Psychotherapy Nursing Care Provider To Pay $2 Million To Resolve FCA Claims Of Unnecessary Care


Carenow Services, LLC, a Roswell, Georgia-based psychotherapy services provider and its CEO Leena Karun, have settled whistleblower allegations that they billed federal medical programs for services that were unnecessary, improperly documented, or less serious than represented in the billing. Carenow has agreed to pay $2 million to resolve claims that they violated the False Claims Act by wrongfully billing Medicaid and Medicare for psychotherapy sessions at skilled nursing facilities and nursing homes.

According to a U.S. Department of Justice (DOJ) press release, between 2012 and 2018, Carenow allegedly billed the government for services rendered to patients who had no record of needing them. These services consisted of psychotherapy sessions at nursing homes and skilled nursing facilities when medical records showed that the patients in question didn’t have any documented medical necessity for them. The government also alleged that Carenow charged for higher levels of medical services than were actually performed, further increasing federal medical program billings. The process of upgrading the cost of services to higher-expense services is known as “up-coding,” and the practice is a potential violation of the False Claims Act.

“Indiscriminately billing the government for psychotherapy services without regard to medical need or intensity of treatment deprives taxpayers of precious federal healthcare resources,” said Acting U.S. Attorney Kurt R. Erskine. “We remain committed to investigating healthcare fraud, particularly those schemes that target the most vulnerable in our communities. Those who commit healthcare fraud should know that they risk significant fines, penalties and even federal prison time.”

Overcharging and up-coding Medicaid and Medicare are types of fraud that have real effects on the efficacy of the medical system and the experiences that people have with it. A pattern of overcharging for services can drive up prices for the entire medical system, which makes it harder for people to afford care and health insurance. It also reinforces mistrust in the medical system and in medical professionals by taking advantage of patients. Medical fraudsters who operate schemes in nursing homes and nursing facilities are also targeting one of the most vulnerable demographics of the U.S. population: the elderly and infirm.

The unnamed whistleblower in this case will receive a reward for their part in bringing this case to the attention of the government. Qui tam whistleblowers, or relators as they are legally referred to, are entitled to 15 to 30% of the total money recovered by the government in a False Claims Act settlement or action. The DOJ has not yet announced the amount of the whistleblower’s reward. 

Less than two weeks ago, the DOJ announced a similar False Claims Act settlement, which revolved around upcoding and unnecessary “physical, occupational, and speech therapy services” at a suburban Chicago nursing facility. Medical fraud makes up $1.8 out of the total $2.2 billion recovered by the False Claims Act in 2020

WNN recently reported 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 essential changes to the Act, making it more difficult for defendants to have cases thrown out, even after fraud was already proven, based on “materiality.” 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. The amendments would have also stopped employers from firing employees so that they could then legally retaliate against them for blowing the whistle.

Read the DOJ’s press release here.

Read WNN’s article on the removal of the FCA amendments here.

Read more False Claims Act/qui tam news on WNN.

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