Long Term Care, Hospice, and Skilled Nursing Facilities Fraud

What is long-term care, hospice and skilled nursing facilities fraud?

Fraud by skilled nursing and other long-term care facilities under the False Claims Act includes a variety of improper practices aimed at increasing reimbursements from federal and state health insurance programs, such as billing for services not provided, billing for services that were provided but not medically appropriate, and paying kickbacks to providers who refer patients to the facility.

Qui tam whistleblower lawsuits under the False Claims Act have become an important tool in combating fraud by long-term care facilities, skilled nursing facilities, and hospice facilities. Most of the patients in these facilities are beneficiaries of the federal Medicare program or the federal-state Medicaid program, which means that false claims for services rendered to these patients are actionable under the False Claims Act.

Long-term care facilities, skilled nursing facilities, and hospice facilities can defraud the Government in a variety of ways. A facility may be billing Medicare for services rendered to patients who do not meet Medicare’s eligibility requirements for the type of services that are being billed. Long-term care facilities, skilled nursing facilities, and hospice facilities also may be liable under the False Claims Act when they bill Medicare or Medicaid for higher levels of services than are appropriate for the patients, or when they fail to provide medically necessary care.

For example, Medicare Part A covers care in a skilled nursing facility only for the treatment of a condition or injury that arose or was treated during a preceding qualifying inpatient hospital stay. Skilled nursing facilities may violate the False Claims Act when they bill Medicare for care that does not meet these coverage requirements.

Skilled nursing facilities also may defraud the Government by billing Medicare and Medicaid for care and services at higher per diem rate levels than are appropriate for their patients. Medicare pays skilled nursing facilities a daily rate for care provided during a covered stay. The Medicare per diem rate is based on the Resource Utilization Group (“RUG”) level to which the skilled nursing facility assigns the patients. The higher RUG levels are reserved for patients whose medical needs require more care and rehabilitation services. Skilled nursing facilities that misclassify patients to collect higher RUG per diem rates may be liable under the False Claims Act.

In the hospice context, Medicare beneficiaries are entitled to care only if they have a terminal prognosis of six months or less. Hospice companies may violate the False Claims Act by submitting claims to Medicare for patients who were not terminally ill when admitted and therefore did not qualify for hospice care. For example, SouthernCare, Inc., one of the nation’s largest hospice providers, paid $24.7 million to settle two qui tam False Claims Act lawsuits alleging that SouthernCare routinely admitted patients who did not qualify for hospice care and billed Medicare for that care.

Moreover, in any long term care setting in which the provider is paid a daily rate to deliver all care necessary to treat the patient, there is a significant risk that the provider will skimp on care to keep profits high. If the provider systematically fails to deliver medically necessary care to its patients in such a situation, it may be liable under the False Claims Act for knowingly billing the government for services not provided.

Facilities can also be liable for other kinds of misconduct, including providing medically unnecessary services to patients, or paying kickbacks to providers who refer patients to the facility.

VSG’s Qui Tam Lawyers Are Experienced in Handling Long Term Care Facilities Fraud Cases

Extendicare Health Services, Inc., a nationwide nursing home chain, paid $10 million to settle qui tam whistleblower claims that the company’s skilled nursing facilities were providing patients with unnecessary rehabilitation therapy services for the sole purpose of obtaining higher reimbursements from Medicare. Extendicare paid VSG client Tracy Lovvorn an additional $990,000 in settlement of her claims for unlawful retaliation and attorney’s fees.