On June 2, 2021, the U.S. Department of Justice (“DOJ”) announced its second settlement for alleged False Claims Act (“FCA”) violations by a rehabilitation provider servicing skilled nursing facilities. The FCA prohibits any person from knowingly presenting or causing to be presented, a false or fraudulent claim for payment to the federal government. The FCA also prohibits any person from knowingly making, using, or causing to be made or used, a false record or statement that is material to a false or fraudulent claim. FCA violators are liable for civil penalties of over $23,000 per claim, plus treble damages. 31 U.S.C. § 3729(a)(1)(G). FCA penalties can be astronomical for healthcare providers due to the volume of claim submissions and have resulted in defendants arguing that the penalties levied are Eighth Amendment violations. CG attorneys have discussed the FCA extensively.
The first announced settlement was for $11.2 million by SavaSeniorCare, which resolved allegations that its corporate-wide policies and practices levied pressure on facilities and staff resulting in “medically unreasonable, unnecessary or unskilled services” provided to Medicare patients. Less than two months later, the government announced a second settlement involving Select Medical Rehabilitation Services, Inc. (“SMRS”), a rehabilitation service provider, that also allegedly billed for medically unnecessary services.
According to the press release, Select Medical Corporation and Encore GC Acquisition LLC agreed to pay $8.4 million to resolve allegations of FCA violations by SMRS. Select Medical Corporation was the prior parent company of SMRS, and Encore GC Acquisition LLC is the successor-in-interest to SMRS.
Between January 2010 and March 2016, SMRS contracted with twelve skilled nursing facilities to provide rehabilitation therapy services. Similar to the allegations in the SavaSeniorCare settlement, the government alleged that “SMRS’ corporate policies and practices encouraged and resulted in the provision of medically unnecessary, unreasonable and unskilled therapy services.” Like the SavaSeniorCare settlement, the SMRS settlement resolves claims brought under the FCA’s qui tam provisions. The FCA’s qui tam provisions provide financial incentives and a procedural structure to whistleblowers – known as relators – so individuals may bring FCA cases on behalf of the government. In this case, the whistleblower was a former employee. If successful, whistleblowers are entitled to 15% to 30% of the money the government recovers based on several factors, such as government intervention.
CG attorneys have also discussed the government’s willingness to engage in cross-agency collaborations in its enforcement efforts, as noted in the SavaSeniorCare settlement. Continuing its practice of government interagency collaboration, the SMRS settlement resulted from coordinated interagency efforts involving the U.S. Attorney’s Office Civil Division’s Commercial Litigation Branch, Fraud Section, the U.S. Attorney’s Office for the District of New Jersey, and U.S. Department of Health and Human Services Office of Inspector General (“HHS-OIG”).
Healthcare providers, especially rehabilitation therapy companies, should pay attention to the two settlements, which allege similar improper actions. The government’s position is clear regarding enforcement actions against those that submit claims for medically unnecessary services. According to Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division, “[c]ontract rehabilitation therapy companies, like other health care providers, will be held accountable if they knowingly provide patients with unnecessary services that waste taxpayer dollars.” Special Agent in Charge Scott J. Lampert of HHS-OIG similarly noted that “[s]ticking taxpayers with a hefty bill for unnecessary health care services will never be tolerated.”
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with False Claims Act investigations and related litigation. If you need assistance with such a matter, please contact us today.