Saunders House: The Facility Behind the Ultra High Therapy Claims

In the Saunders House fraud case, the facility agreed to pay $819,640 to settle allegations that it billed Medicare for unnecessary rehabilitation therapy, the Department of Justice announced. A physical therapist assistant working there through a contracted therapy provider alleged that the facility allowed the provider to manipulate clinical services to maximize billing. The case puts the facility’s decisions alongside the contractor’s treatment records: who needed the therapy, who directed it, and what Medicare was told.

Saunders House was the name under which Old Man’s Home of Philadelphia operated the skilled nursing facility in Wynnewood, Pennsylvania. The whistleblower provided physical therapy there and brought a qui tam case under the False Claims Act.

How the Saunders House Therapy Allegations Worked

The whistleblower alleged that Saunders House billed for services never provided and for therapy that was unreasonable, unnecessary and sometimes harmful. Residents’ needs were supposed to drive treatment. According to the allegations, revenue drove it instead, at the expense of residents and the taxpayers funding their health care.

The government’s account of the payment system explains the incentive. Medicare Part A then paid a daily rate based partly on the resident’s Resource Utilization Group. Each group was meant to reflect the expected cost of caring for residents with similar needs. Ultra High was the highest reimbursement level.

As the Department of Justice explained in its Life Care Centers settlement announcement, the historical Ultra High threshold included at least 720 therapy minutes a week, alongside requirements for the disciplines involved and the days of treatment. More recorded therapy could put a resident into a better-paying group. The government’s allegation against Saunders House was that it caused claims for that highest group despite evidence that the level of therapy was not reasonable or necessary for the patients concerned.

The allegations raise two questions about the treatment record: did the therapy happen, and did the resident need that much of it?

When the Payment Target Becomes the Treatment Plan

A separate case against Kindred Healthcare shows how directly a therapy business could describe the incentive. The government’s amended complaint quoted a RehabCare executive discussing a performance measure tied to therapy minutes:

In that complaint, the government also alleged that managers encouraged therapists to count comforting dying patients, writing progress notes and even unrelated activity as skilled therapy. The executive’s words explain the business pressure behind the allegations: enough recorded minutes to secure the payment, with a reason to resist more labor once that payment stopped rising.

What Changed Under the Patient Driven Payment Model?

The Patient Driven Payment Model replaced RUG-IV for covered Part A skilled nursing stays on October 1, 2019. Under CMS’s rule adopting the model, patient characteristics and clinical needs replaced therapy-minute groups as the basis for classification. Ultra High belongs to the earlier system described in the Saunders House announcement.

For today’s healthcare insider, the payment question runs through the assessment: what diagnosis, functional ability and treatment needs did the facility report, and what did the clinical notes show? Those inputs help determine the payment groups. An unsupported condition or service can change the claim even though recorded therapy minutes no longer set the rate in the old way.

In its Pinnacle audit, the Department of Health and Human Services Office of Inspector General identified unsupported need for intravenous medication among the payment errors. Pinnacle disputed the audit’s recommendations. The example shows why an insider’s knowledge of the care behind an assessment still matters.

Why the Facility and Therapy Contractor Both Matter

The facility can receive Medicare’s payment while a separate company employs the therapists. Under CMS’s consolidated billing rules, the Part A facility payment bundles therapy with nursing, room, board and other covered services. As CMS’s claims processing manual explains, Medicare pays the skilled nursing facility, and the facility’s contract determines what it pays an outside supplier.

That arrangement puts the clinical service, the employment relationship and the Medicare claim in different hands. A therapist may know what care occurred. The contractor may hold the scheduling and treatment records. The facility holds the assessment and claim that turn that care into a request for payment.

Select Rehabilitation appears as a defendant in the Saunders House case. The announced settlement obligation belonged to Old Man’s Home of Philadelphia, doing business as Saunders House.

The nearest parallel is Fairfax Nursing Center’s 2013 settlement. Fairfax and its owners agreed to pay $700,000, a smaller settlement for similar therapy-billing allegations. Those allegations involved excessive or unnecessary therapy, duplicative services, unclear treatment goals and therapy performed primarily to reach higher reimbursement levels. The whistleblowers included former facility therapists and a former contract therapist. In both cases, people delivering therapy could see the relationship between the treatment plan and the payment target from inside the service.

The Saunders House Settlement and Cooperation

The Department of Justice announced the Saunders House settlement on July 29, 2022. DOJ expressly credited Saunders House for fully cooperating with the investigation and said that cooperation affected the resolution.

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 therapy billing allegations, useful evidence connects the care a resident needed and received to the assessment, Medicare claim and decisions behind it. We examine the relationship between clinical notes, therapy logs, orders, assessment versions and billing records, together with who directed or approved the treatment represented to Medicare.

The facility’s Minimum Data Set assessment draws on observations and clinical contributions across the care team. Therapists assess and deliver rehabilitation or skilled maintenance care. Nursing notes and orders supply other parts of the picture. The completed assessment has to be supported by those underlying observations. For an insider, the meaningful discrepancy may be between a resident’s documented condition and the therapy level carried into the claim.

The contractor relationship adds another set of records. Contracts show the arrangement between businesses. Schedules, payroll and time records can help establish who was working when the claimed therapy supposedly occurred.

A therapist, assessment coordinator or billing employee may see a different part of the same decision. We work with that inside knowledge to connect the clinical discrepancy to the payment and the people who controlled it.

When You Know the Therapy Did Not Match the Bill

If you saw treatment pushed toward a payment target or therapy records that did not match the care delivered, speak with our whistleblower experts. We build your strongest case around the clinical and billing decisions you know, bring in skilled nursing fraud whistleblower lawyers who understand therapy billing, and stay at your side throughout the case.