Genesis Healthcare will pay $53.6M to settle overbilling, 'substandard' care allegations

Judge banging gavel on stack of money
Seven whistleblowers will receive a combined $9.67 million as their share of a $53.6 million settlement between the federal government and Genesis Healthcare. (Getty/AndreyPopov)

National nursing home operator Genesis Healthcare has once again agreed to pay the federal government millions of dollars to settle multiple lawsuits against it.

On Friday, the Justice Department said Genesis will pay $53.6 million to resolve six federal lawsuits and investigations that accused the company and its subsidiaries of providing “grossly substandard” nursing care and violating the False Claims Act by billing government healthcare programs for medically unnecessary therapy and hospice services.

The lawsuits were brought by seven whistleblowers who were former employees of companies acquired by Genesis, the DOJ’s announcement says, noting that the whistleblowers will receive a combined $9.67 million as their share of the recovery.

This is the second such settlement for Genesis within the space of a year. In August, it agreed to pay more than $52 million to resolve four federal lawsuits that accused its subsidiaries of billing Medicare for unnecessary hospice services, overbilling Medicare for therapy reimbursement and providing inadequate staffing at certain facilities.

The most recently settled allegations against Genesis encompass a variety of schemes, including billing for more therapy minutes than a patient received; providing therapy to patients longer than medically necessary; and billing for hospice services for patients who were not terminally ill and thus were not eligible for the Medicare hospice benefit.

One of Genesis’ subsidiaries, Skilled Healthcare Group, is also accused of fraudulently assigning patients a higher resource utilization group (RUG) level than necessary. RUG levels are supposed to indicate how much skilled therapy a patient requires, which the government uses to determine reimbursement to providers.

However, providers like Genesis and Kindred Healthcare—which has paid millions to settle allegations it provided medically unnecessary therapy services—may not be entirely to blame. Because Medicare’s reimbursement system offers a monetary incentive to provide greater levels of therapy, it essentially encourages skilled nursing facilities to provide costly, and potentially harmful, excess care to patients.