DOJ Smacks Skilled Nursing Facilities, Consultants with $10M Settlement for False Billings

Nine skilled nursing facilities and a pair of consulting firms will pay the federal government $10 million as part of a deal to settle allegations of false Medicare claims.

Southern SNF Management Inc., Rehab Services in Motion dba Dynamic Rehab, and nine related SNFs in Florida and Alabama were accused of providing unnecessary therapy services in order to artificially boost Medicare reimbursements, according to the Department of Justice. Management encouraged the fraud between October 2009 and December 2013, the DOJ said, with an emphasis on inflating Resource Utilization Group (RUG) levels.

Three whistleblowers — former SNF employees La-Wanda Davis, Tramecier Donald, and Megan Dinkins — brought the alleged improprieties to light under a False Claims Act lawsuit, and as a result will collect $2 million of the $10 million paid back to the government.


“Today’s settlement demonstrates our continuing commitment to ensure that Medicare providers do not place their own financial gain over patients’ clinical needs,” Acting Assistant Attorney General Chad Readler said in a statement announcing the multi-million-dollar payment. “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.”

U.S. Attorney Richard Moore was more blunt in his assessment: “The provision of excessive and medically unnecessary therapy services will not be tolerated.”

The $10 million payment does not constitute an admission of wrongdoing by the consultants or the SNFs, the DOJ noted.


The ability for providers to rake in Medicare dollars by providing as many therapy minutes as possible has been a recurring issue under the current RUG system. Its proposed replacement, the Patient-Driven Payment Model, would shift incentives away from volume and toward the treatment of more medically complex residents, according to the Centers for Medicare & Medicaid Services (CMS) and various industry players that have weighed in on the proposal.

“The PDPM would be a significant shift in how SNFs are paid, and, we believe, a very positive one,” Department of Health and Human Services Secretary Alex Azar said last month. “It reflects our belief that we should not be paying providers in ways that drive overuse of services. Instead, we should pay providers based on the patients they treat, while assessing quality fairly.”

Written by Alex Spanko

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