March 15, 2013

162017_132140396847214_292624_nOn March 8, 2013, the U.S. Department of Justice announced that the Tennessee-based nursing home manager Grace Healthcare LLC and its affiliate Grace Ancillary Services LLC (“Grace”) had agreed on March 4, 2013 to pay $2.7 million, plus interest, to settle the allegations contained in a federal whistleblower lawsuit that they violated the False Claims Act by knowingly submitting or causing the submission of false claims for medically unreasonable and unnecessary rehabilitation therapy to Medicare and the TennCare/Medicaid programs. Grace Ancillary Services LLC provided the therapy in some of the skilled nursing facilities owned and/or managed by Grace Healthcare LLC in Tennessee and other states.

A former Grace employee had filed a whistleblower lawsuit (qui tam action) under the False Claims Act in the United States District Court for the Eastern District of Tennessee that alleged that Grace pressured therapists in 10 nursing home facilities in which Grace provided physical, occupational, and speech therapy to increase the amount of therapy provided to patients in order to meet targets for Medicare revenue that were set without regard to patients’ individual therapy needs and could only be achieved by billing for a large amount of therapy per patient. The period covered by the allegations was from 2007 through June 2011. As a result of the settlement that was reached, the whistleblower will receive $405,000 as his share of the recovery under the provisions of the False Claims Act that permit private citizens to bring suit on behalf of the United States and share in any recovery.

Grace also agreed as part of the settlement to enter into a Corporate Integrity Agreement with the Inspector General of the Department of Health and Human Services that provides for procedures and reviews to be put in place to avoid and promptly detect similar conduct.

The federal False Claims Act lawsuit is captioned United States of America and State of Tennessee ex rel. Ottinger v. Grace Healthcare, LLC, Grace Ancillary Services, LLC, and John Does 1-5, No. 3:10-cv-83 (E.D. Tenn.).


Grace did not admit to any wrongdoing as part of the settlement and stated that it agreed to settle the claims in order to avoid the expense of defending the lawsuit that would have been a distraction from its operations. Grace issued the following statement, in part, on March 8, 2013 with regard to the settlement:

“Neither the Complaint, nor the … Government’s investigation involved any issues or allegations relating to quality of care at any Grace facility. Grace adamantly denied that any of its billings to Medicare were improper, and the settlement with the Government expressly provides that Grace made no admission of wrongdoing. Grace reached the settlement with the government on the basis that Grace’s therapy billings statistically exceeded state averages in some of its facilities. Simply because Grace’s therapy services exceeded state averages did not make the claims for such services incorrect, much less false. However, Grace reached a settlement to avoid the distraction and extraordinary costs of defending a long, drawn-out federal lawsuit. Grace concluded that the interests of its residents, employees, and business relationships are best served by resolving the matter with the government.”


If you know of a nursing home submitting false billings to Medicare or Medicaid for services that were not provided or were otherwise inappropriate, you may be entitled to share in the recovery if a whistleblower suit is filed under the False Claims Act and the lawsuit is successful in obtaining a monetary settlement or judgment.

Click here to visit our website or telephone us toll-free at 800-295-3959 to be connected with lawyers in your state who may agree to represent you in your False Claims Act lawsuit and file a whistleblower suit on your behalf.

Turn to us when you don’t know where to turn.

You can follow us on FacebookTwitterGoogle+, and LinkedIn as well!