Guardian Elder Care Holdings and its related entities recently paid $15.4 million to settle allegations of Medicare fraud. The U.S Department of Justice, after a government investigation, alleged that the company committed Medicare fraud by overbilling the Federal Employees Health Benefits Program and Medicare for unnecessary rehabilitation therapy services.

Many companies specializing in elder care are eligible for federal reimbursement for performing specific treatments. Guardian Elder Care can submit claims to Medicare, as well as the Federal Employees Health Benefits Program, for subsidized rehabilitative tests. Guardian’s companies allegedly “caused certain facilities in Pennsylvania, West Virginia, and Ohio to bill patients at the highest level of Medicare reimbursement, when services at that level were not medically necessary and influenced by financial considerations rather than resident needs.” Guardian’s alleged actions are a direct violation of the False Claims Act, which in part, prevents providers from submitting treatment claims not medically necessary for patients.

In response to the settlement, Assistant Inspector General for Investigations, Thomas W. South, stated that “[s]ubjecting vulnerable patients to unnecessary treatments for financial gain is unconscionable … [and] I am proud that we were able to work with our law enforcement partners to hold Guardian Elder Care accountable for their unscrupulous behavior.” Attorneys for two former Guardian employees reported the case to the government. The alleged violations fall under the whistleblower (qui tam) sections of the False Claims Act, “which permit private parties to sue on behalf of the government for false claims and to share in any monetary recovery.”

Similarly to this case, there have been many instances where whistleblowers were the ones to expose company fraud against the Medicare system. In these qui tam lawsuits, the government compensates whistleblowers for their assistance in their fight against fraud. Whistleblowers can receive up to 25-30% of the amount of the total settlement, depending on the government’s role in the lawsuit. Phillipa Krause and Julie White, the whistleblowers against Elder Care, will receive $2.8 million from the settlement proceeds.