Comments made during a therapy provider’s public conference call in 2006 aroused the suspicion of a listener, who went on to file a whistleblower lawsuit. This was disclosed in a recent court filing in the case, which pits the whistleblower and the U.S. government against RehabCare, the provider that hosted the 2006 call.
Remarks about a “therapist recruiting fee” on the investor information call did not sound right to Mark Essling, CEO of Health Dimensions Rehabilitation Inc., a RehabCare competitor. Essling brought a False Claims Act lawsuit after spending about a year investigating the fees, according to court documents. He alleged that RehabCare overbilled Medicare and Medicaid and paid more than $10 million in kickbacks after taking over therapy at Missouri nursing homes.
RehabCare argued that Essling should not qualify as a whistleblower because he based his suit on publicly available information. Only individuals identified by the False Claims Act, such as an attorney general, can sue a company based on public information. The defendants asked the judge to remove Essling from the action, which would then have proceeded with the government as plaintiff. His removal would have protected RehabCare from potentially paying Essling’s attorney fees.
Judge Audrey G. Fleissig denied RehabCare’s motion in a May 20 ruling. A spokeswoman for Kindred Healthcare, which has owned RehabCare since 2011, said the company plans to “vigorously defend against [Essling’s] allegations.”
The “essential elements” of a fraud must be exposed publicly to trigger the public disclosure bar, and the government would not have understood this alleged fraud based only on RehabCare’s public disclosures, Fleissing wrote. Because Essling’s analysis of the information was needed to bring the case, he can remain a whistleblower plaintiff, the judge ruled.