Nursing Home Therapy Contractor Facility Liability: Who Controlled the False Claim?

Liability for a nursing home therapy contractor’s billing can reach both the company directing therapy and the facility billing Medicare for it. The contractor may set the treatment targets, supply the therapists and shape the minutes recorded. The nursing home turns that work into a claim. The settlements show why an insider’s knowledge of the handoff in healthcare billing matters: who decided what the resident needed, who changed the record and who kept the billing going.

Are Skilled Nursing Facilities Liable for Fraudulent Billing?

Nursing facilities and their therapy contractors have separately settled False Claims Act allegations over Medicare bills built from unnecessary or falsely reported treatment. Nursing home responsibility for false claims submitted by therapy contractor staff is a question we work through with insiders who saw the decisions behind the bills.

Medicare’s consolidated billing system puts the nursing facility at the center of payment for bundled services. Medicare pays the skilled nursing facility, and its contract determines what it pays the outside therapy supplier. The therapist’s employer and the business receiving Medicare’s payment can be different companies.

That creates several places where people control what reaches the bill. Therapists provide treatment and record it. The Minimum Data Set assessment carries information about the resident and produces the HIPPS payment classification used on the claim. Physician orders and skilled-care certifications address the need for care. The facility’s billing process then turns the assessment and covered days into the Medicare claim.

A therapy manager, assessment coordinator and facility administrator may each know a different part of that story. Their records can show where a clinical decision became a reimbursement decision.

RehabCare and Its Customers Made Separate Settlements

A therapy company and nursing home can reach separate False Claims Act settlements over their roles in the same billing scheme. RehabCare’s national resolution and the customer agreements show how that happens.

On January 12, 2016, the Justice Department announced that Kindred Healthcare and RehabCare had agreed to pay $125 million, compared with $8.225 million from four separately settling customers, including Wingate Healthcare.

The government alleged that RehabCare caused false facility claims by automatically placing residents in the highest therapy category, shaping treatment around reimbursement thresholds and reporting inflated or nonexistent services. The customer allegations concerned submitting or causing false claims by failing to prevent unreasonable, unnecessary or improperly reported therapy.

These were cases under the historical Resource Utilization Group payment system. More counted therapy minutes could move a resident into a higher-paying category. The government’s amended complaint described an email in which the treatment target and the clinical judgment collided:

The allegation puts a clinical objection inside the contractor’s own management correspondence. The highest treatment category had become the starting point, even for residents the manager described as too compromised to reach it. In the government’s account, residents faced treatment they could not use, and Medicare got the bill.

Each RehabCare Customer Had Its Own Allegations

The earlier customer settlements show different versions of the same handoff, from overstated treatment intensity to sessions that never happened.

Life Care Services and CoreCare V

Life Care Services, a nursing-facility manager, and CoreCare V, doing business as ParkVista in Fullerton, California, agreed to pay $3.75 million in September 2014. RehabCare Group East supplied the therapy.

The Justice Department alleged that ParkVista submitted false claims and that Life Care Services caused claims at ParkVista and a Massachusetts facility it had managed. The alleged practices included intensifying therapy during assessment periods, shifting minutes between disciplines and estimating or rounding minutes. The reported assessment-period intensity allegedly overstated the treatment residents ordinarily received.

Episcopal Ministries to the Aging

Episcopal Ministries to the Aging, owner of William Hill Manor in Maryland, agreed to pay $1.3 million in September 2014. The home had begun using RehabCare in 2010.

The government alleged that Episcopal failed to prevent unreasonable or unnecessary therapy and inflated reporting. Therapy supplied during the assessment period allegedly produced a payment level above the treatment patients generally received over their stays.

ArchCare

ArchCare, also known as Catholic Health Care System, agreed to pay $3.5 million in March 2015. Its contractor was Physical and Occupational Rehabilitation Therapy and Speech-Pathology Services, a RehabCare and Kindred affiliate.

The allegations concerned three facilities, including a former operation. They included counting evaluation time as treatment, counting unskilled palliative care as skilled therapy and rounding minutes. Before October 2011, the government alleged that therapy during assessment periods supported rates above the treatment furnished outside those periods.

