Firm Related to North Ave. Project Pays $3.9 Million Settlement

Wingate Healthcare location in Haverhill. (File photograph.)

A company associated with the recently permitted assisted living complex off North Avenue is paying $3.9 million to settle claims it “falsely inflated therapy reimbursement claims to Medicare.”

United States Attorney Carmen M. Ortiz announced today Wingate Healthcare is among five companies paying more than $133 million to settle healthcare invoices sent to the federal government “based on unreasonable, unnecessary, or unskilled therapy, or on therapy that never occurred.” Besides Wingate Healthcare, claims were brought against RehabCare, now a part of Kindred Healthcare, of Louisville, Ky., Essex Group Management, Fundamental Administrative Services, and Frederick County (Maryland).

“Medicare beneficiaries are entitled to receive care that is dictated by their clinical needs rather than the fiscal interests of healthcare providers,” said Acting Assistant Attorney General Benjamin C. Mizer for the U.S. Justice Department’s Civil Division. “All providers, whether contractors or direct billers of taxpayer-funded federal healthcare programs, must be held accountable when their actions knowingly cause bills for unnecessary services.”

At the end of December, Haverhill city councilors approved a downsized, 64-unit assisted living complex off North Avenue and set into motion plans to spend $5 million on street improvements. The special permit, issued to Continental Wingate Development Company of Needham, allows the company to build an assisted living and memory care complex on eight acres of land near the existing Wingate at Haverhill nursing home. Councilors unanimously rejected the project last February, but the developer filed suit in Essex County Land Court. Before the final vote, councilors passed two amendments to the special permit on a motion by Councilor William J. Macek. One earmarks Continental Wingate’s $400,000 contribution toward traffic and safety mitigation as the city’s portion of a proposed $5 million state improvement project for North Avenue.

Legal agreements today include a $125 million settlement with RehabCare; a $3.9 million settlement with Wingate Healthcare and 16 of its nursing facilities in Massachusetts and New York; a $1.375 million settlement with Essex Group Management and two of its Massachusetts nursing facilities, Brandon Woods of Dartmouth and Blaire House of Milford; a $2.2 million settlement with Fundamental and two of its nursing facilities, Broomall (Pennsylvania) Rehabilitation and Nursing Center and The Courtyards at Fort Worth (Texas); and a $750,000 settlement with Frederick County, Maryland, which formerly operated the Citizens Care nursing facility in Frederick, Md. The settlements with RehabCare and Wingate Healthcare arise from a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act. The False Claims Act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery.

“These False Claims Act settlements address allegations that RehabCare and its nursing facility customers engaged in a systematic and broad-ranging scheme to increase profits by delivering, or purporting to deliver, therapy in a manner that was focused on increasing Medicare reimbursement rather than on the clinical needs of patients,” said Ortiz. “The complaint outlines the extent and sophistication of this fraud, and the government’s continuing work to ensure that the provision of care in skilled nursing facilities is based on patients’ clinical needs.”

“Whether it’s false billing or unnecessary medical treatments, the FBI will continue to aggressively investigate healthcare providers that fraudulently bill Medicare,” said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “Together, with our law enforcement partners, we’ll pursue those individuals and institutions that look to abuse the healthcare system in favor of their bottom line.”

The government encourages anyone with information about false practices or similar practices involving rehabilitation therapy in nursing facilities to contact the Department of Health and Human Services, Office of Inspector General hotline at (800) HHS-TIPS (800-447-8477), or in writing via