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VENCOR AND VENTAS PAYING U.S. $219 MILLION TO RESOLVE

WASHINGTON, D.C. - The largest settlement under the civil False Claims Act based on failure to provide adequate health care at long term care facilities - part of the overall settlement with the government - was announced today by the Departments of Justice, Health and Human Services (HHS), and Defense (DOD). Vencor Inc. - one of the nation's largest nursing home chains - and Ventas Inc. - a related real estate investment trust - will pay the United States $104.5 million to resolve civil claims that Vencor knowingly submitted false claims to Medicare, Medicaid, and TRICARE, the military's health care program.

Failure of care claims account for more than $20 million of the $104.5 million False Claims Act settlement. The failure of care claims include false claims relating to inadequate staffing, improper care of decubitus ulcers, and failure to meet resident's dietary needs. The remaining portions of the $104.5 million settlement include more than $54 million for improper claims made on Vencor's hospital Medicare cost reports and more than $24 million for over-billing for respiratory care services and supplies. This settlement is the second largest False Claims Act settlement in a nursing home case.

The Louisville, Kentucky-based health care provider and Ventas will pay the government $25 million to resolve certain administrative non-fraud based Medicare claims. Vencor separately is reimbursing Medicare for other overpayments of approximately $90 million, about one third of which has been paid to date.

Vencor filed for protection under the federal bankruptcy laws in September 1999. The settlement announced today is part of Vencor's plan of reorganization, which was entered Friday by the United States Bankruptcy Court for the District of Delaware.

"This case is an important success story in our national nursing home initiative and in our continuing effort to combat fraud that depletes federal health care programs," said Acting Assistant Attorney General Stuart E. Schiffer. "This case should put the long term care industry on notice that we will hold accountable those institutions that care for our nation's most vulnerable citizens, even where the institution has filed for bankruptcy."

HHS Acting Inspector General Michael Mangano noted that, "As part of this global settlement, Vencor has agreed to a ground-breaking Corporate Integrity Agreement whereby Vencor will be implementing a quality improvement infrastructure designed to improve the quality of care in its facilities." The settlement requires Vencor to hire an independent monitor for the term of the Corporate Integrity Agreement.

This monitor will provide oversight of Vencor's quality improvement systems and will directly report its findings to both Vencor and HHS. In addition, Vencor will contract with an independent professional organization to review its audits, claim submission systems, policies, procedures, and practices.

"Through OPERATION TRICARE FRAUD WATCH, we hope to identify any providers who would abuse the military health program or the families it serves," said Dr. H. James T. Sears, Executive Director, TRICARE Management Activity. "Working in partnership with the Justice Department and the Defense Criminal Investigative Service, we can bring abusive providers to justice and help ensure affordable access to health care for our TRICARE beneficiaries."

Some of the government's allegations relate to claims asserted by whistleblowers on behalf of the United States in nine separate civil suits filed under the qui tam or whistleblower provisions of the False Claims Act. Under Vencor's bankruptcy reorganization plan, these individuals or relators will receive more than $15 million of the $104.5 million recovered.

This case is an excellent example of the type of coordination among multiple federal and state entities required by these types of cases involving long term care providers. The government entities involved in the investigation and negotiation of this matter include: the Civil Division of the Department of Justice; HHS-OIG Office of Investigations and Office of Counsel; Health Care Financing Administration; HHS Office of General Counsel; DOD's Defense Criminal Investigative Service and TRICARE Office of General Counsel; Minnesota and Nevada Medicaid Fraud Control Units; and numerous U.S. Attorneys' Offices, including the Middle District of Florida (Tampa Division), Western District of Kentucky, Southern District of California, District of Massachusetts, Eastern District of Arkansas, District of New Hampshire, Southern District of Ohio (Eastern District), District of Minnesota, and Eastern District of Tennessee.

Press inquiries to the Department of Justice should be directed to Charles Miller at (202) 514-2007; inquiries to HHS-OIG should be directed to Judy Holtz at (202) 619-0260; inquiries to HCFA should be directed to Peter Ashkenaz at (202) 690-6145; and inquiries to TRICARE should be directed to Sandra Law-Persing at (703) 681-1775.

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