Ross Manor and Rousseau Management

Ross Manor in Bangor, Maine, agreed to pay $1.2 million in March 2015. RehabCare Group East supplied its therapy. The government alleged that the home failed to prevent assessment-period treatment patterns that produced inflated payment. Later practices allegedly included adding therapy on the last measurement day to cross the next reimbursement threshold.

Rousseau Management agreed to pay $300,000 the following month. It owned Horizons Living and Rehab Center and had formerly managed Amenity Manor. RehabCare Group East was the subcontractor. The allegations included unreasonable, unnecessary or unskilled therapy and treatment that never occurred.

At Ross Manor the allegations turned on when a session happened. At Rousseau they also reached whether it happened at all.

Longwood and Interface Had Separate Roles and Separate Payments

Longwood Management and 27 nursing facilities agreed to pay $16.7 million in July 2020 over allegations that preplanned revenue targets drove unnecessary Ultra High therapy. The following July, therapy contractor Interface Rehab agreed to pay $2 million in a related resolution identifying 11 facilities.

A former director of rehabilitation at Interface brought the whistleblower case. The Justice Department alleged that Interface pressured staff to meet revenue targets requiring excessive treatment. The whistleblower’s complaint described the instruction given at the beginning of the job:

The same complaint alleged that a Longwood administrator resisted discharge requests while Medicare coverage remained. That account puts the contractor’s starting treatment category beside the facility’s control over how long a resident stayed. Both decisions could feed the bill.

Norridge Used an Outside Vendor, Then Its Own Therapy Affiliate

Norridge Gardens’ case followed therapy through a change in who supplied it. The government’s allegations covered treatment first furnished through Quality Therapy & Consultation and later through Norridge’s own affiliate, Rex Therapeutics.

In its August 16, 2021 announcement, the Justice Department reported a $360,000 resolution with Norridge and Rex. It separately identified the earlier 2019 settlement requiring Quality Therapy and its owner to pay $1.09 million.

The Norridge allegations covered 2008 through 2016. The government said the facility pressured others to meet quotas for residents in the highest reimbursement category. It also alleged claims for therapy without a physician order and reports of treatment when residents were not participating or could not undergo or benefit from it.

A former employee of Quality Therapy and Rex brought the whistleblower cases, and the government joined them. That employee’s work crossed the outside-vendor and in-house-affiliate periods. The case follows the people and practices behind the treatment records through both arrangements.

What Evidence Is Needed to Prove Fraud?

The useful evidence connects the resident’s actual treatment to the assessment, certification and claim, and to the people who controlled each. Our work with you is to connect the care, the claim and the decisions across both businesses.

If a facility billed therapy minutes that the contractor knew were false, we work with you to establish who gave the instruction, what the therapist recorded and how it reached the claim.

The contract explains how the facility paid the therapy business. The RehabCare manager’s email and the Interface orientation instruction show why internal communications matter alongside clinical records. A therapist’s objection, the person who received it and the decision that followed can explain why the same billing continued.

What Are the Medicare Billing Guidelines for Skilled Nursing Facility Care?

Medicare Part A pays a nursing home for covered skilled care, at a rate based on the resident’s assessment. The Patient Driven Payment Model replaced the historical therapy-minute payment structure on October 1, 2019.

Under the Patient Driven Payment Model, diagnosis, function and swallowing problems help determine payment. CMS’s resident assessment manual explains how those characteristics affect the therapy and nursing portions of the rate. An unsupported assessed condition can move a resident into a different payment group. For an insider who sees assessment entries changed to raise payment, we trace how those changes reached the facility’s claim.

That change matters when reading a settlement announced after the switch. Longwood’s and Interface’s covered therapy periods ended before the new model began. Their later settlements describe the older payment incentives.

What Is the Reward for a Medicare Fraud Whistleblower?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The RehabCare resolution announced nearly $24 million for the whistleblowers from the contractor’s settlement. In health care fraud cases like this, knowledge from inside the therapy business can reach the facility claims its work helped create.

You Know Where the Instruction Came From

If you worked on either side of a therapy contract and saw treatment records bent to fit the billing target, bring that knowledge to our whistleblower experts. We stay beside you through the case, building the strategy around the decisions you witnessed and bringing in Medicare therapy fraud whistleblower lawyers who understand how contractor records become facility claims. Speak to us about who set the target and how it reached the bill.