In a recent whistle blower settlement, two consulting companies and nine affiliated nursing facilities are to pay $10 million to resolve allegations of False Claims Act violations, according to the U.S. Department of Justice (DOJ).

The whistle blower settlement resulted from allegations brought against Southern SNF Management Inc., Rehab Services in Motion d/b/a Dynamic Rehab and nine skilled nursing facilities located in Alabama and Florida.

The companies were accused of submitting Medicare claims for what were allegedly medically unnecessary rehabilitation therapy services. These allegedly false claims violated the federal False Claims Act, the DOJ alleged.

In a press release, the Acting Assistant Attorney General of the Justice Department’s Civil Division  said, “Today’s settlement demonstrates our continuing commitment to ensure that Medicare providers do not place their own financial gain over patients’ clinical needs.” He added, “Such conduct is especially unacceptable when it seeks to take advantage of older Americans, who are some of the most vulnerable members of our community.”

According to the DOJ, between October 2009 and December 2013, Southern SNF, Dynamic Rehab and nine other skilled nursing facilities’ corporate policies encouraged the disregard for patients’ clinical needs through the submission of medically unnecessary and unreasonable therapy.

The DOJ alleges the submission of unnecessary and false claims was founded upon artifically inflated Resource Utilization Group levels. Medicare reimburses skilled nursing facilities based on a patient’s Resource Utilization Group (RUG) level. An RUG level is based the how much skilled rehabilitation therapy a patient needs.

The allegations against the companies came about when former employees of the skilled nursing facilities filed a whistle blower lawsuit under the False Claims Act. Under the Act, employees can file and allege False Claims Act violations on behalf of the government and benefit by being able to share in any recovery. The whistle blowers in this case are said to receive $ 2 million in recovered funds from the whistle blower settlement.

According to the U.S. Attorney for the Southern District of Alabama, “Health care companies that do business with the Federal government must bill taxpayer funds honestly.” Adding that “Those engaging in deceptive billing practices can expect an aggressive investigation to recover inappropriately obtained funds.”

The whistle blower settlement is the culmintion of a coordinated effort by the United States Attorney’s Office for the Southern District of Alabama, the Civil Division’s Commercial Litigation Branch, the Department of Health and Human Services Office of Inspector General and the Federal Bureau of Investigation.

Overview: Whistle Blower Settlement & Lawsuits

A private citizen may sue a business or individual under the False Claims Act if that business or person is defrauding the government. In return, the whistle blower is able to recover funds on behalf of the government.

The lawsuit, when filed, is also done so under wraps or “under seal.” This means that the lawsuit and investigation is kept secret from everyone, even those that are being accused, until the Justice Department is able to further look into the allegations.

In a whistle blower lawsuit, the government investigates the allegations with the assistance of the whistle blower’s attorney. In only a small number of whistle blower lawsuits does the government intervene. If the government does not intervene, whistle blowers are also able to continue the investigations and purse lawsuits filed under the False Claims Act on their own.