Rehabilitation therapy company pays $30 million to settle kickback, false claims allegations

by Ben Vernia | January 21st, 2014

On January 17, the Department of Justice announced that RehabCare Group, Inc., and two related companies had agreed to pay $30 million to resolve charges, initially brought by a whistleblower, that the company defrauded federal health care programs by paying kickbacks for nursing home referrals. According to DOJ’s press release:

Contract therapy providers RehabCare Group Inc., RehabCare Group East Inc. and Rehab Systems of Missouri and management company Health Systems Inc. have agreed to pay $30 million to resolve claims that they violated the False Claims Act by engaging in a kickback scheme related to the referral of nursing home business, the Justice Department announced today. Additionally, as part of this settlement, the entities have agreed to restructure their business arrangement.

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Between March 1, 2006, and Dec. 31, 2011, RehabCare allegedly arranged with Rehab Systems of Missouri to obtain Rehab Systems of Missouri ’s contracts to provide therapy to patients residing in 60 nursing homes controlled by Rehab Systems majority-owner James Lincoln. In exchange for this stream of referrals, RehabCare allegedly paid Rehab Systems a $400,000 to $600,000 upfront payment and allowed Rehab Systems to retain a percentage of the revenue generated by each referral.

DOJ also announced that the whistleblower, a corporation, will receive $700,000 (a 2.33% relator’s share, which may reflect the preponderance of state Medicaid funds in the settlement).

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