Home Care Provider Files for Bankruptcy After Tequila-for-Referrals Charges

Kentucky-based Nurses’ Registry and Home Health Corp. recently filed for Chapter 11 bankruptcy, and alleges Medicare owes the company $1 million in payments for health care services it provided. 

Medicare officials suspended payments to Nurses’ Registry earlier this year after suing the company over alleged kickbacks and improper billing, court documents show. The case drew attention in part because Nurses’ Registry was a prominent corporate sponsor of University of Kentucky athletics, and the alleged kickbacks included exchanging Wildcats basketball tickets for referrals, The Wall Street Journal reported.

Other kickbacks allegedly involved doctors being given tickets to a Journey concert and bottles of tequila, and there was an email exchange in which a doctor and the home health company discussed how many referrals would be needed for Kentucky Derby tickets, according to the WSJ.

Nurses’ Registry, founded and incorporated in 1984, providers home health care services in central Kentucky including skilled nursing, physical therapy, occupational therapy, nursing assistant and other services.The company serves more than 1,300 patients, court records show.

On an annual basis, Medicare receivables represent approximately 65% of the company’s revenues, according to court documents. Medicare receivables average approximately $1.3 million per month.

Since Medicare payments were suspended, Nurses Registry’ has been unable to fully pay its ongoing operating expenses, the company says in the filing. 

“Without immediate delivery of the outstanding Medicare Receivables and payment of future Medicare Receivables, the Debtor [Nurses’ Registry] will have no choice but to cease operations and discharge its patients and employees,” the company says in the suit. “Disruption to patient care will cause immediate and irreparable harm to patients, and ceasing operations abruptly will greatly minimize the going concern value of the Debtor for the benefit of all of its constituencies.” 

The Centers for Medicare & Medicaid Services (CMS) provided a notice to the company regarding suspending payments on May 6, 2015. 

The suspension of Medicare payments was based on, but not limited to, “interviews of staff and patients which corroborated the allegation that patients who are receiving or have received services from Nurses’ Registry are not appropriate for home health services,” CMS said in the notice.

It is not clear whether the company intends to use Chapter 11 protection to reorganize, close or sell, according to the WSJ.

Written by Cassandra Dowell