published Friday, March 8th, 2013

Chattanooga: Nursing home company agrees to pay $2.7 million to feds

WASHINGTON — A Chattanooga-based nursing home manager Grace Healthcare LLC and its affiliate Grace Ancillary Services LLC, have agreed to pay $2.7 million, plus interest, to resolve allegations that they violated the False Claims Act by knowingly submitting or causing the submission to the Medicare and TennCare/Medicaid programs of false claims for medically unreasonable and unnecessary rehabilitation therapy, the U.S. Department of Justice announced today.

Grace Ancillary Services LLC provided the therapy in some of the skilled nursing facilities Grace Healthcare LLC owns and/or manages in Tennessee and elsewhere, a news release stated.

The settlement resolves claims that in 10 nursing home facilities in which Grace provided physical, occupational, and speech therapy for periods ranging from 2007 through June of 2011.

It was stated that Grace pressured therapists to increase the amount of therapy provided to patients in order to meet targets for Medicare revenue that were set without regard to patients’ individual therapy needs and could only be achieved by billing for a large amount of therapy per patient.

As part of the settlement, Grace has agreed to enter into a Corporate Integrity Agreement with the Inspector General of the Department of Health and Human Services that provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to the settlement.

“In today’s economic climate, it is more important than ever for the United States to make sure that Medicare and Medicaid funds are spent appropriately,” Stuart F. Delery, principal deputy assistant attorney general for the civil division of the Department of Justice, said. “The Department of Justice will not tolerate those who abuse government health care programs by providing services based on their own financial considerations, rather than the needs of their patients.”

U.S. Attorney for the Eastern District of Tennessee Bill Killian said the continued viability of the country’s health care benefit programs “depends, in large part, on the honesty and integrity of the program participants.”

“Health care providers must make decisions regarding the level of services to be provided based solely on individual patient need rather than a desire to increase the bottom line,” he said in the release. “As this settlement demonstrates, when aggressive business practices cross the line into waste and abuse, we are committed to working with our federal and state partners to protect public funds.”

The allegations settled today arose from a lawsuit filed by a former Grace employee under whistleblower provisions of the False Claims Act.

Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. The whistleblower in this case will receive $405,000.

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