Kindred Health Care, Inc., the nation’s largest provider of post-acute care, which includes hospice and home health services, has paid a penalty of over $3 million for failing to comply with a corporate integrity agreement (CIA), which was imposed as a condition of a previous $25 million False Claims Act settlement.  The $3,073,961 penalty was announced September 20, 2016 and is the largest ever assessed for violations of a CIA.  Due to the findings of the CIA required audits, Kindred has also announced it will close 18 “underperforming” sites.

The record penalty resulted from Kindred’s failure to correct improper billing practices. The Department of Health and Human Services Office of Inspector General, the agency that administers the CIA, made several unannounced site visits to Kindred facilities and found ongoing violations.  Further, CIA-required audits performed by Kindred’s internal auditors in 2013, 2014, and 2015 found that the company and its predecessors had failed to implement policies and procedures required by the CIA and that poor claims submission practices had led to significant error rates and overpayments by Medicare.

Specifically, Kindred was billing Medicare for hospice care for patients who were ineligible for hospice services or who were not eligible for the highest level and most highly paid category of service.  This same type of violation led to the original qui tam False Claims Act settlement with now-subsidiary of Kindred, Gentiva.  In that settlement, Gentiva paid $25 million to resolve allegations that between January 2006 and January 2009 it submitted false claims to the Medicare program for the most highly reimbursed services that were unnecessary or that were not performed in accordance with Medicare requirements .

Massive settlements and penalties seem to be rather common for Kindred.  In January 2016, Kindred agreed to pay $125 million to settle claims that another one of its subsidiaries, RehabCare, submitted claims to Medicare for rehabilitation therapy services that were not reasonable, necessary and skilled or that never occurred.  In that case, the government alleged numerous over-billing schemes including that Kindred presumptively placed patients in the highest therapy reimbursement level, rather than assessing the patient individually and then billed at the highest levels regardless of the care provided.

Significantly, the common theme throughout each of these settlements and penalties is that Kindred continues to bill the government at the highest level of reimbursement possible with blatant disregard for the level of care needed or actually provided.  As the industry leader, with over $7 billion in revenue in 2015, Kindred’s continual massive settlements and record-breaking violations signal the scope of Medicare fraud and also demonstrate that the giants of the healthcare industry see defrauding the taxpayers and paying enormous settlements as simply the way to do business.