Skilled Nursing Facility provider, executives, pay $28.5 million to settle allegations of claims for medically unnecessary care

by Ben Vernia | September 19th, 2016

On September 19, the Department of Justice announced that North American Health Care, Inc., its board chairman and a senior vice president had agreed to pay $28.5 million to resolve civil charges that they caused claims to be submitted for medically unnecessary rehabilitation care at the firm’s skilled nursing facilities. According to DOJ’s press release:

North American Health Care Inc. (NAHC), its chairman of the board, John Sorenson, and its senior vice president of Reimbursement Analysis, Margaret Gelvezon, have agreed to pay a total of $30 million to resolve allegations that they violated the False Claims Act by causing the submission of false claims to government health care programs for medically unnecessary rehabilitation therapy services provided to residents at NAHC’s skilled nursing facilities (SNFs), the Department of Justice announced today.  Under the settlement agreement, NAHC has agreed to pay $28.5 million. Mr. Sorensen has agreed to pay $1 million and Ms. Gelvezon has agreed to pay $500,000.

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NAHC is a private, for-profit company headquartered in Orange County, California, that has service agreements to operate 35 SNFs, most of them in California.  The SNFs provide inpatient rehabilitation services, including physical, occupational, and speech therapy, to patients.  The United States contends that NAHC caused false claims to be submitted to Medicare and TRICARE, seeking payment for medically unnecessary rehabilitation therapy services provided to residents at the NAHC facilities.

The United States further contends that Gelvezon, in her capacity as an officer of NAHC, contributed to this conduct by creating the improper billing scheme.  The government also contends that Sorensen, in his capacity as chairman of the board of NAHC, reinforced this scheme at the NAHC facilities.  The United States contends that this conduct occurred during the period from Jan. 21, 2005, to Oct. 31, 2009, for all of the NAHC SNFs and continued during the period of Nov. 1, 2009, to Dec. 3, 2011, for three of the SNFs in the Northern District of California area.

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The government also announced that the company had agreed to enter into a five-year Corporate Integrity Agreement.

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