Contract nursing home therapy providers Kindred/RehabCare will pay $125 million to resolve a False Claims Act lawsuit alleging that they caused skilled nursing facilities to submit false claims to Medicare for rehabilitation therapy services that were not reasonable, necessary and skilled, or that never occurred, the Department of Justice announced today. RehabCare is the largest provider of therapy in the nation, contracting with more than 1,000 skilled nursing facilities in 44 states to provide rehabilitation therapy to patients. The government alleged that RehabCare’s policies and practices  —  including setting unrealistic financial goals and scheduling therapy to achieve the highest reimbursement level regardless of the clinical needs of its patients — resulted in Rehabcare providing unreasonable and unnecessary services to Medicare patients and led its nursing home customers to submit artificially and improperly inflated bills to Medicare.

The allegations were initially brought to light in a lawsuit filed under the qui tam whistleblower provisions of the False Claims Act by a physical therapist and an occupational therapist, both of whom had worked for RehabCare.  The whistleblowers will receive nearly $24 million as their share of the recovery.