On January 12, 2016, the Department of Justice (DOJ) announced that RehabCare Group Inc., RehabCare Group East, and their parent company, Kindred Healthcare (Kindred/Rehabcare) agreed to pay the government $125 million to settle a qui tam lawsuit alleging that it violated the false claims act (FCA) by knowingly causing its skilled nursing facilities (SNFs) to bill Medicare and Medicaid for unreasonable and/or unnecessary services provided to patients receiving occupational, physical and speech rehabilitative therapy.

Kindred/Rehabcare, one of the largest homecare nursing facilities in the country with more than 1,000 SNFs throughout America, was contracted by the government to provide rehabilitative care for Medicare and Medicaid patients. In December 2011, licensed Occupational Therapists and former employees of RehabCare, Janet Helpin and Shawn Fahey, filed a qui tam lawsuit on behalf of the government alleging that Kindred/Rehabcare violated the FCA by participating in a healthcare fraud scheme designed to boost its revenue resulting in the government being overcharged and incorrectly billed for rehabilitative services that SNFs provided to Medicaid/Medicare patients — services that were unnecessary or not provided at all. These alleged unethical actions caused Kindred/Rehabcare to violate its obligations to the government and knowingly disregard the best interest of its patients.  The alleged violations include rehabilitative patients being placed in the highest therapy reimbursement level without being evaluated for proper treatment based on individual needs, while other patients received lesser therapy services that were billed to Medicaid and Medicare at the highest rate.  In addition, the government alleged that Kindred/Rehabcare scheduled and reported therapy for patients who no longer qualified for continued therapy, or patients who were already discharged, and billed Medicaid/Medicare for services that were completely unrelated to rehabilitative care.

A provision of the FCA makes it unlawful for a person or company to submit false claims to governmental agencies or programs, such as Medicare or Medicaid, and is designed to aid in the prevention of unlawful practices and to ensure that patients receive quality medical care based on a physician’s best judgment rather than inflating its revenue. Private citizens called “relators” can bring a qui tam lawsuit against any person or company that violates the FCA and can receive up to 30 percent of the settlement amount for exposing government fraud.  Healthcare fraud is often prosecuted under the FCA, and through qui tam lawsuits.