White Collar Criminal Defense Group

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

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.

Judge Rakoff Pans Sentencing Guidelines, Grants Substantial Variance In Fraud Case

When he appeared before U.S. District Judge Jed Rakoff (S.D.N.Y.) for sentencing on June 14, 2017, Stefan Lumiere, a former analyst and portfolio manager at Visium Capital Management LP, was facing a 97-121-month range of imprisonment under the U.S. Sentencing Guidelines.  The advisory range for Lumiere, who was found guilty by a jury for securities fraud and related crimes regarding to the overvaluation of a $480 million health care hedge fund, was largely driven by a loss amount calculated in the tens of millions of dollars.

Lumiere boldly requested a non-custodial sentence. In support of that outcome, Lumiere argued that he had earned no money beyond his $200,000 salary (relatively modest for the market, his position, and the industry) based on the performance of the fund, and thus had not benefited significantly from the conduct. He also noted that he had no role investor communications; accordingly, he had not made the misrepresentations regarding the fund’s value that were at the root of the scheme. Finally, he focused on his positive personal characteristics, including his extensive volunteer work and his dedication to his family. In that vein, Lumiere submitted more than 60 character letters from family, friends, and colleagues.

While Judge Rakoff declined to impose a non-custodial sentence, he varied sharply downward from the Guidelines range.  He railed against the punitive nature of the Guidelines in general, and as applied to Lumiere. In this case, as in many, the range they produced bore no relationship to the statutory factors – such as the history and characteristics of the offender, the nature and circumstances of the offense, and the need for just punishment – that the Court was required to apply under 18 U.S.C. § 3553(a). After evaluating all of the evidence in light of the § 3553(a) factors, Judge Rakoff sentenced Lumiere to 15 months’ imprisonment and a $1 million fine.

The outcome demonstrates that effective sentencing advocacy can make a substantial impact in federal court.  But perhaps even more important is drawing the right audience, a judge who is willing to approach the U.S. Sentencing Guidelines with rigorous analysis and healthy skepticism in determining whether they produce a just result in the instant case. 

Anyone who needs a defense lawyer needs someone with experience who is vigorous and zealous to protect their rights and interests. If you need a defense attorney, please contact us today.