Kindred to Pay $125 Million Settlement in Therapy Overbilling Case

Kindred Healthcare Inc. (NYSE: KND) has agreed to a $125 million settlement with the United States Department of Justice over an investigation into a therapy services company it acquired in 2011. Kindred is the largest provider of post-acute services in the country, and following a 2014 acquisition, became the largest home health provider.

RehabCare Group Inc., the largest provider of nursing home therapy services in the United States, was sued for allegations that the company violated the False Claims Act by knowingly causing skilled nursing facilities (SNFs) to submit claims to Medicare for rehabilitation therapy services that were not reasonable, necessary or skilled, or that never occurred.

The company, which contracts with more than 1,000 SNFs to bring rehabilitation therapy to patients in 44 states, was purchased by Kindred on June 1, 2011. The allegations specifically noted that during the period prior to Oct. 1, 2011, RehabCare boosted the amount of reported therapy during “assessment reference periods,” which allowed its affiliated SNFs to bill Medicare at the highest therapy reimbursement rates.

“Medicare beneficiaries are entitled to receive care that is dictated by their clinical needs rather than the fiscal interest of health care providers,” Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, said in a prepared statement. “All providers, whether contractor or direct billers of tax-payer funded federal health care programs, will be held accountable when their actions cause false claims for unnecessary services.”

RehabCare has denied engaging in any illegal activities and entered into the settlement without any admissions of wrongdoing.

Kindred expects to make the payment on the settlement during the first quarter of 2016, according to a press release. Kindred has also entered into a Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services (OIG) for its provision of contract rehabilitation therapy services.

Written by Amy Baxter