National company at focus of Lowell-Dracut tug-of-war pays $54 million federal fine


DRACUT — A national health care company that was the focus of a recruiting war between Lowell and Dracut has agreed to pay a $54 million fine to settle six federal lawsuits, according to the Justice Department.

Genesis Healthcare Inc., headquartered in Kennett Square, Penn., was accused of billing for false claims to government health care programs for “unnecessary therapy and hospice services, and grossly substandard nursing care.”

Genesis owns and operates through its subsidiaries 450 skilled-nursing facilities and assisted/senior living facilities in 30 states. Genesis subsidiaries also supply rehabilitation and respiratory therapy to about 1,700 healthcare providers in 45 states, the District of Columbia and China.

After the company and Lowell officials couldn’t come to terms on a new facility in the Hamilton Canal Innovation District several weeks ago, the company is planning to build at 55 Loon Hill Road in Dracut.

“We will continue to hold health care providers accountable if they bill for unnecessary or substandard services or treatment,” Acting Assistant Attorney General Chad Readler, of the Justice Department’s Civil Division, said in a statement. The “settlement demonstrates our unwavering commitment to protect federal health care programs against unscrupulous providers.”

The company also announced the settlement on its website. Genesis said the $53.6 million was to resolve matters with its subsidiaries: a Sun Healthcare therapy matter in Georgia; a Skilled Healthcare therapy matter related to facilities in the Midwest; and a Skilled Healthcare hospice matter related to the Las Vegas Creekside Hospice False Claims Act litigation in federal court.

Genesis also resolved a Skilled Healthcare legacy investigation related to staffing in certain California facilities.

“Genesis denies the allegations in these legacy matters that arose prior to the acquisition of Sun Healthcare in 2012 and the combination with Skilled Healthcare in 2015,” the company wrote on its website. “Genesis operates in a heavily regulated industry and is pleased to resolve these legacy matters acquired in the Sun Healthcare and Skilled Healthcare transactions.”

Last week, the Genesis Healthcare project moved forward in Dracut after Special Town Meeting passed an article to rezone a portion of the project’s land from residential to commercial.

The 73,000 square-foot skilled rehabilitation facility is a $26 million investment, with more than 200 jobs and $370,000 in annual tax revenue coming to Dracut.

Town Manager Jim Duggan announced in May that the project was headed to Dracut. He secured the deal after learning from someone in Lowell that a deal to bring Genesis to the city had crumbled. The health-care facility had been slated to be a marquee development for Lowell’s Hamilton Canal Innovation District.

On Wednesday, Duggan said he was not familiar with the settlement.

“But that’s not going to affect us here moving forward for the investment in the community, and the more than 200 jobs they’ll also create,” Duggan said.

A Genesis representative could immediately be reached for comment.

The settlement resolves four sets of allegations. The Georgia allegation involves submitting false claims to Medicare by billing for outpatient therapy services that were not medically necessary or unskilled in nature.

The Midwest allegation involves false claims to Medicare, TRICARE, and Medicaid by providing therapy to certain patients longer than medically necessary, and/or billing for more therapy minutes than the patients actually received.

The Las Vegas allegation involves false claims to Medicare for services performed at the hospice facility by: billing for hospice services for patients who were not terminally ill and not eligible for the Medicare hospice benefit, and billing inappropriately for certain physician evaluation management services.

The California allegation involves false claims to the Medicare and Medi-Cal programs at its nursing homes for services that were grossly substandard and/or worthless. They also allegedly failed to provide sufficient nurse staffing to meet residents’ needs.

“It’s disturbing when health care companies bill Medicare and Medicaid to care for vulnerable patients, but provide grossly substandard care and medically unnecessary services just to boost company profits,” Special Agent Steven Ryan of the Department of Health and Human Services, Office of Inspector General, said in a statement. “We will continue to crack down on medical providers who betray the public’s trust and the needs of vulnerable patients through fraudulent billing and irresponsible practices.”

Follow Rick Sobey on Twitter @rsobeyLSun.