Kindred HealthCare Settles Whistleblower Lawsuit Alleging Kickbacks

RehabCare Group Inc, RehabCare Group East Inc. and Rehab Systems of Missouri and management company Health Systems, part of Kindred HealthCare Inc. have agreed to pay the Government $30 million in order to resolve allegations that they violated the False Claims Act by paying kickbacks for  patient referrals.  The lawsuit alleged that between March 2006 and December 2011, RehabCare arranged with Rehab Systems to obtain contracts to provide therapy to patients in approximately 60 nursing homes and in exchange Rehab Systems would retain part of the revenue received as the result of the referral.  “Health care providers that attempt to profit from illegal kickbacks will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”

Kindred Healthcare f/k/a Vencor, Inc. paid the United States $104.5 million in 2001 to resolve civil claims that Vencor knowingly submitted false claims to Medicare, Medicaid, and TRICARE. At the time, Nolan Auerbach & White’s courageous clients’ case recovery included more than $54 million for improper claims made on Vencor’s hospital Medicare cost reports. (Other claims involved $20 million for failure of care and $24 million for respiratory care services and supplies.) According to the suit, Vencor inappropriately included on its Medicare costs report the revenue and the expenses of running a separate business. That business supplied its nursing homes with special contracted services such as respiratory therapy. Vencor was thus able to inflate both the revenue and expense lines at its hospitals which, under Medicare’s formulas, boosted its reimbursements from Medicare.

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