California nursing home company pays $16.7 million to settle whistleblowers’ rehabilitation fraud claims

by Ben Vernia | July 22nd, 2020

On July 13, the Department of Justice announced that the California nursing home company Longwood Management Corp. had agreed to pay nearly $17 million to resolve allegations — originally brought by whistleblowers — that the company’s nursing homes submitted false claims for reimbursement for rehabilitation services. According to DOJ’s press release:

Longwood Management Corporation and 27 affiliated skilled nursing facilities (Longwood) have agreed to resolve allegations that they violated the False Claims Act by submitting false claims to Medicare for rehabilitation therapy services that were not reasonable or necessary, the Department of Justice announced today.  Longwood is headquartered in California and the 27 skilled nursing facilities are also located in California.  

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The settlement resolves allegations that Longwood submitted false claims for rehabilitation therapy by engaging in a systematic effort to increase Medicare billings.  Medicare reimburses skilled nursing facilities at a daily rate that reflects the skilled therapy and nursing needs of qualifying patients.  The greater the patient’s needs, the higher the level of Medicare reimbursement.  The highest level of Medicare reimbursement for skilled nursing facilities is for “Ultra High” therapy patients, who require a minimum of 720 minutes of skilled therapy from two therapy disciplines (e.g., physical, occupational, or speech therapy), one of which has to be provided five days a week.

Longwood allegedly knowingly submitted or caused the submission of false and fraudulent claims to Medicare for medically unreasonable and unnecessary Ultra High levels of rehabilitation therapy for Medicare Part A residents.  Specifically, Longwood allegedly pressured therapists to increase the amount of therapy provided to patients to meet pre-planned targets for Medicare revenue.  These targets were alleged to have been set without regard to patients’ individual therapy needs and could only be achieved by billing for a high percentage of patients at the Ultra High level.

The settlement covers conduct that occurred from May 1, 2008 through Aug. 1, 2012 at six facilities (Alameda Care Center, Burbank Rehabilitation Center, Magnolia Gardens Convalescent Hospital, Montrose Healthcare Center, Sherman Oaks Health & Rehab Center, and West Hills Health & Rehab Center); and from Jan. 1, 2006 through Oct. 10, 2014 at twenty-one facilities (Burlington Convalescent Hospital, Chino Valley Rehabilitation Center LLC, Colonial Care Center, Covina Rehabilitation Center, Crenshaw Nursing Home, Green Acres Lodge, Imperial Care Center, Imperial Crest Health Care Center, Laurel Convalescent Hospital, Live Oak Rehabilitation Center, Longwood Manor Convalescent Hospital, Monterey Care Center, Intercommunity Healthcare Center, Park Anaheim Healthcare Center, Pico Rivera Healthcare Center, San Gabriel Convalescent Center, Whittier Pacific Care Center, Studio City Rehabilitation Center, Sunnyview Care Center, View Park Convalescent Center, Western Convalescent Hospital). 

The company also agreed to a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. The government announced that the three whistleblowers (in two separate qui tam suits) will receive $3,006,000 (an 18% relators’ share).

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