Extendicare Whistleblower Receives 2.79 million in Medicare Fraud Settlement

In October, Tracy Lovvorn, a former employee of Extendicare, Inc., received a $1.8 million payment for information provided regarding Extendicare’s inappropriate Medicare billing and services to the elderly in their care. This was in her capacity as ‘”Relator” in a qui tam claim brought on behalf of the government under the False Claims Act.

Under federal law, if a “Relator” (also known as a “whistleblower”) brings evidence of fraud or wrongful acts that resulted in the federal government overpaying for product, services or a contract under false pretenses, the Relator can receive a portion of the monies recovered. The False Claim Act was instituted to encourage individuals to come forward with information regarding the inappropriate and false collection of fees from the federal government. The process is that the individual puts together a claim for review by the federal government (usually to the United States Attorney), who then investigates and decides whether the join in the action and prosecute the claims. Approximately $27 billion has been recovered for the government in qui tam actions. Under the False Claims Act, a Relator can get between 15-25% of the amounts recovered by the government in their case. Relators are typically represented by attorneys who specialize in qui tam actions.

Lovvorn, a physical therapist who worked for Extendicare between 2008- 2009, was hired by Progressive Step, a subsidiary of Extendicare as director of rehabilitation for the company’s eastern region. When she complained about the billing practices of the company, specifically in Pennsylvania and Delaware, the company began a campaign of harassment and retaliation against her.

In the qui tam action, Lovvorn claimed that Extendicare put pressure on rehabilitation staff to provide increased services to residents during an assessment period when the Medicare reimbursement was higher. They were then told to decrease services when the assessment period was over. The claim went further to explain how Extendicare management applied pressure to therapy providers to deliver inappropriate therapies to residents that, in two documented cases, could not tolerate the services that were provided. This maximized profits for Extendicare, but cost the government millions of dollars in false claims

Extendicare management scheduled excessive physical and occupational therapy for one terminally ill resident, again resulting in unnecessary payments by the government. Another resident, who suffered from seizures which rendered her unable to tolerate excessive therapies, was labeled by an Extendicare manager as a “missed opportunity.” The manager wrote of the resident in an email, “Financial loss of 2300 bucks!!!!” and stated “We have to step up and make sure that this doesn’t happen again!!!!”. Additional claims included allegations of lesser standards of care in the medical treatment of its residents.

Extendicare, Inc., a Canadian company incorporated in Delaware and whose headquarters are in Milwaukee, Wisconsin, owns 150 nursing homes in 11 states and is the 7th largest nursing home operator in the U.S. based on the combined number of beds across all its facilities.

Extendicare, Inc. claims no wrongdoing in the settlement of Lovvorn’s case, but will pay a total of $10 million, which includes the $2.76 million to Lovvorn and $206,000.00 to another claimant. The remainder will be paid to the government for reimbursement on fraudulent Medicare claims. The company released a statement citing the wish to avoid expensive litigation rather than any wrong doing as the instigation for the settlement.

Acting Associate Attorney General Stuart F. Delery said in a prepared statement, ”As part of this historic resolution, Extendicare will also enter into a five-year chain-wide corporate integrity agreement with the Department of Health and Human Services. This agreement will contain innovative staffing requirements intended to ensure that this type of misconduct will not happen again.”

Without people like Ms. Lovvorn, corporations will continue to effectively steal billions of dollars of taxpayer money from the government. Ms. Lovvorn is a true American hero.

Toni Kohlbeck, student intern Jacoby & Meyers.