The Department of Justice (“DOJ”) announced that 27 skilled nursing facilities owned by Longwood Management Corporation (“Longwood”) have agreed to resolve allegations that Longwood violated the False Claims Act (“FCA”) by submitting false claims to Medicare for rehabilitation therapy services that were neither reasonable nor necessary.  Longwood will pay $16.7 million to resolve these claims.

Medicare reimburses skilled nursing facilities at a daily rate that reflects the skilled therapy and nursing needs of qualifying patients.  The level of reimbursement Medicare pays out depends on the patients’ needs: the greater a given patient’s needs, the higher the level of Medicare reimbursement that becomes available.  According to DOJ, Longwood allegedly knowingly submitted false claims for rehabilitation therapy by engaging in a systematic effort to increase Medicare billings.  Specifically, Longwood allegedly pressured therapists working at its facilities to increase the amount of therapy provided to patients—even if the increased therapy was neither reasonable nor necessary—in an attempt to bill as many patients as possible at the highest Medicare billing rate.

The settlement partially resolves allegations brought in two lawsuits filed by whistleblowers under the qui tam provisions of the FCA.  The whistleblowers will collectively receive approximately $3 million of the settlement proceeds.

Read the DOJ press release here.