US jumps into whistleblower cases that accuse nursing-home chain of overbilling Medicare

The Justice Department said Tuesday that it is stepping into a long-running lawsuit against one of the nation's largest nursing-home chains, accusing it of systematic Medicare overbilling and sometimes putting frail, dying patients through arduous rehab schedules just to increase revenue.

The department is taking control of a whistleblower lawsuit in U.S. District Court in Alexandria against Toledo, Ohio-based HCR ManorCare after a yearslong investigation. The initial accusations against the company were filed by a northern Virginia occupational therapist in 2009.

The lawsuit alleges that ManorCare routinely pressured administrators of its nursing homes, assisted living and rehab facilities to meet financial targets by billing for unnecessary care.

ManorCare, which also operates under the Heartland and Arden Courts brands, denied wrongdoing and said the dispute revolves around providing care that exceeds government expectations.

"The government bases its allegations on retrospective analyses performed by a few alleged experts who have never cared for, spoken with or even seen the patients in question. Instead, these alleged experts second-guess the hands-on clinical judgment of tens of thousands of experienced, licensed, caring and compassionate doctors, nurses and therapists who actually provided care to our patients," the company said in a statement issued Tuesday. It declined to comment further.

But Jeffrey Downey, attorney for the original whistleblower, occupational therapist Christine Ribik, said the government's investigation of ManorCare was exhaustive and "uncovered an astonishing amount of really bad facts."

The lawsuit alleges that ManorCare routinely pushed the vast majority of its patients into Medicare's highest tier of rehabilitation services, whether they needed it or not. That allowed the company to increase the amounts it billed.

For instance, in 2006, ManorCare billed Medicare at the top reimbursement rate for 39 percent of its patients. That number more than doubled to 80 percent by 2009, according to the lawsuit.

The lawsuit describes an 85-year-old patient at a ManorCare facility in Palm Harbor, Florida, whose medical records called for hospice care only, instead being put through 100 days of therapy even though a therapist described him as "medically fragile." He was put into hospice care only at the end of the 100 days, which marked the length of time that Medicare would cover his therapy treatments.

"We strive for a system whereby health care providers provide reasonable and necessary services without overbilling Medicare for unreasonable and unnecessary services," said Dana Boente, U.S. Attorney for the Eastern District of Virginia, where the case has been brought.

The lawsuit does not specify the amount that investigators believe Medicare was overbilled, but says Medicare paid more than $6 billion to ManorCare's 281 skilled nursing facilities from January 2006 to May 2012.

ManorCare operates skilled nursing facilities in 30 states. It was purchased in 2007 by The Carlyle Group for $6.3 billion.

The lawsuit was initially filed under the False Claims Act, which allows private citizens to bring lawsuits on behalf of the United States when they have knowledge that the government is being defrauded. The U.S. can then investigate and decide whether it wants to take over the case. Whistleblowers whose cases are taken over by the government are entitled to collect anywhere from to 15 to 25 percent of any money recovered. The percentage increases slightly if they win a case without the government's help.