Senior Care Company Targeted in Fraud Case Must Pay Feds $2.7 Million

A Chattanooga, Tenn.-based nursing home manager has agreed to pay $2.7 million to resolve False Claims Act allegations, announced the Department of Justice (DOJ) last week. 

Grace Healthcare LLC and its affiliate Grace Ancillary Services LLC allegedly violated the False Claims Act, according to DOJ, for knowingly submitting claims for medically unnecessary rehabilitation therapy. 

The settlement resolves claims that from 2007 to June 2011, Grace pressured therapists to increase the amount of therapy provided to patients in 10 of its nursing home facilities. 


As part of the settlement, Grace has agreed to enter into a Corportate Integrity Agreement with the Inspector General of the Department of Health and Human Services (HHS)

Under this agreement, Grace is provided with procedures and reviews to be put in place to avoid and detect behaviors similar to those which gave rise to the settlement.

“Health care providers must make decision regarding the level of services to be provided based solely on individual patient need rather than a desire to increase the bottom line,” said U.S. Attorney for the Eastern District of Tennessee Bill Killian in a statement. 


Allegations arose from a lawsuit filed by a former Grace employee under whistleblower provisions of the False Claims Act. The whistleblower under this case will receive $405,000, according to DOJ. 

This resolution is part of the government’s emphasis on combating health care fraud, DOJ notes, and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative. 

Through the efforts HEAT and HHS under the False Claims Act, DOJ has recovered $10.2 billion since January 2009. Total recoveries in False Claims Act cases since then have totaled over $14 billion, notes DOJ.

Written by Jason Oliva

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