A New York long-term care therapy provider has agreed to pay $315,000 to resolve allegations that, between Jan. 1, 2017, and Sept. 30, 2019, it conspired with a nursing home management company, its affiliated entity, the company’s owner, and one of its executives to cause the submission of false claims to Medicare for unnecessary skilled nursing facility therapy services. The settlement, announced March 4, 2026, by the Department of Justice, resolves allegations in a False Claims Act complaint the federal government filed in February 2025 against the therapy provider, the management company, its owner, and the executive.
Skilled nursing facilities (SNFs) are inpatient facilities that provide transitional care following a hospital stay of at least 72 hours. Federal healthcare programs, including Medicare, reimburse providers for medically reasonable and necessary services rendered to SNF residents. The False Claims Act prohibits individuals or entities from submitting, or causing the submission of, false claims for payment or making false statements material to claims for payment from federal healthcare programs.
As detailed in the settlement agreement, the therapy provider admitted that at various times between January 2017 and September 2019, its therapists delivered Ultra High Resource Utilization Group (RUG) rehabilitation therapy—the highest reimbursed therapy category under the former RUG payment system— to residents covered by Medicare at facilities operated by the nursing home management company, even after documenting that the residents should no longer receive those services. In some cases, residents told therapists they were physically unable or refused to participate in the therapy.
The provider also admitted that its senior regional director overseeing those facilities, who had no clinical experience or license, certified that a terminated employee had provided Ultra High RUG therapy services to a resident without confirming whether the services were actually performed, allowing the services to be billed to Medicare.
The settlement resolves the government’s complaint against the therapy provider, which alleged the company caused a nursing home operator to submit false Medicare claims for medically unreasonable and unnecessary therapy services provided to residents of its skilled nursing facilities.
The government’s case against the nursing home operator and two of its leaders remains ongoing.
Compliance Perspective
Issue
SNFs are responsible for ensuring that services provided to their residents and billed to federal healthcare programs are medically necessary, appropriately documented, and consistent with the resident’s clinical condition. This responsibility extends to services delivered by contracted providers, including therapy vendors. When facilities do not maintain effective oversight of contracted services, or when documentation and billing processes are not adequately monitored, organizations may face increased risk that unsupported or unnecessary services are billed to Medicare or other federal healthcare programs. Such situations can expose facilities and their partners to liability under the False Claims Act.
Discussion Points
- Review policies and procedures addressing oversight of contracted clinical services, including therapy providers. Policies should outline expectations for determining medical necessity, documenting changes in a resident’s condition, and communicating when services should be modified or discontinued. Procedures should also address review of documentation and verification processes prior to billing. Facilities may benefit from periodically reviewing these policies with their compliance team or an external consultant who can help identify potential gaps, evaluate oversight practices, and recommend updates consistent with regulatory expectations.
- Provide education and training for appropriate staff to reinforce accurate documentation of the resident’s condition, recognition of when services may no longer be appropriate, and the facility’s role in monitoring contracted providers and maintaining effective communication within the care team. Med-Net Academy offers the course Understanding and Using the Medicare Triple Check Process, which reviews the importance of ensuring the accuracy of billing for skilled services, preventing the submission of false claims, reducing adjusted or denied claims, confirming that residents receive the benefits to which they are entitled, and ensuring that clinical documentation appropriately correlates with financial data.
- Conduct routine audits of therapy documentation, care plans, and billing-related records to confirm that services provided to residents are consistent with clinical documentation and regulatory requirements. Audits should evaluate whether documentation supports the level and duration of services delivered and whether oversight mechanisms are functioning effectively. Some facilities choose to engage an independent consultant to perform focused reviews, mock surveys, or risk assessments to obtain an objective evaluation of compliance practices and identify areas for improvement.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*