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Genesis Healthcare Inc. Agrees to Pay $53.6 Million Settlement to Resolve False Claims Act Violations

The government seems even more determined than ever to crack down on illegal billing and to make those who have done so pay for their alleged misdeeds. Proof of this came last week when the Department of Justice announced that Genesis Healthcare Inc. has agreed to pay more than $53 million – including interest – to settle lawsuits alleging that it and several other companies violated the False Claims Act. The government alleges that Genesis violated the False Claims Act by submitting false claims for medically unnecessary therapy and hospice services and by providing grossly substandard nursing care. Genesis – which is located in Kennett Square, Pennsylvania – owns and operates skilled nursing facilities, assisted/senior living facilities and a rehabilitation therapy business. “We will continue to hold health care providers accountable if they bill for unnecessary or substandard services or treatment,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Today’s settlement demonstrates our unwavering commitment to protect federal health care programs against unscrupulous providers.”


The settlement resolves four sets of allegations in all.

  • In the first allegation, the government maintains that from April 2010 through March 2013, Skilled Health Group Inc. (SKG), Skilled Healthcare LLC (Skilled LLC), and Creekside Hospice II LLC, knowingly submitted false claims to Medicare for services they provided at Creekside Hospice. Specifically, the facilities are alleged to have billed hospice services for patients who were not terminally ill and that they billed inappropriately for physician evaluation services.
  • Secondly, the settlement resolves allegations that from January 1, 2005 through December 31, 2013, SKG, Skilled LLC and Hallmark Rehab GP LLC submitted false claims to Medicare, TRICARE and Medicaid for medically unnecessary services that they billed for more therapy minutes than their patients received. The facilities are also alleged to have fraudulently assigned patients a higher Resource Utilization Group (RUG) level than necessary. RUGs are mutually exclusive categories that reflect levels of resource need in long-term care settings. Medicare reimburses SNF’s based on these metrics.
  • In the third allegation, the government maintains that from January 1, 2008 to September 27, 2013, Sun Healthcare Group, Inc., SunDance Rehabilitation Agency and SunDance Rehabilitation submitted false claims to Medicare Part B by billing for medically unnecessary services and for services that were carried out by unskilled persons.
  • In the final allegation, the Justice Department maintains that between September 1, 2003 and January 3, 2010 Skilled LLC submitted false claims to Medicare and Medi-Cal at its nursing homes for services that were substandard. Specifically, the settlement resolves allegations that these facilities failed to provide sufficient nurse staffing to meet the needs of residents. This in turn violates the government’s standard requirements for these nursing homes, SNF, etc.

“Safeguarding federal health care programs and patients is a priority,” said Acting U.S. Attorney Steven W. Myhre for the District of Nevada. “Today’s settlement is an example of the U.S. Attorney’s Office’s commitment to holding medical providers accountable for fraudulent billing of medically unnecessary treatments and services. We are committed to protecting federal health care programs, including Medicare, TRICARE, and Medicaid, which are funded by taxpayer dollars.” The settlement resolves allegations that were brought about by lawsuits filed under the qui tam, or whistleblower, provisions the False Claims Act by several former employees of companies acquired by Genesis. The qui tam provisions of the False Claims Act permit individuals to sue on behalf of the federal government in cases alleging false claims and to recover a portion of any subsequent settlement. The whistleblowers in this case are scheduled to receive a combined $9.67 million.