skilled Healthcare Group Inc. (SKG) and its subsidiaries submitted false claims by (1) billing for hospice services for patients who were not terminally ill, and (2) billing inappropriately for certain physician evaluation management services at the SKG Creekside Hospice facility in Las Vegas. In addition, Genesis settled claims that from 2005 through 2013, SKG and its subsidiaries submitted false claims at certain facilities by providing therapy to certain patients longer than medically necessary, and/or billing for more therapy minutes than the patients actually received. This set of claims also included allegations that the SKG subsidiaries assigned patients a higher Resource Utilization Group (RUG) level than necessary. Genesis did not acquire SKG and its related entities until after all of the conduct at issue had occurred.

Outpatient Therapy Charges

The settlement announced on Friday also wrapped in allegations regarding Genesis subsidiaries Sun Healthcare Group Inc., SunDance Rehabilitation Agency Inc., and SunDance Rehabilitation Corp. Specifically, the settlement resolves allegations that from 2008 through September of 2013, those entities billed for outpatient therapy services provided in the State of Georgia that were (1) not medically necessary or (2) unskilled in nature. Sun Healthcare and the SunDance entities were acquired by Genesis in December of 2012.

Allegations of Substandard Care

The last piece of the Genesis settlement resolves allegations that between 2003 and 2010, Genesis subsidiary, Skilled LLC, submitted claims at certain of its nursing homes for services that were grossly substandard and/or worthless and therefore ineligible for payment. At the heart of the claims of worthless services were allegations that the nursing homes at issue did not provide sufficient nurse staffing to meet residents’ needs. Genesis acquired Skilled LLC in February of 2015.  

For the Record

At a time when the cost of healthcare weighs heavy on many taxpayers, it is imperative that people who illegally bill our healthcare system are held accountable and forced to pay restitution. — Special Agent in Charge David J. LeValley, FBI Atlanta

The Take-Home

While nobody knows at this point what healthcare reform efforts will bring during this legislative session, there should be little doubt that cost-reduction through pursuit of allegations of fraud and abuse will be one of the hallmarks of any proposal. Medical providers, particularly those providing hospice and rehabilitative services, can expect continued scrutiny of their documentation of medical care provided and the medical bases for it.  

If you are aware of any person, corporation or entity that you think may be violating the Federal False Claims Act or a State False Claims Act, contact us today.