Vencor Ventas: The Care, the Cost Reports and the Real Estate Company
In the Vencor Ventas fraud case, Vencor Inc. and Ventas Inc. agreed to pay $104.5 million to settle False Claims Act allegations involving inadequate nursing-home care, improper hospital cost reports and respiratory overbilling. The government alleged that Vencor billed public health care programs while failing residents who needed adequate staffing, wound care and nutrition. Residents depended on the care. Taxpayers funded the claims.
The Justice Department’s March 19, 2001 announcement described claims involving Medicare, Medicaid and TRICARE, the military’s health care program. Whistleblowers had brought some of the allegations in nine separate civil suits. The settlement brought a nursing-home chain and a real estate investment trust into the same financial resolution.
The Settlement Behind the Headline
The government’s $219 million headline covered several kinds of payments. Alongside the False Claims Act settlement, Vencor and Ventas agreed to pay $25 million to resolve administrative Medicare claims.
Vencor was separately reimbursing Medicare for approximately $90 million in other overpayments. Those repayments were already underway when the government announced the resolution.
What the False Claims Act Settlement Covered
The government divided the civil fraud settlement into care, hospital cost-report and respiratory billing components. Each points to a different part of the business and a different set of records.
More than $20 million concerned failure-of-care allegations. The government said Vencor submitted false claims involving inadequate staffing, improper care of pressure ulcers and failure to meet residents’ dietary needs. These allegations reached the ordinary work of a nursing home: having enough people to provide care, treating wounds and meeting residents’ nutritional needs. The care residents depended on was also the care the government was paying for.
More than $54 million concerned improper claims on Vencor’s hospital Medicare cost reports. That was a hospital reimbursement allegation within a settlement the Justice Department described as a nursing-home case. The hospital accounting mattered alongside what happened on the nursing-home floor.
More than $24 million concerned overbilling for respiratory care services and supplies. The government’s description puts both the services and the supplies in view. A respiratory-services business has a clinical side and a billing side: the care documented, the goods supplied and the charges submitted for payment. The allegation concerned what Vencor charged for those services and supplies.
Why Ancillary Billing Mattered
Medicare’s payment rules were changing around the services at issue here. The Bureau of Labor Statistics’ March 1999 Monthly Labor Review paper, Health services industry: still a job machine?, described the introduction of prospective payment in nursing homes in July 1998. The paper placed the change in a broader shift: payments for services following hospitalization, including skilled nursing facility care, had grown as growth in inpatient hospital and physician payments slowed.
The paper explained that nursing-home reimbursement had varied widely for Medicare patients with the same diagnosis. Under the new system, payments reflected the average cost of treating patients by diagnosis, initially blending a facility-specific rate with a federal rate. The paper also noted that most nursing homes received more funding from Medicaid than Medicare, while many states based their reimbursement policies on Medicare’s. That connects the payment change to both programs named in Vencor’s settlement. For a reader looking at Vencor’s respiratory-overbilling allegations, the paper’s point about ancillary services explains why the payment rules mattered:
The prospective payment system makes it more difficult to increase charges by manipulating medicare’s billing rules for ancillary services.
Health services industry: still a job machine?, Monthly Labor Review, Bureau of Labor Statistics, March 1999
Why Ventas Appears in the Fraud Case
Ventas was a named settling company, described by the Justice Department as a real estate investment trust related to Vencor. The government named both companies in the civil fraud settlement and the administrative Medicare settlement, while describing the alleged false claims as Vencor’s.
For a nursing-home insider, the property business can sit alongside the business delivering care. With common ownership, a facility’s rent or management expense can become income elsewhere in the same business. That industry structure is why understanding the company operating a facility and the businesses receiving its payments matters. Here, the government’s settlement reached both the care provider and the related property company.
The Reorganization Included a Whistleblower Reward
Vencor filed for bankruptcy protection in September 1999. The settlement became part of its reorganization plan. The plan also provided for the whistleblowers to receive more than $15 million from the False Claims Act component.
A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.
Vencor also agreed to independent oversight of its quality-improvement systems and a separate review of its audits and claim-submission practices under its Corporate Integrity Agreement.
What Evidence Is Needed to Prove Fraud?
Proof here crosses care records, staffing accounts and cost reports. We work with you to connect what you know to the claims and the decisions behind them. The person who understands a staffing record may hold a different part of the answer from the person who prepared a cost report.
The separate National HealthCare cost-report settlement announced in 2000 shows why that connection matters. The government alleged that nursing-home cost reports overstated staff hours devoted to Medicare residents. It also alleged that personnel were billed as providing therapy they had not performed. The payroll total tells less than how those hours were allocated. The allegation was about the account of staff time, not just the size of the workforce.
A person who knows the care, the costs or the accounts can explain a discrepancy that looks ordinary in a billing file alone. We bring that knowledge together with healthcare billing expertise to build the case with you.
You Know Where the Records Disagree
If you know why a facility’s care records, staffing accounts or hospital cost reports tell different stories, speak to one of our whistleblower experts about what you saw. We build the case with you and bring in healthcare fraud whistleblower lawyers who understand nursing-home care and Medicare cost reporting. We stay on your side from the first review of those records through the pursuit of a recovery.
