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Medicare Whistleblowers to Receive $2 Million in False Claims Act Case Against Skilled Nursing Facility Operators

On July 18, 2018, the Department of Justice announced that it had reached a ten-million-dollar settlement agreement with Southern SNF Management, Inc., Rehab Services in Motion d/b/a Dynamic Rehab, and nine affiliated skilled nursing facilities to resolve allegations of Medicare fraud. According to Acting Assistant Attorney General Chad A. Readler, the case demonstrates the Department of Justice’s “continuing commitment to ensure that Medicare providers do not place their own financial gain over patients’ clinical needs.” While all False Claims Act cases involve unacceptable waste of taxpayer money for personal profit, Mr. Readler highlighted why allegations of Medicare fraud are particularly worrying: “Such conduct is especially unacceptable when it seeks to take advantage of older Americans, who are some of the most vulnerable members of our community.” The DOJ noted that the $10 million payment does not constitute an admission of wrongdoing by any of the defendants.

Three healthcare whistleblowers, each a former employee of the skilled nursing facility, will share a $2 million reward under a provision of the False Claims act that permits successful qui tam whistleblowers to receive between 15% and 30% of the amount recovered for the government. La-Wanda Davis, Tramecier Donald, and Megan Dinkins exposed allegations of fraud against their former employers in 2013 by filing a False Claims Act case with the help of qui tam attorneys. Their lawsuit, which was later joined by the U.S. government, claimed that Southern SNF Management, Inc., Rehab Services in Motion d/b/a Dynamic Rehab, and the nine skilled nursing facilities’ corporate policies and practices encouraged employees to provide unreasonable and unnecessary therapy services regardless of patients’ actual medical needs. These practices allegedly resulted in millions of dollars of false and excessive Medicare claims.

Federal officials used the settlement as an opportunity to warn healthcare providers of the consequences of fraud, stating that “the provision of excessive and medically unnecessary therapy services will not be tolerated” and that those engaged in such deception “can expect an aggressive investigation to recover inappropriately obtained funds.”

Unscrupulous healthcare providers have found many different ways to take advantage of vital government programs like Medicare. The False Claims Act has been an important tool in the fight against government programs fraud since it was first enacted to combat war profiteering during the Civil War. But the system depends on healthcare whistleblowers telling their story.

© 2020 by Tycko & Zavareei LLP


About this Author

Jonathan K. Tycko leads the Whistleblower Practice Group of Tycko & Zavareei LLP

In recent years, the laws of the United States have undergone a whistleblower revolution. Federal and state governments now offer substantial monetary awards to individuals who come forward with information about fraud on government programs, tax fraud, securities fraud, and fraud involving the banking industry. Whistleblowers also now have important legal protections, designed to prevent retaliation and blacklisting.

The law firm of Tycko & Zavareei LLP works on the cutting edge of this whistleblower revolution, taking on even the most complex and confidential whistleblower...