The Government says skilled nursing facilities (SNFs) are overbilling Medicare
and Medicaid by $1.5 billion. To stop it, the government counts on whistleblowers
who file suit under the False Claims Act, which the Justice Department
calls “one of the most powerful tools” to stop healthcare
fraud and abuse. To encourage whistleblowers to come forward, the Government
will give them 15-30% of what the Government recovers.
I’m in a two-part series about whistleblowers who have helped the
Government stop SNFs that are providing extra services that a patient
does not really need, just in order to pad the Medicare bill. These whistleblowers
filed suit under the False Claims Act, which is how they became entitled
to a percentage of what the Government collected.
Extendicare Health Services, Inc.
* Government: $10 million
* Whistleblower: $1.8 million, plus $990,000 for unlawful retaliation and
Extendicare Health Services Inc. And its subsidiary Progressive Step Corporation
paid $10 million to resolve allegations that 33 of its facilities had
billed for rehab therapy for Part A patients who did not actually need
it, in order to get higher reimbursements from Medicare. The whistleblower,
a former Area Director of Rehabilitation for Progressive Step, received
$1.8 million because she filed suit under the False Claims Act and helped
end the overbilling. Extendicare also paid another $28 million to end
allegations that it had provided services that were so bad they were basically
worthless. Those allegations apparently were not brought by a whistleblower
who filed suit under the False Claims Act, so no whistleblower was paid
a share in that case.
* Government: $2.7 million
* Whistleblower: $405,000
A whistleblower was paid $405,000 for helping DOJ collect $2.7 million
from Grace Healthcare LLC, a nursing home manager, and its affiliate,
Grace Ancillary Services LLC. The whistleblower and DOJ accused the company
of ordering rehab therapy that was not medically reasonable and necessary.
According to the lawsuit, Grace pressured its therapists to increase the
amount of therapy that patients received in order to meet the company’s
revenue goals — not based on what the patients needed. The only
way the therapists could make their goals, the suit alleged, was if they
billed large amounts of therapy for every patient, regardless of whether
a particular patient needed the therapy. The company paid $2.7 million
in the face of claims that the pressure resulted in patients getting unreasonable
and unnecessary services at ten of its skilled nursing facilities.
Going to the government with information about the fraud is not enough
to guarantee you a percentage of the case. In order to be a qualified
whistleblower, you have to file suit under the False Claims Act.
In the following case, the Government got money back from a SNF, but no
whistleblower got a percentage of what the Government got. We do not know
how the Government detected the fraud.
North American Health care, Inc.
* Government: $28.5 million
North American Health Care Inc. (NAHC) paid $28.5 million to resolve allegations
that it had provided unnecessary rehab to residents at its SNFs. The Chairman
of the Board and the Senior Vice President of Reimbursement Analysis agreed
to kick in another $1.5 million. According to DOJ, the company kept patients
at the SNFs for longer than the patients needed to be there.
The Government also has an ongoing criminal case against the owner of SNFs
in Florida. Since False Claims Act cases have to be filed under seal,
it is possible that the Government’s investigation began with a
civil suit filed under the FCA by a whistleblower. At this point we do
not know how the Government got its information.
Peter Esformes and Alleged Co-Conspirators
* Ongoing criminal case
In July 2016, DOJ unsealed an indictment against three Miami, Florida,
men. The men, who ran 30 skilled nursing homes and assisted living facilities,
were charged with bilking Medicare of $1 billion. DOJ accused the trio
of an extreme form of providing unnecessary services: admitting patients
who did not need SNF or AL care at all. Disturbingly, DOJ said that back
in 2006, Esformes had paid $15.4 million to settle civil “fraud
claims for essentially identical conduct, namely unnecessarily admitting
patients from his assisted living facilities into a Miami-area hospital.”