Government Intervenes in HCR ManorCare Qui Tam Suits

According to the Department of Justice, the federal government has filed a consolidated complaint intervening in three whistleblowers’ qui tam lawsuits alleging that HCR ManorCare and its affiliates violated the False Claims Act. The Justice Department alleges that the medical providers engaged in systematic overbilling of Medicare and TRICARE, the healthcare program for U.S. military members and their families, for therapy services. The government’s complaint names HCR ManorCare, Inc., owned by The Carlyle Group; Manor Care Inc.; HCR ManorCare Services, LLC; and Heartland Employment Services, LLC (collectively “ManorCare”) as defendants.

According to ManorCare’s website, it employees over 55,000 people and operates 280 skilled nursing facilities and rehabilitation centers nationwide under the names Heartland, ManorCare Health Services and Arden Courts.

According to the Consolidated Complaint in Intervention, the whistleblowers, also known as relators, are three former employees of three Heartland entities. Relator Christine Ribik, a licensed occupational therapist, initiated the first lawsuit against ManorCare under the qui tam provisions of the False Claims Act in 2009 in the Eastern District of Virginia. Relator Patrick Gerard Carson, a physical therapy assistant, filed his qui tam action in 2011. The third relator, Marie Slough, is a physical therapist who brought her qui tam suit in 2014. All three of the whistleblower’s actions were consolidated by the Court in November 2014.

In its complaint, the government alleged that ManorCare billed federal healthcare programs, including Medicare and TRICARE, for services that were not medically necessary or were not skilled in nature and did not meet the requirements for care provided in skilled nursing facilities.

For example, the government alleged that ManorCare set Ultra High billing targets for its skilled nursing facilities without regard to its patients’ actual medical needs to maximize ManorCare’s revenue. Ultra High billing is the highest daily rate that Medicare will pay for rehabilitation therapy. It applies to patients who require skilled rehabilitation therapy for a minimum of 720 minutes per week from at least two therapy disciplines. The government claims that ManorCare engaged in a nationwide scheme to bill at the Ultra High level whether it was medically appropriate or not. The government gave an example of ManorCare’s facility in Sunnyvale, California. In 2006, Sunnyvale billed 52.9 percent of its therapy services at the Ultra High rate. By February 2010, it billed 91 percent at the Ultra High rate, and by May 2012 it billed 94 percent of its rehabilitation services at the Ultra High level.

If the government ultimately recovers any monies from ManorCare, either through settlement or trial, the whistleblowers may be entitled to share in the proceeds as their rewards under the qui tam provisions of the False Claims Act.