Kindred Healthcare Inc. To Pay $125 Million to Settle Allegations of False Claims

Monday, February 8, 2016
By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health

Kindred Healthcare Inc. (Kindred), the largest skilled therapy provider in the nation, has agreed to pay $125 million to settle allegations that it violated the False Claims Act (FCA). Kindred is accused of billing Medicare for therapy services that were unnecessary or never occurred, the U.S. Department of Justice (DOJ) announced January 12, 2016.

Knowingly Violating The False Claims Act Alleged.

According to the DOJ, Kindred and its subsidiary RehabCare, allegedly violated the FCA by knowingly causing skilled nursing facilities (SNFs) to submit false claims to Medicare for rehabilitation therapy services that were not reasonable, necessary and skilled, or that never occurred. The alleged overbilling occurred from January 2009 to September 2013. “Medicare beneficiaries are entitled to receive care that is dictated by their clinical needs rather than the fiscal interests of healthcare providers,” Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, said in a statement.

According to the DOJ, RehabCare, which was purchased by Kindred in 2011, had policies and procedures in place that aimed at billing Medicare for the highest reimbursements, without evaluating what was best for patients. To read more about the alleged fraudulent activity, click here.

The Whistleblowers.

The settlement resolves allegations originally brought in a lawsuit filed under the qui tam, or whistleblower, provisions of the FCA in December 2011 by Janet Halpin, a physical therapist and former rehabilitation manager for RehabCare and Shawn Fahey, an occupational therapist who worked for RehabCare. The whistleblowers stand to receive nearly $24 million as part of the settlement. For more information, click here.

To read a prior blog I wrote on a similar case, click here.

The Legalities of Such Cases.

This case was brought under the federal False Claims Act which mandate's standards and regulations for both civil and criminal penalties against those falsely billing the government. Most states have enacted their own specific version of whistleblower laws. False claims cases, such as this recent one, are typically carried out in a qui tam (or whistleblower) proceeding. This type of action involves a private party filing a lawsuit against a defendant who allegedly is defrauding the government. Usually these types of cases are designed to protect the whistleblowers from receiving any potential prosecution or punishment due to involvement in the fraudulent actions.

The government urges healthcare providers to step forward and report illegal and fraudulent activities as soon as they are uncovered. The False Claims Act serves as a system of rewards which encourages whistleblowers to bring these issues to the government's attention.

I have written a detailed two-part blog series discussing the ins and outs of false claims lawsuits involving whistleblowers in the healthcare industry. To read part of one that blog, click here. To read part two of that blog, click here.

Contact Health Law Attorneys Experienced with False Claims Act, Qui Tam or Whistleblower Cases.

Attorneys with The Health Law Firm also represent health care professionals and health facilities in False Claims Act, qui tam or whistleblower cases. We have developed relationships with recognized experts in health care accounting, health care financing, utilization review, medical review, filling, coding, and other services that assist us in such matters.

If you are a health professional and you know your employer or company is committing fraud, remember this is your taxpayer money being stolen. You could receive a big reward such as Janet Halpin did in this case ($24 million), if you come forward with actual evidence that false claims have been submitted. However, remember that you must have actual documentary evidence that there were actual false claims submitted to the government. Call us if you need guidance or assistance in this.

On the other hand, if you are a health care business, organization, medical group or institution and you have a False Claims Act suit or claim made against you, we are available to defend such cases. It is difficult for a whistleblower to prove a false claims case and we have successfully defended these.

To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at


Poizner, Michaela. “Nation’s largest skilled therapy provider settles FCA allegations for $125 million.” AHLA. (January 20, 2016). Web.

Kass, Dani. “Rehab Therapy Co., Nursing Centers Pay $125M in FCA Deals.” Law360. (January 12, 2016). Web.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida, area.  The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

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