Agility Health Oceana County: Therapy on Paper, Durable Medical Equipment That Never Arrived

The Agility Health Oceana County fraud case brought a $1 million settlement over allegations of false therapy claims and patient information used to bill Medicare for unnecessary equipment. The government alleged that some residents could not participate in the therapy billed in their names, while some never received the equipment billed using their information. For someone working inside the therapy department, those are concrete differences between what reached the patient and what reached Medicare.

The U.S. Attorney’s Office for the Western District of Michigan announced the settlements on February 25, 2015. Agility Health LLC agreed to pay $850,000, compared with Oceana County Medical Care Facility’s $150,000. The contractor took on the larger payment even though the facility submitted the therapy claims. The government alleged that the facility submitted false therapy claims and that Agility caused those claims through its work there. Agility’s settlement also covered the equipment allegations.

Agility Ran the Therapy Department, Oceana Submitted the Claims

Agility Health managed Oceana County Medical Care Facility’s therapy department, supplied therapy staff and helped prepare insurance claims beginning in 2008. The facility was county-owned and provided inpatient and outpatient rehabilitation in Hart, Michigan.

Those roles put the contractor inside the decisions that became the facility’s bills. Its work reached from staffing and treatment management to claims preparation. The government alleged that Agility knowingly caused false Medicare claims and that the facility knowingly submitted them.

This division of work is part of how skilled nursing care is bought and paid for. Under Medicare’s consolidated billing system, the facility receives payment for bundled services, including therapy. A therapy contractor can therefore shape the treatment and supporting records behind a claim the facility submits.

The Therapy Claims Did Not Match the Residents’ Care

The therapy allegations covered January 1, 2009 through December 31, 2013. The government said the inpatient skilled therapy was sometimes never provided, sometimes upcoded and sometimes medically unnecessary.

According to the government, Agility and the facility billed Medicare, or caused it to be billed, for services purportedly given to patients who were mentally and physically unable to participate in therapy programs. Taxpayers were footing the bill for therapy the government said those residents could not even take part in.

The payment setting helps explain why the therapy record mattered. During this period, recorded therapy minutes helped determine Medicare’s payment category. A more intensive category could support a higher payment. Medicare began using the Patient Driven Payment Model on October 1, 2019 to classify patients in covered skilled nursing stays. The alleged conduct predates that change.

The contractor-and-facility pattern also appears in Quality Therapy & Consultation’s case. That separate resolution involved the therapy company and four nursing facilities, with allegations of upcoding and treatment residents did not need or could not benefit from. The recurring question is how the contractor’s treatment decisions became the facility’s payment claims.

Patient Information Became Durable Medical Equipment Claims

Agility’s settlement also covered allegations that an Agility employee at the facility improperly disclosed protected health information to an outside vendor in 2011. According to the government, the vendor used it to bill Medicare for unnecessary durable medical equipment, some of which patients never received.

The government described the disclosure as a violation of the Health Insurance Portability and Accountability Act. The equipment claims gave that disclosure a financial consequence: information held for patients’ care allegedly became the means of billing Medicare for equipment they did not need.

That part of the case reaches beyond the therapy department’s own claims. The government alleged that an outside vendor submitted the equipment bills and that Agility caused the false claims. The connection runs from the patient information disclosed inside the facility to the equipment represented on the vendor’s bill and what the patient actually received.

For an insider who knows the vendor relationship, the relevant comparison includes the information shared, the equipment ordered, the delivery record and the Medicare claim. We examine those connections with the person who understands the work, because the disclosure and the equipment bill sit at different points in the same alleged conduct.

Oceana County Medical Care Facility Employees Started the Whistleblower Case

Three employees of Oceana County Medical Care Facility brought the qui tam case under the False Claims Act, and the government joined it. The Justice Department announced that they would share in the settlement proceeds. Their work inside the facility was the starting point for a case that reached the therapy contractor as well as the facility itself.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

What Evidence Is Needed to Prove Fraud?

For a case like this, the evidence must connect the resident’s condition and actual care to the treatment recorded and the claim submitted. We work through those connections with you, including who controlled the treatment decisions and how they reached the bill.

The assessment is especially important because it connects clinical work to payment. We examine where those accounts diverge, how the claim used the disputed information and whose decisions explain the difference.

The California Research Bureau’s 1997 report, Fraud and Abuse in the Health Care Market of California, describes how complex contracts and financial arrangements create opportunities for fraud beyond the familiar picture of a provider submitting a false bill. That perspective fits the government’s allegations here: the contractor managed the therapy department, while the facility submitted the therapy bills.

A separate complaint against Encore Rehabilitation Services shows why the design of the therapy record can itself matter. The whistleblower alleged that the company removed the place where therapists recorded time they could not bill:

The alleged removal matters because nonbillable time would have tested the productivity claim. It illustrates a question worth pursuing when a therapy record looks too neat: which parts of the working day did the system let staff record?

You Know What Reached the Patient

If you know how therapy records became Medicare claims, or how patient information reached an equipment vendor, speak to one of our whistleblower experts about those decisions. We work with you to build your strongest skilled nursing whistleblower case and bring in healthcare fraud whistleblower lawyers who know therapy and equipment billing. We stay beside you through the case, connecting what you know about the care to who controlled the claims.