Tennessee-based nursing home operator Grace Healthcare LLC will pay the federal government more than $2.7 million, settling charges that Grace violated the False Claims Act by billing Medicare for unnecessary rehabilitation therapy.
A former Grace employee made the allegations in a whistleblower case. He said 10 Grace-operated skilled nursing facilities billed for unnecessary and unreasonable physical, occupational and speech therapy to meet the corporation’s reimbursement goals from 2007 to 2011.
The company did not admit to wrongdoing as part of the agreement, and said the government’s investigation was not related to quality of care issues. Grace said it settled to avoid an expensive suit that would distract from its operations.
“Grace reached the settlement with the government on the basis that Grace’s therapy billings statistically exceeded state averages in some of its facilities,” the company stated. “Simply because Grace’s therapy services exceeded state averages did not make the claims for such services incorrect, much less false.”
The government, however, maintains that Grace’s billing was an example of “waste and abuse” driven by “financial considerations,” said U.S. Attorney for the Eastern District of Tennessee Bill Killian.
Grace will enter into a Corporate Integrity Agreement regarding its therapy services as part of the settlement. The former Grace employee received $405,000 under the settlement agreement.