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An attorney for two employees at Haverhill nursing facilities says their employer, RehabCare, a subsidiary of Louisville-based Kindred Healthcare, has agreed to settle a Medicare fraud case for $125 million.
Boston attorney Jeff Newman says a four-year-long federal investigation revealed the fraud was going on at 498 skilled nursing facilities nationwide.
Skilled nursing facilities are where patients are sent for therapy once they are released from the hospital.
Newman says he was working late one night in 2011 when he got a call from a woman who worked for RehabCare, a company that sends rehab experts to nursing facilities.
"Her job was to schedule patient therapies in a skilled nursing facility," Newman recalled in a phone interview Tuesday.
The employee said she was being forced to schedule the most intense — and expensive — therapy for patients, whether they needed it or not.
"And she started telling them openly that they had to stop it because it was hurting the patients and they basically were rebuffing her and telling her that she had to do it, that it was a requirement of her job," Newman said.
Newman says another employee from RehabCare working at a different Haverhill nursing facility also came forward, and it became clear that this was not an isolated case.
Newman then got in touch with the U.S. attorney's office in Boston.
Medicare reimbursements for rehab work a little bit like sweeps rating periods in television. Medicare looks at one week of work a month and then assumes the same intensity of rehab is being given all month.
Newman says the investigation revealed that at the direction of RehabCare, hundreds of other nursing facilities across the country were billing Medicare for maximum rehab of patients during that one week, but then would scale back the rest of the month even though Medicare was still reimbursing them for the most intense rehab.
Newman praised the U.S. attorney's office in Boston for discovering that this was a nationwide problem.
"There are many other companies out there that do the same thing that Kindred/RehabCare do," Newman said.
In the settlement, the federal government calls the two employees whistleblowers and is awarding them nearly $24 million for reporting the fraud. Newman says neither wants to talk.
Neither Kindred Healthcare nor RehabCare returned requests for comment.
This segment aired on January 12, 2016.