$30M Paid on Nursing Home Referral Kickback Scheme

Contract therapy providers RehabCare Group Inc., RehabCare Group East Inc. and Rehab Systems of Missouri and management company Health Systems Inc. have agreed to pay $30 million to resolve claims that they violated the False Claims Act by engaging in a kickback scheme related to the referral of nursing home business. Additionally, as part of this settlement, the entities have agreed to restructure their business arrangement.


Between March 1, 2006, and December 31, 2011, RehabCare allegedly arranged with Rehab Systems of Missouri to obtain Rehab Systems of Missouri’s contracts to provide therapy to patients residing in 60 nursing homes controlled by Rehab Systems majority-owner. In exchange for this stream of referrals, RehabCare allegedly paid Rehab Systems a $400,000 to $600,000 upfront payment and allowed Rehab Systems to retain a percentage of the revenue generated by each referral.


The settlement resolves allegations originally brought in a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. The whistleblower will receive $700,000 as its share of the recovery in this case.


See the DOJ Announcement


See also Medical Law Perspectives, September 2013 Report: Physical Therapy: Rehabilitation Services and Liability Risks