DOJ Intervenes in Skilled Nursing Lawsuit Against HCR ManorCare

Skilled nursing has been one of the hottest areas for whistleblower lawsuits under the False Claims Act. Many skilled nursing facilities, hospice and home health care providers have been accused of engaging in health care fraud. HCR ManorCare is the latest to be involved in a lawsuit for the overbilling Medicare for its health care services.

The complaint filed by the Federal Government, and unsealed today, accuses HCR ManorCare of improper billing for Medicare and Tricare services in multiple ways. The complaint predominately focuses on unnecessary services and upcoding to increase the amount the company could bill the federal healthcare programs.

The Medicare rate for skilled nursing depends on the Resource Utilization Group (“RUG”) of the patient. There are five groups ranging from Rehab Low to Rehab Ultra High. According to the complaint, ManorCare set high targets for the percentage of patients billed at the Ultra High rate and expected its therapists to do whatever it took to meet them. It also instructed its therapists to use group therapy sessions to boost Ultra High billings. When Medicare changed its billing rules for concurrent sessions (group therapy) in 2010, the company increased its group sessions in order to make up some of the lost money.

ManorCare also tried to bill for its patients as long as possible regardless of the medical necessity of the services. The company placed various impediments in the path of its employees to make it difficult for them to discharge patients. It required contact with a Regional Rehab Manager before discharging a patient that had been a beneficiary for less than 35 days. It also required the facility to obtain approval by telephone from a Medicare Operations Specialist.

Additionally, ManorCare undertook a project to expand the length of stays by Medicare patients in order to offset perceived reductions in Medicare payments. The campaign did not assess whether there was a medical need for an extended stay by the patient.

The lawsuit was started under the False Claims Act by three former employees of the company. They were employed as an occupational therapist, a physical therapist and a physical therapy assistant at various entities controlled by the company. If the federal government is able to recover money from the company, they may be eligible for a reward of between 15 and 25 percent of the penalty paid.

The company operates facilities under the Heartland, ManorCare Health Services and Arden Courts. It had more than 60,000 employees and 500 locations in 2007. It has a large presence in Pennsylvania as well as Florida, Illinois, Ohio and Michigan. Medicare paid the company more than $6 billion during the time period at issue. If the allegations listed in the complaint and described above are true, the company could be looking at a substantial settlement given the treble damages provisions in the law.

HCR ManorCare is not the only company to be sued under the nation’s primary tool against fraud. Extendicare agreed to pay $38 million last year to settle a lawsuit concerning substandard nursing care under a worthless services theory. Life Care, Golden Living and Kindred Healthcare, or one of their subsidiaries, have all been involved in litigation under the False Claims Act in the last few years.

Health care whistleblowers are able to bring information about Medicare fraud at skilled nursing facilities to the attention of the Department of Justice through the False Claims Act. If you suspect fraud by a nursing provider, please contact one of our False Claims Act attorneys for a free consultation and additional information about the law and evidence required.