Florida-based nursing home chain Consulate Health Care has reached a tentative settlement with the Department of Justice after six of its affiliated nursing homes filed for Chapter 11 bankruptcy following a more than quarter-billion-dollar judgment in a False Claims Act case. 

The proposed bankruptcy settlement agreement was filed Monday by lawyers representing Consulate, the Washington Post first reported. A Consulate spokeswoman declined to comment on the matter and said there is still a second hearing scheduled later this month before the issue can be finalized.

“We’re really working with all parties involved to hopefully reach the desired outcome but right now it’s still ongoing,” the spokeswoman told McKnight’s Long-Term Care News on Tuesday. 

The proposed agreement stems from a decision by a Florida federal appeals court in June 2020 reinstating $257.7 million of an original $347.9 million verdict in an FCA case. Whistleblower Angela Ruckh, a one-time employee at La Vie Rehab (now Consulate) in Florida, filed suit against the company, accusing it in 2011 of overcharging Medicare and Medicaid by inflating therapy claims.

Six affiliated nursing home entities with Consulate in March filed for bankruptcy because they did not have enough in reserve to pay the reinstated judgement.

Under the proposed settlement, the United States would instead receive $3.375 million and Ruckh would get $1.125 million, the Washington Post reported. 

“The skilled nursing industry has been dramatically impacted by the COVID-19 pandemic, including from the recent resurgence of infections from the delta variant,” Paul Rundell, the company’s Chapter 11 restructuring officer, said in a court filing Monday. 

“Many large skilled nursing organizations, including Consulate, have encountered increased financial stress as a direct result. And the State of Florida, where many of Consulate’s skilled nursing facilities are located, is among the hardest hit,” he added.