Whistleblowers Will Receive $3.6M For Reporting Healthcare Company’s False Medicare Claims

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Less than a week after federal authorities conducted a massive crackdown on medical fraud, arresting more than 400 individuals, the Department of Justice announced that three Ohio-based healthcare companies and their executives would pay $19.5 million to resolve allegations they falsified Medicare claims for unnecessary services that allegedly harmed patients. 

The DOJ announced Monday the settlement with Foundations Health Solutions (FHS), Olympia Therapy Inc. (Olympia), and Tridia Hospice Care Inc., along with their executives, putting an end to two whistleblower lawsuits filed against the companies.

The inter-related companies composed one of the largest nursing home operations in Ohio.

FHS was created following the merger of Provider Services Inc., which provided management services to skilled nursing facilities, and BCFL Holdings Inc. Olympia provided rehabilitation therapy services to patients at facilities managed by FHS, while Tridia Hospice Care provided hospice care services to the facilities.

Each of the companies were partially controlled or owned by Brian Colleran and Daniel Parker from 2008 to 2013.

Whistleblower Lawsuits

Each of the companies were sued in 2011 and 2012 by former employees under the federal False Claims Act, which allows individuals to sue on behalf of the government and to share in any recovery.

The first lawsuit [PDF], filed by Vladimir Trakhter, a former Olympia employee, accused Olympia and Provider Service Inc. — which is now FHS — of submitting false claims to Medicare from Jan. 2008 to Dec. 2012.

According to the suit, Olympia and FHS’s claims were for medically unnecessary rehabilitation therapy services at 18 skilled nursing facilities.

The suit claims that the companies routinely assigned residents to more costly therapy services, regardless of care and resources, solely to obtain higher levels of Medicare reimbursements.

In cases where the facilities did perform the unneeded or more stringent therapy, the suit alleges that patients were harmed when they were unable to tolerate the therapy.

For instance, one patient with a weak heart, mood disorder, and a temper was overworked and attempted to refuse treatment from two therapists. After arguing with the therapists about his inability to engage in the therapy, the man suffered cardiac arrest and could not be resuscitated, the suit claims.

The second lawsuit [PDF], filed by former Tridia employees Paula Bourne and La’Tasha Goodwin in Dec. 2012, accused the hospice care provider of submitting false claims to Medicare from April 2011 to Dec. 2013.

According to the lawsuit, Tridia submitted false claims to Medicare for hospice services provided to patients who were ineligible for the Medicare hospice benefit because Tridia failed to conduct proper certifications or medical examinations.

Settling Up

Under the terms of the settlement, the companies will reimburse Medicare, and pay $2.9 million to Trakhter, the former Olympia employee, and $740,000 to Paula Bourne and La’Tasha Goodwin, the former Tridia employees.

Finally, FHS and Colleran must enter into a five-year Corporate Integrity Agreement, designed to increase the accountability and transparency so that they will avoid or promptly detect future fraud and abuse.

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