Nursing Home Company and Executives to Pay $30 Million to Settle Unnecessary Rehab Therapy Allegations

North American Health Care, Inc. (NAHC), its chairman of the board, John Sorenson, and its senior vice president of Reimbursement Analysis, Margaret Gelvezon, have agreed to pay a total of $30 million to resolve allegations that they violated the False Claims Act by causing the submission of false claims to government health care programs for medically unnecessary rehabilitation therapy services.  Under the settlement agreement, which was announced by United States Attorney Brian J. Stretch on September 19, 2016, NAHC will pay $28.5 million, Mr. Sorenson will pay $1 million and Ms. Gelvezon will pay $500,000.

NAHC is a private, for-profit company headquartered in Orange County, California.  The company has service agreements to operate 35 skilled nursing facilities, most of them in California, that provide inpatient rehabilitation services, including physical, occupational, and speech therapy.  The United States alleged that NAHC submitted bills to Medicare and TRICARE for medically unnecessary rehabilitation therapy services provided to residents of the NAHC nursing homes.  Further allegations included keeping the residents at the SNFs longer than necessary.

In addition to the monetary settlement, NAHC has also entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) which applies to all facilities managed by NAHC and requires an independent review organization to annually review therapy services billed to Medicare.

“This office is committed to safeguarding the federal health care programs and the patients who are enrolled in them.  Skilled nursing facilities such as NAHC treat some of the most vulnerable patients in the health care system.  These facilities, and the individuals who run them, must be held accountable when they provide treatment based on financial motivations instead of the patients’ needs,” said Brian J. Stretch, United States Attorney for the Northern District of California.

Mr. Sorenson is also facing a separate case, filed by a former NAHC facility administrator, that alleges as CEO Sorenson ordered other nursing home administrators to pay physicians in exchange for referring Medicare beneficiaries to NAHC facilities.  That case is still proceeding despite an attempt by Sorenson to have it dismissed in November 2015.