Mpls. Law Firm Helps Local Whistleblower Win $5.7M
A whistleblower lawsuit filed by a locally based provider of rehabilitation services recently led to a $30 million settlement between some other companies and the federal government.
In 2006, the CEO of Health Dimensions Rehabilitation (HDR), a Cambridge-based provider of rehabilitative therapy, was listening to an earnings call by RehabCare Group, Inc., another therapy services provider. RehabCare’s CEO allegedly described a “recruiting fee” paid to a nursing home chain in Missouri, which HDR’s leader believed constituted an illegal “kickback” scheme.
HDR blew the whistle on the alleged misconduct, filing a lawsuit in 2007. HDR was represented by Jonathan Bye, an attorney from Minneapolis-based Lindquist & Vennum, and the federal government eventually intervened in the case.
Several years after the case began, the U.S. Justice Department has announced that it reached a settlement with RehabCare Group and Health Systems, Inc., a nursing home management company.
The two companies agreed to pay $30 million to resolve allegations that they participated in an alleged kickback scheme between 2006 and 2011, through which funds were allegedly paid to obtain referrals of Medicare-reimbursed therapy business from nursing homes.
Such an operation violates an “anti-kickback statute,” the government said. And the settlement should send a “message to those who seek to improperly take advantage of the Medicare program,” Gerald Roy of the U.S. Department of Health and Human Services said in a statement.
The defendants have reportedly denied wrongdoing and Kindred Healthcare, which acquired RehabCare in 2011, said in a statement provided to news outlet Business Insurance that “RehabCare denies all liability but is pleased to have reached a compromise that allows all parties to put this issue behind them.”
HDR, the whistleblower, will receive $5.7 million—or 19 percent of the total settlement. Under the terms of the deal, RehabCare Group and Health Systems also “agreed to restructure their business arrangement,” the Justice Department said.
“Health care providers that attempt to profit from illegal kickbacks will be held accountable,” Stuart F. Delery, assistant Attorney General for the Justice Department’s civil division, said in a statement. “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”