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North American Health Care Inc. Agrees to Pay a $28.5 Million Settlement for Claims of Medically Unnecessary Rehab Services

The government’s crackdown on health care related fraud often follows a labyrinth of individuals and companies who conspire against its agencies. This was demonstrated when last week, the Department of Justice announced that North American Health Care Inc. (NAHC), its chairman of the board, John Sorenson, and its senior vice president of Reimbursement Analysis, Margaret Gelvezon had all agreed to pay a total of $30 million to resolve False Claims Act violations. It is alleged that the parties caused the submission of false claims to the government for rehabilitation services to government health care programs that were medically unnecessary. The recipients of these services were residents of NACH’s skilled nursing facilities (SNF). Under the terms of the settlement, NAHC agreed to pay $28.5 million, Mr. Sorensen agreed to pay $1 million and Ms. Gelvezon has agreed to pay $500,000.


“Medicare patients and those insured by TRICARE are entitled to receive care necessary for their clinical needs and not the financial needs of their health providers,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. NAHC provides inpatient rehabilitation, physical, occupational and speech services through its 35 SNF which mostly operate in the state of California. The government alleges that NAHC caused false claims to be submitted to Medicare and TRICARE and that it then sought payment for unnecessary rehabilitation therapy services provided at its facilities.


Moreover, the government contends that Gelvezon, as an officer at NAHC, created and participated in an improper billing scheme. The government also maintains that Sorensen participated in this scheme at the NAHC facilities. The conduct is alleged to have occurred from January 21, 2005, to October 31, 2009, for all of the NAHC SNFs and continued from November 1, 2009, to December 3, 2011, for three of the SNFs in the Northern District of California area. “Skilled nursing facilities such as NAHC treat some of the most vulnerable patients in the health care system. These facilities, and the individuals who run them, will be held accountable when they provide treatment based on financial motivations instead of the patients’ needs,” said U.S. Attorney Brian J. Stretch for the Northern District of California.


NAHC has also agreed to enter into a five-year Corporate Integrity Agreement (CIA) with the HHS-OIG as part of its settlement agreement. The CIA applies to all facilities managed by NAHC and requires an independent review organization to evaluate therapy services billed to Medicare by NAHC. The settlement comes about in the wake the government’s emphasis on combating health care fraud through its Health Care Fraud Prevention and Enforcement Acton Team (HEAT). The initiative was announced back in May of 2009 by the Attorney General and the Secretary of Health and Human Services. One tool of this effort has been the False Claims Act. If you know of fraud that has been or is being committed against the government in one form or another, you are advised to report it to the proper agencies. You are also encouraged to contact a false claims act lawyer.  A false claims act attorney will be able to advise you as to your rights and can also help you understand all aspects of the law including the Whistleblower Protection Act. The Whistleblower Protection Act allows private citizens to sue on behalf of the government over fraud they have helped to uncover. It also entitles private citizens to a portion of any recovery.brand