Local Nursing Home Sues Kindred for Alleged Medicare Fraud

An Iowa nursing home whose profits ballooned more than 350%—allegedly through fraud—recently filed a lawsuit against Kindred Healthcare and its corporate predecessor, RehabCare Group, claiming the rehabilitation and skilled care services provider is responsible for the Medicare fraud, reports the DesMoinesRegister.com.

Bethany Lutheran Home is a 120-bed skilled nursing facility located in Council Bluffs, Iowa, and was investigated last fall after it contracted with RehabCare (which has since merged with and been taken over by Kindred) to provide physical, occupational, and speech therapy services to residents. After hiring the rehab provider, the nursing home’s Medicare billings for those services “skyrocketed.”

The Register reports:


Specifically, the prosecutors alleged that the number of residents who supposedly were receiving an “ultra high” level of rehabilitation service — which is billed to Medicare at the highest possible rate — underwent a “seismic shift” in 2006 once RehabCare Group was hired.

The prosecutors said that not one of the home’s residents received a single day of “ultra high” therapy care in 2004. But two years later, the home billed Medicare for 1,685 days of “ultra high” care — a rate that was seven times that of the average Iowa nursing home.

That increase in billings continued through 2009, the prosecutors said, producing “windfall profits” for Bethany Lutheran Home.


According to the U.S. attorney’s office, RehabCare Group had assured Bethany Home during contract negotiations that the home’s revenue from rehabilitation services would double if the two did business together.

The company “kept its promise,” prosecutors allege, by immediately increasing the home’s annual Medicare Part A revenue from $243,000 to almost $887,000.

In one year, prosecutors said, Bethany’s annual profit jumped from $145,204 to $547,550 — a 377 percent increase.

Bethany Lutheran Home agreed to settle the matter by paying $675,000 to the federal government and entering into a so-called “corporate integrity agreement” that requires the home to provide additional staff training in determining what services can legally be billed by nursing homes to Medicaid and Medicare. The agreement also creates additional layers of oversight that apply to Bethany Home’s billing practices and quality of care.

Michael D. Van Sickle, the chief operating officer at Bethany Lutheran Home, said earlier this year that “Bethany is committed to correcting the process issues that led to the allegations.”

Read the full piece at the Des Moines Register.

Written by Alyssa Gerace