Medicare Scam: ManorCare Owners Face $3B Lawsuit

Medicare Scam Exposed: HCR ManorCare, one of the nation’s largest healthcare providers, has been hit with a massive lawsuit for allegedly providing medically unnecessary therapy services to its patients. The government has intervened in three False Claims Act lawsuits and filed a consolidated complaint against HCR ManorCare, alleging that the company knowingly submitted false claims to Medicare and Tricare for rehabilitation therapy services that were not medically reasonable and necessary.

The government’s complaint alleges that HCR ManorCare, which is owned by The Carlyle Group, exerted pressure on its skilled nursing facility administrators and rehabilitation therapists to meet unrealistic financial goals, resulting in the provision of medically unreasonable and unnecessary services to Medicare and Tricare patients.

ManorCare allegedly set prospective billing goals designed to significantly increase revenues without regard to patients’ actual clinical needs and threatened to terminate SNF managers and therapists if they did not administer the additional treatments necessary to qualify for the highest Medicare payments.

“The Department of Justice is committed to ensuring that healthcare providers who pressure their employees to provide medically unnecessary services to Medicare beneficiaries and Tricare recipients, solely to increase their own profits, are held accountable,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.

The government’s intervention in these matters illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.

HCR ManorCare operates approximately 281 skilled nursing facilities (SNFs) in 30 states. The company’s alleged actions have left taxpayers footing the bill for unnecessary medical services, amounting to billions of dollars in losses.

The three consolidated lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery.