Signature HealthCARE: Therapy Targets and Forged Medicaid Certifications

In the Signature HealthCARE fraud case, the company agreed to pay more than $30 million to resolve allegations of Medicare therapy inflation and forged certifications sent to Tennessee Medicaid. The therapy complaint describes a business that allegedly pushed treatment until a reimbursement target was met, then cut it when additional treatment brought no additional payment. For a therapist who saw the schedule change while the patient’s needs stayed the same, that is the heart of the case.

Signature HealthCARE is the Louisville, Kentucky nursing-facility operator that the Justice Department described as operating approximately 115 facilities in its June 8, 2018 settlement announcement. The Medicare case began with two employees at its Columbia, Tennessee facility: a certified occupational therapy assistant and a licensed occupational therapist. Their False Claims Act complaint connected what they saw during the working day to schedules, patient charts and billing entries.

Therapy Targets Came Before Patient Need

The government alleged that Signature presumptively put residents into the highest therapy reimbursement level, targeted the minimum minutes needed for each level, and pressured staff and patients to finish those minutes even when residents were sick or refused treatment. Physical, occupational and speech-language therapy allegedly became tools for reaching the payment category.

The complaint gives that pressure a concrete form. On the last day of one assessment period, a rehabilitation manager allegedly ordered an assistant to provide another 30 minutes of therapy. The assistant said she had already treated the patient, saw no medical reason for another session and knew the patient was refusing more therapy.

When she later checked the chart, she allegedly found two additional 15-minute sessions entered retroactively. The manager had certified that she performed them herself. According to the complaint, those sessions never happened, but the entries got the resident to the company’s reimbursement target. The alleged decision survived in the chart even though the therapist had refused to carry it out.

The Therapy Stopped at the Payment Target

The complaint alleged that Signature increased therapy to reach a higher payment category and cut it once the higher rate was secured. Under the historical Resource Utilization Group system, therapy minutes helped set the facility’s daily Medicare Part A rate.

One resident’s occupational therapy schedule supplied an unusually precise example:

That mark was the weekly therapy threshold for the Ultra High category. The alleged precision followed the payment rule rather than the resident’s treatment needs.

The same incentive allegedly worked in reverse. Another resident had already reached the highest category before his next scheduled sessions. The complaint says Signature reduced his physical and speech-language therapy from 50 minutes each to 15 minutes each, then instructed therapists to provide neither session. A target presented as a reason to demand more treatment became a reason to withhold it.

A California Research Bureau report on health care payment contrasts fee-for-service with capitation, where providers work within a fixed budget:

The Signature complaint describes its own version of that tension within an assessment period. Treatment allegedly rose when it could increase the daily rate and fell when it could not. The resident experienced both sides of the same financial calculation.

These allegations concern the older RUG payment system. Medicare replaced it for covered Part A stays with the Patient Driven Payment Model on October 1, 2019. That change moved the payment inquiry toward clinical conditions and assessment inputs.

Medicare Part B Had Its Own Billing Trail

The complaint also alleged unnecessary therapy and services never provided under Medicare Part B. The two parts of Medicare created different incentives: Part A paid a daily bundled rate, while the complaint described Part B therapy billed in units of treatment.

That distinction follows the resident through the facility. Under Medicare’s consolidated-billing rules, the facility bills for therapy even during a stay no longer covered by Part A. Medically necessary outpatient therapy can remain payable under Part B after Part A coverage ends.

According to the whistleblowers, managers added Part B residents to therapists’ schedules when Part A work was slow. Signature measured productivity by the share of working time spent on billable therapy. The complaint alleged that filling those schedules led to treatment residents did not need.

It also described a way to keep the bills from attracting questions at home:

The alleged purpose was to avoid questions from residents or family members who would recognize unnecessary treatment. Medicare, the complaint says, still received the bill. A missing patient bill could therefore be part of the same story as an inflated government bill.

Forged Tennessee Medicaid Certifications

The settlement package also resolved allegations that Signature submitted forged pre-admission certifications of skilled-nursing need to Tennessee Medicaid.

Tennessee Health Management faced a closely related allegation in a separate settlement announced in February 2019. The government alleged that it submitted pre-admission evaluations bearing photocopied or pre-signed physician signatures for TennCare placement. That case illustrates why the certification deserves its own scrutiny: the paper can appear complete while the supposed physician authorization is the disputed act.

What Evidence Is Needed to Prove Fraud?

In a case like Signature’s, the evidence connects what the resident needed and received to what the facility recorded and billed, and to the managers who directed it. The complaint shows how employees’ ordinary knowledge of a working day can expose a billing account that does not fit.

The whistleblowers and colleagues allegedly tracked a manager’s time in a meeting and away at lunch, then compared their observations with entries in Optima, Signature’s billing database. The complaint says she recorded therapy during those same periods for both Part A and Part B patients. It separately describes Daily Treatment Logs that placed a therapist with different residents at overlapping times.

Patient accounts supplied another check. The whistleblowers alleged that residents denied receiving the speech therapy recorded for them. One resident said she did not even know she was on the speech-language caseload. The complaint also alleged that a regional officer closed an internal investigation despite a patient’s statement that the billed treatment had never occurred.

Our whistleblower experts work with the people who know those records to connect the clinical decision, the entry and the government payment. The therapist may know what happened in the room. An assessment or billing employee may know how that account became the claim.

The Settlement and the Whistleblower’s Share

Signature agreed to resolve the Medicare therapy and Tennessee Medicaid certification allegations through settlement agreements, with Tennessee receiving a portion of the payment. The government intervened and took over the lawsuit the two former therapy employees had brought.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Here, the people who brought the case knew the therapy work firsthand and connected it to the company’s billing.

You Know Why the Schedule Changed

If you saw therapy targets override patient needs or a certification carry a signature that did not belong there, speak to our whistleblower experts about what happened. We build the case with you and bring in healthcare fraud whistleblower lawyers who know skilled-nursing therapy billing and Medicaid certification cases. We stay beside you as the knowledge you gained at work becomes the evidence behind your case.