Ensign Group Inc., a Mission Viejo company that operates nursing homes in several states, has agreed to pay $48 million to resolve allegations that it billed Medicare for unnecessary procedures performed on its patients.
Two former Ensign Group therapists had accused the company in whistle-blower lawsuits of performing the unnecessary rehabilitation therapy at six skilled-nursing facilities in California. Although the lawsuits were filed in 2006, the government contended that the fraud lasted from 1999 to 2011.
"Ensign provided therapy to patients whose conditions and diagnoses did not warrant it, solely to increase its reimbursement from Medicare," the Justice Department said in a news release.
The Justice Department said the false claims were submitted by Atlantic Memorial Healthcare Center in Long Beach, Panorama Gardens in Panorama City, Orchard Post-Acute Care in Whittier, Sea Cliff Healthcare Center in Huntington Beach, Southland in Norwalk and Victoria Care Center in Ventura.
"Skilled nursing facilities that place their own financial interests above the needs of their patients will be held accountable," said Stuart F. Delery, assistant attorney general for the Justice Department’s civil division. "We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens."
Ensign Group denied engaging in any illegal conduct and said in a news release that it agreed to the settlement "without any admission of wrongdoing in order to resolve the allegations and to avoid the uncertainty and expense of protracted litigation."
Ensign Group is a public company. Shares of its stock were down less than 1% in midday trading on Wall Street.
Under federal law, employees who expose their employers' fraud against the U.S. government can claim a percentage of money the government recovers. It was not clear Tuesday how much of the $48 million would be paid to the whistle-blowers, Gloria Patterson and Carol Sanchez.
One of the lawsuits alleged that Ensign encouraged the fraudulent billing by setting unreasonable goals for Medicare billing and rewarding employees for hitting "audacious goals," said attorney Larry P. Zoglin, who represented an Ensign whistle-blower in one of the lawsuits.
"The company was pressuring administrators to achieve goals that realistically could be met only by cheating Medicare,” said Zoglin, who is of counsel to the law firm Phillips & Cohen.
In order to reach the incentive goals, Ensign employees billed at higher rates than was justified or performed therapy for longer periods than the patients needed, according to the settlement agreement.
When goals were reached, administrators were rewarded with benefits such as all-expense paid trips to Hawaii, Alaska and other vacation spots, Zoglin said.
"The case against Ensign Group involves a company that regularly bilked Medicare by submitting inflated bills that, in some cases, sought money for services that simply were never provided to patients," said U.S. Atty. André Birotte Jr. "This settlement – one of the largest Medicare fraud cases against a nursing home chain in U.S. history – demonstrates our commitment to protecting taxpayers who fund important programs that benefit millions of Americans but don’t want to see their hard-earned money wasted on fraud or abuse."