Diversicare pays $9.5 million to settle whistleblowers’ false claims allegations for rehabilitation services

by Ben Vernia | February 28th, 2020

On February 28, the Department of Justice announced that Tennessee-based Diversicare Health Services, Inc., has agreed to pay $9.5 million to resolve claims, originally brought by two whistleblowers in separate lawsuits, that the company submitted false claims for reimbursement for rehabilitation services. The company also entered into a five-year corporate integrity agreement. According to DOJ’s press release:

Diversicare Health Services Inc., has agreed to pay $9.5 million to resolve allegations that it violated the False Claims Act by knowingly submitting false claims to Medicare for rehabilitation therapy services that were not reasonable, necessary, or skilled, the Department of Justice announced today. 

The settlement also resolves allegations that Diversicare submitted forged pre-admission evaluations of patient need for skilled nursing services to TennCare, the state of Tennessee’s Medicaid Program.  Diversicare, based in Brentwood, Tennessee, provides skilled nursing and rehabilitation services at approximately 74 facilities across the country.

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The government alleged that from Jan. 1, 2010, through Dec. 31, 2015, Diversicare’s corporate policies and practices were designed to place as many beneficiaries in the highest level of Medicare reimbursement — Ultra High — irrespective of the individual clinical needs of the patients.  These profit-driven policies and practices resulted in the provision of unreasonable, unnecessary, and unskilled therapy to many beneficiaries in Diversicare’s skilled nursing facilities.  The government alleged that Diversicare submitted claims for Ultra High therapy levels despite evidence that (1) the frequency and duration of physical or occupational therapy were not reasonable or necessary for the patient, (2) the intensity of the physical or occupational therapy was inappropriate for the patient and not reasonable or necessary, (3) services did not require the skills of a therapist to perform them, and (4) speech therapy was medically unnecessary.  This included specific instances of improper co-treatment in order to achieve minute thresholds, repetitive and unskilled exercises that did not match plan of care goals to obtain additional minutes, engaging patients in activities contraindicated by underlying medical conditions, inflating ADL scores, extending patient lengths of stay beyond what was medically indicated, billing for services that were not provided, using budgets, goals, and quotas to ensure Ultra High therapy was maximized, and threatening or undertaking adverse actions against employees if they failed to meet the budgets, goals, or quotas.

The government also alleged that Diversicare submitted forged, photocopied, or pre-signed physician signatures on pre-admission evaluation certifications required in the submission of claims to TennCare for nursing facility services rendered to TennCare beneficiaries at its associated Tennessee skilled nursing and rehabilitation facilities.  TennCare is Tennessee’s Medicaid program jointly funded by the state of Tennessee and the federal government. 

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The Government announced that the whistleblowers will receive separate awards totaling $1,545,350 (a relators’ share of approximate 16.2%)

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