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Therapy provider, nursing home operators settle claims of fraud

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A nursing home therapy provider and four nursing home operators, including two with facilities in Massachusetts, have agreed to pay the federal government more than $133 million to settle allegations of Medicare fraud.

The office of US Attorney Carmen M. Ortiz announced the settlements on Tuesday, ending a whistleblower lawsuit filed in 2011 by two former employees at two facilities in Haverhill.

RehabCare, now part of Kindred Healthcare based in Louisville, Ky., will pay $125 million to settle allegations it routinely billed for therapy that was either not necessary, or that it did not provide, according to a statement issued by Ortiz.

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The government also reached a $3.9 million settlement with Wingate Healthcare and 16 of its nursing facilities in Massachusetts and New York, Ortiz's office said. The government also reached a $1.375 million settlement with Essex Group Management and two of its homes in Dartmouth and Milford, the statement said.

The settlements resolved allegations that RehabCare and the nursing homes submitted false reimbursement claims to Medicare based on “unreasonable, unnecessary, or unskilled therapy, or on therapy that never occurred,” Ortiz’s statement said.

Her office said the fraud occurred during a period prior to Oct. 1, 2011.

The case was first filed in December 2011, in federal court in Boston, by Janet Halpin and Shawn Fahey, former RehabCare employees in Haverhill who acted under a federal whistleblower law, their lawyer, Jeffrey A. Newman, said.

In a statement, Newman said his clients had "first-hand knowledge of the company's wrongdoings" and "helped the federal government recover millions of dollars in fraudulent payments to RehabCare."

The government intervened in February 2015 in the civil case brought by his clients, Newman said.

"Ms. Halpin and Ms. Fahey have done a service to the taxpayers by recognizing and reporting the fraudulent scheme to the Government," Newman said.

Kindred Healthcare said in aseparate statement that RehabkCare agreed to the settlement without admitting wrongdoing.

Wingate Healthcare and Essex Group, now Elder Services, could not be reached for comment late Tuesday night.


Travis Andersen can be reached at travis.andersen@globe.com. Follow him on Twitter @TAGlobe.