News Releases

Lindquist & Vennum Assists Client Health Dimensions Rehabilitation, Inc. in Securing $30 Million False Claims Act Settlement

01.22.14

The Department of Justice announced late Friday that it had entered into a $30 million settlement with RehabCare Group Inc., one of the largest therapy providers in the country, and a chain of 60 nursing homes resolving a Medicare False Claims Act case originally commenced by Health Dimensions Rehabilitation (HDR) in 2007. As the whistleblower, HDR will receive 19% of the settlement. HDR is represented by Lindquist attorney Jonathan M. Bye.

In 2006, HDR’s CEO, Mark Essling, listened to a RehabCare earnings call in which its CEO described a $600,000 “recruiting fee” it had made to a nursing home chain in Missouri, purportedly in connection with recruiting the homes’ therapists. Based on his knowledge of the industry, Essling believed there was no reason to pay a recruiting fee in those circumstances, and that it was instead an illegal kickback to obtain referrals of the Medicare-reimbursed therapy business from the homes. He discussed the matter with Jon Bye with whom he had worked on various matters over the years, including other False Claims Act cases, and in 2007 they filed the whistleblower case in federal court in Minnesota.

The Government investigated the claims and chose to intervene after it discovered facts which Essling and Lindquist believed represented an additional ongoing stream of kickbacks. Although the case was transferred to St. Louis, Essling and Lindquist worked closely with the Minnesota U.S. Attorney's Office in preparing and starting the trial of the case. Last October, on the second day of trial, a tentative settlement was reached. After three months of further negotiations, settlement was finally reached on January 17.

Jon Bye told Law360 that the company "is pleased that it had the opportunity to bring this situation to the government’s attention and is very appreciative of the efforts of [federal prosecutor] Chad Blumenfield and his colleagues at the U.S. attorneys office in Minnesota in pursuing and resolving the case.”

Additionally, the U.S. Department of Health and Human Services Office of Inspector General Special Agent in Charge Gerald T. Roy commented, “This settlement sends a message to those who seek to improperly take advantage of the Medicare program.”

This case has received a significant amount of media attention, including:

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