September 23, 2016

DOJ Catch Of The Week — North American Health Care

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “Catch of the Week” goes to North American Health Care Inc.  On Monday, the California-based operator of dozens of skilled nursing facilities — along with its Chairman John Sorenson and Senior Vice President of Reimbursement Analysis Margaret Gelvezon — agreed to pay $30 million to resolve charges they violated the False Claims Act by billing for medically unnecessary rehabilitation therapy services.  Under the settlement, the company agreed to pay $28.5 million, while Sorensen and Gelvezon agreed to pay $1,000,000 and $500,000, respectively.  See DOJ Press Release.

North American has service agreements to operate 35 skilled nursing facilities, most of them located in California.  According to the government, the company caused false claims to be submitted to Medicare and TRICARE for payment for medically unnecessary rehabilitation therapy services provided to residents at the North American facilities.  The government further contends that Gelvezon contributed to this conduct by creating the improper billing scheme, and that Sorensen reinforced the scheme in his capacity as chairman of the board of North American.  The settlement is notable for the government’s willingness to go after not only the company, but the key officers overseeing or aware of the misconduct.

In announcing the settlement, the government emphasized its commitment to hold healthcare providers accountable for billing for unnecessary services or treatment.  U.S. Attorney Brian J. Stretch for the Northern District of California stated that skilled nursing facilities “treat some of the most vulnerable patients in the health care system,” and “these facilities, and the individuals who run them, will be held accountable when they provide treatment based on financial motivations instead of the patients’ needs.”  HHS Special Agent Steven Ryan similarly warned that the settlement “should send a message to others who may be engaging in these schemes that we will pursue justice for our beneficiaries and the programs.”

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