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UPDATED: Select Medical Will Pay $8M to Settle FCA Claims

— July 13, 2021

Select Medical, Encore resolve government claims that Select Medical Rehabilitation Services billed Medicare for medically unnecessary services.

Select Medical Corporation will pay more than $8 million to resolve allegations that Select Medical Rehabilitation Services Inc. (SMRS) violated the False Claims Act (FCA).  The FCA is a measure that prohibits any person or company from knowingly submitting fraudulent claims for payment to the government.  Select Medical operates long term acute care and inpatient rehabilitation hospitals.  From 1997 to 2016, according to the DOJ, SMRS offered contract rehabilitation therapy services to skilled nursing facilities (SNFs), and from January 2010 to 2016, SMRS contracted with a dozen SNFs in New York and New Jersey to provide rehabilitation therapy.  Select Medical was the prior parent company of SMRS, and Encore is the successor-in-interest to SMRS.

This resolution comes just two months after an announcement that SavaSeniorCare would pay $11 million to settle FCA claims that its policies and procedures put pressure on staff to bill for “medically unreasonable, unnecessary or unskilled services” provided to Medicare patients. SavaSeniorCare, based in Georgia with SNFs staffed in facilities across the nation, had SNFs bill the government program for rehabilitation therapy services that “were not reasonable, necessary or skilled.”  As part of the resolution, Sava also entered into a five-year Corporate Integrity Agreement with the U.S. Health and Human Services’ Office of Inspector General (HHS-OIG) that requires an independent reviewer to annually monitor patient stays and associated claims to Medicare.

Select Medical & Encore Will Pay $8M to Settle FCA Claims
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“When corporate greed rises to the level of defrauding federal health care programs, while subjecting one of our most vulnerable populations to grossly substandard care and unnecessary medical services, we must hold the companies accountable,” said Acting U.S. Attorney Mary Jane Stewart for the Middle District of Tennessee. “Any fraud that undermines the care being provided to elderly nursing home residents cannot continue and will be exposed and rooted out. We are grateful to the courageous whistleblowers who reported this egregious conduct.”

Acting Assistant Attorney General Brian M. Boynton added of the latest agreement, “Today’s settlement reflects our commitment to protect patients and taxpayers by ensuring that the care provided to Medicare beneficiaries is dictated by their individual clinical needs and not by a provider’s financial interests.  Contract rehabilitation therapy companies, like other health care providers, will be held accountable if they knowingly provide patients with unnecessary services that waste taxpayer dollars.”

“Skilled nursing facility residents and their families must be assured that the care and therapy that residents receive is based on medical need, not greed,” said Acting U.S. Attorney Rachael A. Honig for the District of New Jersey. “We must also protect the taxpayers by ensuring that Medicare pays only for appropriate services performed for legitimate medical purposes. We will hold all health care providers who violate the False Claims Act responsible for their actions.”

An Encore spokesperson responded, “On March 31, 2016, Encore Rehabilitation Services acquired Select Medical Rehabilitation Services, Inc. (SMRS), a wholly owned, direct subsidiary of Select Medical Corporation (Select) offering contract rehabilitation therapy services to skilled nursing facilities across the country.  For several years, Encore has cooperated with a government inquiry related to alleged conduct by Select and SMRS.  The conduct at issue concerned 12 facilities serviced by SMRS and occurred prior to Encore’s acquisition of SMRS.  While Encore had no involvement in the alleged conduct, we have agreed to enter into a settlement with the government – along with Select – to resolve the matter, as we are considered the ‘successor-in-interest’ to SMRS due to the acquisition.  The payments required under the terms of the settlement agreement with the government were not made by Encore or any of our affiliated entities, and there have been no administrative obligations or requirements imposed upon Encore in connection with the settlement of the matter.  We remain fully committed to complying with industry laws and regulations, as well as closely adhering to Encore’s rigorous Code of Conduct that guides our business practices, decisions and behaviors.  Going forward, Encore will continue to provide comprehensive, quality care and service to our patients and dedicated customers.”


Contract Rehabilitation Therapy Providers Agree to Pay $8.4 Million to Resolve False Claims Act Allegations Relating to the Provision of Medically Unnecessary Therapy Services

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