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DOJ Intervenes in Medicare Fraud Suit against Major Nursing Home Owner

In recent news, the U.S. Department of Justice (DOJ) announced that it would join a false claims lawsuit against HCR ManorCare, which is one of the biggest nursing home chain operators in the country. The company has been accused by a whistleblower of consistently overbilling Medicare, including for reimbursements for resident rehabilitations that were too difficult and thus unnecessary for frail residents. This was also to justify higher reimbursement claims to increase revenue, since the level of rehabilitation often hit the highest reimbursement rate level under Medicare.

As the AP reported based on the lawsuit, one example of the alleged fraud occurred when a man who was prescribed hospice care was instead put through over three months of therapy by the nursing home just to qualify for Medicare reimbursements. It is also alleged that nursing homes kept residents for longer than they needed to be there to continue billing the government for care services. The initial lawsuit was filed by an occupational therapist at one of the facilities who saw the alleged fraudulent activity, and there were other suits, all of which have been consolidated into one lawsuit now that DOJ has decided to get involved after years of investigating. DOJ’s involvement may signal its confidence in the strength of the suit after having looked into the matter for a substantial period of time. ManorCare has denied that the billing was fraudulent.

False Claims Act – Rooting Out Fraud

The False Claims Act is a vital piece of law that allows the federal government to claw back money, plus additional penalties and damages, from private entities or persons that reap financial benefits as a result of committing fraud against the United States. This is a very common scenario in the context of medical providers and Medicare and Medicaid claims, as false billing or overbilling Medicare and Medicaid reimbursements for treatments and visits that did not occur or were unnecessary yields unearned profits and thus defraud the government and taxpayers. Nursing homes unfortunately can be offenders, and facilities and individuals can face civil and criminal liability and penalties for such actions. Nursing homes often rely on substantial revenue streams from these government programs, but some unfortunately take advantage of this. Such actions defraud the government and jeopardize the health, safety and well-being of patients who are given medications or treatments that they do not need simply to run up the reimbursement bill.

Crucial to the efficacy of this law is a provision that allows private citizens to bring similar lawsuits on behalf of the government. Typically these plaintiffs, or “relators,” are whistleblowers who have the inside track on such fraud, and their access and information is vital to these lawsuits, known as “qui tam” lawsuits. The Department of Justice has the option to decide whether to join the case since it is brought on behalf of the United States. This can be advantageous given the case could be prosecuted with the resources of the government as opposed to a single private litigant. And if there is a recovery, the whistleblower gets to share in part of the recovery as a reward.

The DOJ’s involvement here may hint at its confidence in the lawsuit, though of course at this stage the complaint merely reflects allegations only. It has been reported that the government has identified over a thousand false claims for a nearly six year period by the Toledo, Ohio-based nursing home company. Putting aside the fact this has yet to be resolved, this is another example of the government’s efforts to combat what may be fraud, and highlights the importance of whistleblowers in bargaining these matters to light.

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