Physical therapy provider Quality Therapy & Consultation and four skilled nursing facilities — all in the Chicago metropolitan area — agreed to pay $9.7 million to resolve allegations of False Claims Act violations, the U.S. Attorney’s Office for the Northern District of Illinois announced Tuesday.

The settlement and consent judgments resolve allegations that Quality Therapy & Consultation and Frances Parise, its owner, worked with the four SNFs to boost Medicare reimbursement by so-called “upcoding” of patients’ Resource Utilization Group (RUG) scores.

The score represents the totality of a resident’s care needs, based on the levels of physical, occupational, and speech therapy a patient receives, as well as the complexity of care required. Higher RUG scores mean higher Medicare payments to a SNF; the government’s allegations included claims that the companies provided unnecessary skilled therapy services to patients in order to bill Medicare for the highest amounts possible.

The Centers for Medicare & Medicaid Services (CMS) identified a desire to reduce therapy and RUG score inflation when implementing the new Patient-Driven Payment Model (PDPM) for Medicare nursing home reimbursements. Under the new system, which takes effect October 1, operators will see Medicare payments more closely linked to resident acuity and need, and not therapy volume.

Representatives from two of the four SNFs — Ridgeview Rehab and Nursing Center and Balmoral Home — declined to comment when reached on Wednesday; Lake Shore Healthcare and Rehabilitation Centre did not have someone available for comment as of press time.

*In a statement provided to Skilled Nursing News, a spokesperson for The Carlton at the Lake said that the current operator of the facility — Carlton Skilled Nursing Facility, LLC — was not involved in the settlement. The previous operator, The Carlton at the Lake Inc., was the entity that worked with Quality Rehab & Consultation, Etan Bleichman, regional director of operations at The Carlton, said in the statement.

Carlton Skilled Nursing Facility LLC did not start operations until after the timeframe of the investigation, according to Bleichman.

All four facilities are located on the North Side of Chicago.

A phone number listed for the Orland Park, Ill.-based Quality Therapy & Consultation was disconnected.

As is common in FCA settlements, the $9.7 million total payment does not represent an admission of guilt or liability by the SNFs or the therapy company; as a result, the government’s claims remain only accusations. Providers involved in FCA suits often maintain their innocence throughout the entire process, but settle the cases to avoid incurring even higher legal defense fees and disrupting their day-to-day operations.

Under the terms of the settlements and consent judgments, The Carlton at the Lake, Inc. will pay $3.63 million, Balmoral Home $1.7 million, Ridgeview Rehab $1 million, and Quality Therapy & Consultation $1.09 million. Frances Parise will pay $160,000, and agreed to be excluded from all participation as a provider in Medicare, Medicaid, and all other federal health care programs for five years.

The settlements and consent judgments resolved a civil lawsuit filed in U.S. District Court in Chicago by a former employee of Quality Therapy and Consultation under the whistleblower provisions of the FCA.

*This story has been updated to include the statement from The Carlton at the Lake.