Skilled nursing facility pays $5.1 million to settle Medicare fraud suit over treatments that were not medically necessary

New Oaklawn Investments, LLC, d/b/a Oaklawn Health and Rehabilitation Center and Elmcroft Senior Living, Inc., a Louisville based skilled nursing facility, agreed to pay $5,191,470 to resolve allegations that it violated the False Claims Act by submitting false claims for payment to the Medicare Program, announced United States Attorney Russell M. Coleman.

“Today’s settlement is the result of this office working in a coordinated effort with Medicare’s Unified Program Integrity Contractor, AdvanceMed, to ensure that taxpayer dollars are not misspent – especially when providing vital services to our senior community,” stated United States Attorney Russell Coleman. “The more than 5 million dollar settlement underscores our continued commitment to uncovering health care fraud.” Oaklawn is a for-profit skilled nursing facility with 128 beds located in eastern Jefferson County, Kentucky, that was managed by Elmcroft.

The government contends that during the period from February 26, 2007 through February 26, 2010, Oaklawn improperly billed Medicare for patient rehabilitation services at the resource utilization (“RUG”) Code Series Rehabilitation Ultra High and Rehabilitation Very High, for certain services that were not reasonably or medically necessary.

Skilled nursing facilities use a clinical assessment tool known as the Resident Assessment Instrument to identify residents’ clinical condition, including strengths, weaknesses, preferences, functional status and expected use of services. Under Medicare Part A, skilled nursing facilities are required to classify residents into RUGs based on assessment data from the resident assessment. Therapy RUGs are divided into five levels of therapy (ultra high, very high, high, medium, or low), with Medicare generally paying the most for “ultra high” therapy.

The matter was handled by Assistant United States Attorney Benjamin S. Schecter with assistance from Medicare’s Unified Program Integrity Contractor, AdvanceMed.

Jeffrey Newman represents whistleblowers including the whistleblowers in the U.S. v. RehabCare which settled in 2016 for $125 million.