Consumer Fraud

Whistleblower’s False Claims lawsuit leads to $30-million settlement with therapy providers

osha whistle Whistleblower’s False Claims lawsuit leads to $30 million settlement with therapy providersA whistleblower who sued a group of contract therapy providers under the False Claims Act will receive $5.6 million for helping the government recover $30 million in Medicare funds, the U.S. Justice Department announced Tuesday.

The whistleblower sued RehabCare Group Inc., RehabCare Group East Inc., Rehab Systems of Missouri, and Health Systems Inc., alleging the companies devised and participated in a kickback scheme that put profits ahead of patient care.

According to the lawsuit, between March 1, 2006 and Dec. 31, 2011, RehabCare and Rehab Systems of Missouri arranged a deal in which RehabCare would acquire Rehab Systems of Missouri’s patient therapy contracts with 60 nursing homes. In exchange, RehabCare paid Rehab Systems $400,000 to $600,000 up front and allowed Rehab Systems to retain a percentage of the revenue generated by each referral.

“The Anti-Kickback Statute is intended to protect patients and federal health care programs from fraud and abuse,” John Marti, Acting U.S. Attorney for the District of Minnesota, said in a statement, adding that his office would continue to pursue companies that furthered their financial interests “at the expense of the Medicare Trust Fund.”

The case was handled by the U.S. Attorney’s Office for the District of Minnesota with assistance from the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Eastern District of Missouri, the F.B.I., and the U.S. Department of Health and Human Services. The Elder Justice and Nursing Home Initiative, which coordinates the Justice Department’s efforts to combat elder abuse, neglect, and financial exploitation, especially as they impact beneficiaries of Medicare, Medicaid and other federal health care programs, supported the lawsuit.

The “qui tam” provisions of the False Claims Act allow individuals to sue on behalf of the U.S. government when they have evidence of fraud and other wrongdoing committed against a government agency or taxpayer-funded programs such as Medicare and Medicaid.

The Justice Department has recovered more than $17 billion through False Claims Act lawsuits since January 2009. The majority of those funds have gone back to government health care programs.


U.S. Department of Justice