HCR ManorCare accused of fraud but disputes claims

HCR ManorCare, which operates 281 skilled nursing facilities (SNFs) in 30 states, routinely submitted false claims to Medicare and Tricare for rehabilitation therapy services that it knew were not medically reasonable and necessary, the federal government alleged yesterday in announcing that it had combined three False Claims Act lawsuits against the provider into one. ManorCare asserts that the lawsuit boils down to a “billing dispute” and that inappropriate care and billing did not occur.

The company, according to the government’s complaint, pressured administrators and rehab therapists to meet unrealistic financial goals that resulted in the provision of the services in question. “ManorCare allegedly set prospective billing goals designed to significantly increase revenues without regard to patients’ actual clinical needs and threatened to terminate SNF managers and therapists if they did not administer the additional treatments necessary to qualify for the highest Medicare payments,” according to a Department of Justice news release. “ManorCare also allegedly increased its Medicare payments by keeping patients in its facilities even though they were medically ready to be discharged.”

U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, one of the districts involved in the investigation into the alleged false billings, said: “We want to ensure that taxpayer dollars are used to pay for healthcare for Americans that need it, not to unjustly enrich healthcare companies. Medical providers will be held accountable when they exploit patients for profit by subjecting them to therapies they don’t need and then billing Medicare for reimbursement.”

In a letter posted on its website, ManorCare said it has cooperated fully with government investigators and refutes the basic claims made in the lawsuit. “We believe this lawsuit is unjust, and we will vigorously defend ourselves in court,” the letter states. ManorCare notes that errors in claims can occur in a company that cares for more than 160,000 patients in a year, as it does, but it maintains that the lawsuit “is the result of a billing dispute between our company and the federal government that stems from the government’s view that our industry as a whole is providing a level of care to Medicare rehabilitation patients that exceeds the government’s expectations, despite the fact that these services were ordered by licensed physicians and delivered by licensed therapists.”

The three consolidated lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. The act permits the government to intervene in such lawsuits, as it has done in these cases. A defendant that violates the False Claims Act is liable for three times the government’s losses, plus civil penalties.

The claims asserted against ManorCare are allegations only; no determination of liability, the justice department emphasized.

ManorCare is owned by the Carlyle Group.