Contractor accused of kickbacks has local ties
Published 6:00 pm Saturday, December 17, 2011
RehabCare Group Inc. may be in hotwater in Missouri, but it could be business as usual at many Minnesota care centers.
A government’s complaint alleges that RehabCare paid kickbacks to Rehab Systems of Missouri — a contract rehabilitation services provider — in order to gain access to a lucrative stream of referrals involving beneficiaries covered by the Medicare and Medicaid public health insurance programs.
RehabCare provides therapy at about 50 nursing facilities in Minnesota, including St. Mark’s Lutheran Home and Sacred Heart Care Center, both in Austin, Thorne Crest Retirement Community and St. John’s Lutheran Home, both in Albert Lea, and Adams Health Care Center in Adams. However, officials at those facilities have said the charges against RehabCare won’t have any immediate effect on local care.
“I don’t think that effects us at all,” said Rebecca Halverson, administrator of Sacred Heart.
Since the alleged kickbacks occurred in Missouri, Halverson said she anticipates the issue won’t lead to big changes locally.
“I would think it would be business as usual,” she said, noting that Sacred Heart has been pleased with RehabCare’s services.
Thorne Crest officials in Albert Lea also said they don’t anticipate the kickbacks in Missouri to have an adverse impact on Minnesota facilities.
Like Halverson, the officials said they’ve been pleased with RehabCare.
The case arising stems from a transaction in 2006 between the Kentucky and Missouri companies, according to a news release from the U.S. attorney. The U.S. attorney filed a civil complaint in Minnesota against RehabCare as part of an existing federal lawsuit that was brought initially by a whistleblower in Cambridge, Minn.
Health Dimensions Rehabilitation Inc., a Cambridge corporation that provides physical, occupational speech therapy services in nursing homes and other systems, first filed suit against RehabCare back in 2007. The government’s complaint in the matter says RehabCare has contracts to provide therapy with approximately 50 skilled nursing facilities in Minnesota.
The government alleges RehabCare was interested in purchasing the Missouri company in 2006, but correctly determined that it would violate the federal anti-kickback statute by paying a purchase price that accounted for the value of referrals from nursing homes controlled by the majority owner of Rehab Systems of Missouri.
The government’s complaint alleges that RehabCare structured the deal so that it paid the Missouri company about $600,000 and agreed to give a lucrative five-year contract for a portion of revenue from Medicare and Medicaid patients.
“Essentially, in exchange for directing the therapy business at the nursing homes to RehabCare, RSM received an up-front payment and was guaranteed over 10 percent of the revenue from the ongoing contract therapy operations,” the government said in a news release. “Aside from continuing to deliver the business to RehabCare, RSM provided no services and no value in return.”
A spokeswoman for RehabCare did not respond to a message seeking comment.
—The Associated Press contributed to this report.