Skilled nursing facility Norridge Gardens, located in Norridge, IL, has agreed to pay $360,000 to resolve whistleblower allegations that they wrongfully billed federal medical programs. According to an August 16 U.S. Department of Justice (DOJ) press release, Norridge Gardens has settled allegations that they provided unnecessary care, and “‘upcoded’ physical, occupational, and speech therapy services” to increase payouts from Medicare. Upcoding is a process where medical providers misrepresent elements of care or services provided as more serious or expensive than they actually were, thus achieving higher federal medical program payouts.
The settlement resolves allegations that between 2008 and 2016, Norridge Gardens provided unnecessary treatments through two skilled therapy vendors, Quality Therapy & Consultation Inc., and its own therapy affiliate, Rex Therapeutics, LLC. The government alleged that Norridge Gardens billed the government for treatments done without a doctor’s orders, as well as treatments that hadn’t been administered. The government also alleged that Norridge Gardens pressured providers to upgrade care to higher levels of urgency and cost, allowing them to increase their Medicare billings.
The False Claims Act allows private citizens to sue companies on behalf of the government under the qui tam provisions of the Act. These whistleblowers, or relators as they are legally known, are entitled to a portion of 15 to 30% of the total reward amount recovered by the government in a settlement, or finding of liability. As is often the case, the whistleblower was a former employee of Quality Therapy and Rex Therapeutics, allowing them insider information into potentially fraudulent activities taking place in both organizations. The DOJ hasn’t yet announced the amount of the award that the whistleblower will receive in this case.
Medical fraud makes up over three quarters of the False Claims Act’s annual recoveries. Over two thirds of the $2.2 billion recovered in 2020 came from cases brought by whistleblowers. Although we don’t yet have full statistics on the False Claims Act’s performance in 2021, there have been multiple large cases just in the past two months that demonstrate its continued effectiveness. Earlier in August, diabetes testing supplies provider Arriva Medical, LLC agreed to pay $160 million to settle False Claims Act allegations of a kickback scheme and false billings. While Norridge Gardens’ case was relatively small, the power of the False Claims Act is that it can capture and prosecute massive fraud just as easily as smaller cases.
Just last week, WNN published an article reporting on the removal of a set of False Claims Act amendments from the 2021 Infrastructure Bill. The False Claims Amendments Act would have made a number of small, but essential changes to the Act, making it harder for defendants to have cases thrown out after fraud was already proven based on “materiality.” The amendments would have also made it harder for organizations to retaliate against employees who they had previously terminated. The amendments were removed because of a last-minute lobbying campaign headed up by the American Hospital Association (AHA), a group whose constituents might benefit from keeping the current definition of materiality, WNN sources say.