Extendicare Health Services Settles False Claims Act Case

The Justice Department announced that Extendicare Health Services, Inc. (“Extendicare”) and its subsidiary Progressive Step Corporation (“ProStep”) have agreed to settle two whistleblowers’ qui tam claims that they violated the False Claims Act by billing government health care programs for substandard nursing services and billing for rehabilitation therapy services that were not medically necessary or reasonable.

According to the Extendicare website, its United States operations are headquartered in Milwaukee, Wisconsin. Through its subsidiaries, it is made up of 156 skilled nursing, assisted living, and rehabilitation facilities in eleven states. ProStep provides inpatient rehabilitation services, such as physical and occupational therapy and speech-language pathology services, through Extendicare’s skilled nursing facilities.

Skilled nursing facilities, most often called “nursing homes,” are licensed healthcare facilities that offer short-term care for individuals who need rehabilitation services and long-term care for patients with serious or persistent health conditions, such as Alzheimer’s Disease, who cannot be cared for at home or in an assisted living facility.

According to the Justice Department, two whistleblowers brought separate cases under the qui tam provisions of the False Claims Act alleging that Extendicare had violated the False Claims Act. Tracy Lovvron and Donald Gallick, both former employees of Extendicare, filed the qui tam complaints in Pennsylvania and Ohio, respectively.

According to the government, between 2007 and 2013, Extendicare billed Medicare and Medicaid for materially substandard skilled nursing services (e.g., it failed to have an adequate number of skilled nurses for the number of skilled nursing residents, and it failed to follow the appropriate protocols to prevent falls and pressure sores) and submitted claims for rehabilitation services that were not medically necessary.

The government claims that the violations occurred in 33 nursing homes in eight states: Indiana, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, Washington, and Wisconsin. The Justice Department announced that Extendicare and ProStep have agreed to pay $32.3 million to the federal government to settle the allegations. The Medicaid programs of the eight states will share in a $5.7 million settlement. In addition, Extendicare and ProStep will enter into a facility-wide five-year corporate integrity agreement.

As their reward under the qui tam provision of the False Claims Act, the whistleblowers will share in approximately $2 million.

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