In the spring of 2015, our firm filed a case under the qui tam provisions of the False Claims Act on behalf of two whistleblower clients against Signature Healthcare, a provider of skilled nursing services in numerous states. The two whistleblowers alleged that Signature was engaged in a scheme to artificially inflate its Medicare reimbursement by providing unnecessary physical, occupational, and speech therapy to nursing home residents. This unnecessary therapy pushed patients into a higher Resource Utilization Group (“RUG”) category.
Under Medicare reimbursement rules, this alleged scheme significantly increased the amount of money Medicare paid per day for those patients. Because reimbursement rates are based on the number of therapy minutes provided, nursing facilities have an incentive to either overreport the amount of therapy or to provide excessive therapy that doesn’t benefit the patient.
After three years of investigation, the Department of Justice intervened in our clients’ case and reached a settlement with Signature. Under the settlement, Signature will pay the United States over $30 million.
In recent years, several skilled nursing facilities around the country have faced similar lawsuits alleging manipulation of Medicare’s reimbursement system to gouge the taxpayers.
“Because Medicare reimbursements are based in large part on the number of therapy minutes these facilities report, you have a situation where the fox is guarding the hen house. And like the hens, the taxpayers are getting eaten alive,” said the whistleblowers’ attorney, Jerry Martin. Martin formerly served as United States Attorney and now represents whistleblowers who want to expose fraud against the Medicare and Medicaid programs. Seth Hyatt, of BJM&G as well, also represented the whistleblowers.
In addition to the Settlement Agreement with the Department of Justice, Signature has also entered into a Corporate Integrity Agreement (CIA) with the Office of Inspector General at Health and Human Services (OIG-HHS). A CIA is an agreement in which an entity, such as a nursing home company, agrees to certain HHS-OIG requirements in exchange for the government agreeing it won’t ban the company from the Medicare or Medicaid programs. Often CIAs require the hiring of a compliance officer, development of compliance policies and training, and other measures aimed at preventing future fraud, waste, and abuse.
Signature has denied the allegations contained in the whistleblowers’ lawsuit and did not admit to liability when it entered into the settlement agreement with the government.
The False Claims Act provides a mechanism for whistleblowers with knowledge of fraud to report that fraud to the government and to share in the government’s recovery. Last year, whistleblowers were paid nearly $400 million in rewards for filing qui tam lawsuits that lead to recoveries to the federal treasury.
Barrett Johnston Martin & Garrison, LLC is based in Nashville, Tennessee and represents whistleblowers all across the country. More information about this practice can be found here.