Diversicare Health Services: Therapy Targets and Alleged TennCare Forgeries

Diversicare Health Services Inc. agreed to pay $9.5 million to settle a fraud case over allegations of unnecessary Medicare therapy and forged TennCare admission certifications. The whistleblower’s complaint described staff reassessing residents until their scores satisfied administration. That is the question at the center of the case for a nurse, therapist or billing employee: did the assessment describe the resident, or the payment management wanted?

The Department of Justice announced the settlement on February 28, 2020. At the time, the Brentwood, Tennessee company provided skilled nursing and rehabilitation services at approximately 74 facilities across the country. Two former employees had brought separate qui tam cases.

What the Diversicare Settlement Required

The settlement amount reflected Diversicare’s ability to pay. The company also entered a five-year Corporate Integrity Agreement with the Department of Health and Human Services’ Office of Inspector General.

The Justice Department announced an award of approximately $1.4 million for one of the two former employees. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

Therapy Targets Allegedly Came Before Clinical Need

Diversicare’s therapy targets allegedly pushed residents into Ultra High, the highest Medicare reimbursement level, regardless of their clinical needs. The government described corporate policies covering January 1, 2010, through December 31, 2015, that used budgets, goals and quotas to maximize that category.

The alleged practices reached into the treatment session. Staff allegedly treated patients together improperly to reach minute thresholds and used repetitive, unskilled exercises that did not match the goals in the care plan. The government also alleged therapy of inappropriate intensity, physical or occupational therapy whose frequency or duration was unnecessary, and medically unnecessary speech therapy.

Some patients allegedly performed activities that their underlying medical conditions made inappropriate. Other claims concerned inflated activities-of-daily-living scores, stays extended beyond medical need and services never provided. The harm described in the government’s account ran in both directions: unnecessary treatment for residents and unnecessary bills for taxpayers.

Reassessing Residents Until the Score Went Up

The whistleblower’s complaint alleged that management used repeated assessments to obtain higher payment scores. Its account came from a former director of nursing at Mayfield Rehab & Special Care Center, a Diversicare-operated facility.

The complaint explained why an assessment mattered financially. Under the payment system it described, activities-of-daily-living scores measured dependence in bed mobility, transfers, eating and toilet use. Higher dependence scores supported higher Medicare billing rates. A nursing observation could therefore become a payment input.

At Mayfield, the whistleblower alleged, the administrator told nursing staff to treat routine help, such as handing a patient water or fastening a bra, as grounds for increasing a score. The complaint alleged that moving a score from five to six brought an extra $40 per patient per day. In that account, even a glass of water became a reason to bill Medicare more. The complaint described what happened when the initial assessment did not produce the desired result:

In that account, management’s satisfaction determined when the assessment was finished. The complaint also alleged that daily morning meetings emphasized keeping residents covered by Medicare as long as possible, with many stays approaching 100 days.

A 2018 teaching-case paper in the Journal of Forensic & Investigative Accounting, Pressure to Commit Fraud in the Workplace: Two Teaching Cases Addressing Fraud and Whistleblower Protection, examines how pressure to meet financial targets and management’s conduct can encourage fraud. The complaint described a company-wide seminar where the chief executive emphasized maximizing reimbursement over accurate billing.

Alleged TennCare Certification Forgeries

The TennCare allegations concerned physician signatures on pre-admission evaluations of patients’ need for nursing facility services. TennCare is Tennessee’s Medicaid program, jointly funded by the state and federal government.

The government alleged that Diversicare submitted forged, photocopied or pre-signed physician signatures on certifications required for claims at its Tennessee facilities.

Ultra High Belonged to an Earlier Payment System

The Ultra High allegations arose under the older therapy-minute payment system. Medicare replaced that system with the Patient Driven Payment Model for covered skilled nursing facility stays on October 1, 2019.

The newer model shifted classification toward resident characteristics and clinical needs. The CMS assessment manual describes how diagnoses, function and nursing needs affect payment. That changes where an inflated assessment can affect payment. For the historical Diversicare allegations, the important connections were between treatment minutes, dependence scores and reimbursement categories.

What Evidence Is Needed to Prove Fraud?

For these allegations, useful evidence connects the resident’s actual condition and care to the assessment, physician certification and government claim. It also shows who directed a change and what that change did to billing.

The Minimum Data Set assessment draws on observations by clinical staff. Nursing and therapy notes, care plans and the successive assessment versions can show how the recorded condition changed. The payment classification and claim show what the facility billed from that record. In an allegation like Mayfield’s, the sequence matters: the initial observation, the demand for reassessment and the score ultimately entered.

Clinical, billing and compliance employees may each see a different part of that sequence. We work with insiders to connect those parts into a healthcare fraud case grounded in what the facility represented and what actually happened.

The Same Practices in Other Tennessee Cases

Signature HealthCARE’s 2018 settlement addressed a similar combination: alleged targeting of the highest therapy reimbursement level and forged pre-admission certifications sent to Tennessee Medicaid. The therapy allegations included pressure to complete treatment when patients were sick or refused it. The resemblance is in the two ways clinical paperwork allegedly served a payment target.

Tennessee Health Management’s 2019 settlement separately concerned allegedly photocopied or pre-signed physician signatures on TennCare placement certifications. Grace Healthcare’s 2013 settlement concerned alleged therapy-volume targets at ten nursing facilities, set regardless of clinical need. Together, these separate health care cases show why the financial instruction and the clinical document belong in the same account of a claim.

You Saw How the Assessment Changed

If a therapy quota drove the charting or a physician signature appeared on a certification without the physician’s approval, speak to one of our whistleblower experts about what you saw. We build the case with you around the clinical decisions, payment records and instructions that connect them, and bring in skilled nursing fraud whistleblower lawyers who understand Medicare therapy and TennCare certifications. We stay beside you as your knowledge becomes the foundation of the case.