Justice Department Settles False Claims Act Case with California-Based Interface Rehab Center

Justice Department Settles False Claims Act Case with California-Based Interface Rehab Center

It has been another relatively successful month in the federal government’s mission to bring down bad actors and companies looking to defraud the American people.

Last week, Interface Rehab - a medical rehabilitation firm operating out of Placentia, California - became another notch on the Justice Department’s belt in the fight against crime.

Raising Services and Billing More

According to a press release, the Justice Department confirmed that it had reached a settlement with Interface Rehab over allegations of wrongful and excessive billing practices for healthcare insurance. The press release confirmed that Interface Rehab will pay financial compensation to settle the case, putting an end to years of investigations.

As the press release explained, Interface Rehab knowingly submitting wrong claims to Medicare and billing the healthcare insurance program for rehabilitation services. The company was accused of either submitting these claims itself or causing others to submit claims for unnecessary and unreasonable “Ultra High” levels of rehabilitation therapy.

Interface Rehab had been engaged in this act between January 2006 and October 2014. The false claims were primarily from its Medicare Part A residents - spanning 11 Skilled Nursing Facilities. As the Justice Department also alleged, Interface Rehab’s case was connected to Longwood Management Corporation - another California-based nursing home operator.

In Longwood Management Corporation’s case, the company was alleged to have submitted false claims for rehabilitation therapy by increasing its billings for Medicare. The case was settled in July 2020, with the government indicting Longwood Management Corporation and 27 Skilled Nursing Facilities that it controlled.

Ideally, Medicare pays a daily rate for its Skilled Nursing Facilities. This means that nurses who work with patients who need more care will get higher compensation rates. Medicare offers the highest compensation levels to nurses who offer “Ultra High'' therapy as their patients will need no less than six hours of skilled therapy for about five days a week. Longwood Management Corporation understood this, and the company had deliberately filed for these “Ultra High” levels. It also pressured its therapists to increase their services to meet specific pre-set targets.

The Justice Department eventually settled with Longwood for $16.7 million.

The same thing was seen with Interface Rehab. The company pressured therapists to increase their services provided to patients in order to hit targets. This way, it was able to game the system and file for more Medicare money.

The Law Catches Up With Interface Rehab

Interface Rehab’s crimes were eventually brought to light following a report from Keith Pennetti - the company’s former Director of Rehabilitation. After finding out what the company was up to, he filed a report with the Justice Department.

The case went all the way up to the U.S. Attorney’s Office for the Central District of California, and an investigation was carried out along with the Civil Division’s Commercial Litigation Branch and its Fraud Section.

To settle the case, Interface Rehab has had to pay $2 million. For his part in bringing the case to the forefront, Keith Pennetti will receive about $360,000. He will also get additional compensations if more details and financial penalties are imposed on Interface Rehab in the future.

Keith Pennetti’s compensation is courtesy of the False Claims Act - the oldest and strongest whistleblower law in the United States. Signed into law in 1863, the False Claims Act provides that whistleblowers who share valuable details of criminal activities with the government can get financial compensation from the resulting prosecution. It is especially prominent if the crime had been to dupe the federal government directly.

Ideally, whistleblowers are eligible for between 15 and 30 percent of the proceeds. They also get cuts if additional proceeds are gotten from the case.

Speaking about the case, Brain M. Boynton, the Acting Assistant General for the Department of Justice, said:

“This settlement reflects our continuing efforts to protect patients and taxpayers by ensuring that the care provided to beneficiaries of government-funded health care programs is dictated by clinical needs, not a provider’s fiscal interests. Rehabilitation therapy companies provide important services to our vulnerable elderly population, but they will be held to account if they provide therapy services based on maximizing revenue rather than the interests of their patients.”

The case file didn't say anything about whether Interface Rehab will have to submit to additional monitoring or compliance requirements.


David Kani

David Kani is a Southern California based trial lawyer with a focus on class actions and whistleblower (False Claims Act, SEC and others) cases.

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