Nursing Home Therapy Providers to Pay $30M for Illegal Kickbacks

Nursing home contract therapy providers RehabCare Group Inc., RehabCare Group East Inc., and Rehab Systems of Missouri, along with management company Health Systems Inc., have agreed to pay $30 million to resolve claims they accepted illegal kickbacks to get business referrals, the Department of Justice announced.

The companies allegedly engaged in a kickback scheme related to the referral of nursing home business, and as part of the settlement they have also agreed to restructure their business arrangement.

Between March 2006 and December 2011, RehabCare arranged with Rehab Systems of Missouri to obtain the latter’s contracts in order to provide therapy to patients residing in 60 nursing homes controlled by the company’s majority-owner James Lincoln, according to the Justice Department allegations. In exchange for these ongoing referrals, RehabCare is accused of paying Rehab Systems a $400,000 to $600,000 upfront payment and also allowing the company to retain a percentage of the revenue generated by each referral.


The $30 million settlement resolves allegations brought in a lawsuit filed by a whistleblower, who will receive $700,000 as his or her share of the recovery in this case. Although the claims have been settled via the agreement, they remain allegations only and no liability has been determined. 

The U.S. Attorney’s OFfice for the District of Minnesota handled the case with assistance from the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Eastern District of Missouri, the Federal Bureau of Investigation, and the U.S. Department of Health and Human Services Office of the Inspector General. 

Written by Alyssa Gerace


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