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United States Intervenes on Another Medicare Fraud Case

Several former employees of HCR ManorCare, Inc. ("HCR") brought False Claims Act ("FCA") complaints against HCR, a nationwide nursing home company. The United States Department of Justice ("DOJ") has decided to intervene in the case, which alleges that the company's leadership forced employees to provide unnecessary and possibly harmful care to patients in order to bill the Government for more money.1

The FCA complaint alleges that HCR directors and executives forced employees to continue providing services for patients, whether they needed them or not, in order for the company "to maximize revenue by billing at the Ultra High level."2 The plaintiffs allege that this scheme has been going on at least from October 2006 through May 2012, as evidenced by the fact that, during that time, "ultra high" billings increased greatly at many HCR facilities. The DOJ says that the company submitted over 1,200 false claims to Medicare in order to gain excessive reimbursement payments. The complaint also provides some specific examples of excessive care provided to patients, including employees providing therapy to a man despite physician's orders demanding care only to relieve pain.3

Fraud in the U.S. healthcare system is not a new problem. We blogged about a similar claim brought in which the DOJ intervened against Creekside Hospice in Las Vegas several months ago [Link To Previous Article]. No one knows exactly how much Medicare actually pays out due to fraudulent claims, but annual estimates are as high as $60 billion or 10% of Medicare's costs every year, and costs to the overall U.S. healthcare system from fraud are estimated to be approximately $272 billion.4

The U.S. continues to crack down on fraud in the healthcare system. The Affordable Care Act has required more in-depth screening of companies that will provide contract work for the Government, the amount of resources used to discover and investigate fraudulent schemes has increased, and the punishments given to violators have become tougher. The Centers for Medicare and Medicaid Services has also used a "new predictive-analysis system" in order to spot potentially fraudulent billing.5

While these improvements have been somewhat successful, Medicare and Medicaid fraudsters catch on and move to different areas, different companies, or develop a different scheme. Additionally, some Government officials have claimed that those tasked with stopping healthcare fraud are ineffective due to "conflicts of interest" and other consequences caused by politics.6 Expect to see the DOJ intervene on more FCA cases such as the one against HCR as it looks to reduce fraudulent billing by Government contractors and continues to reduce the number of problematic companies and individuals involved with the healthcare industry.

The legal team at SFMS has significant experience litigating false claims matters. If you have any questions regarding this subject or this posting, please contact Valerie Chang ([email protected]) or Michael Ols ([email protected]). We can also be reached toll-free at (866) 540-5505.

Shepherd, Finkelman, Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS also maintains an affiliate office in London, England and is an active member of Integrated Advisory Group (, which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at








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