Diversicare and Two Occupational Therapy Assistants to Pay Over $1.3 Million to Resolve False Claims Act Allegations

            MONTGOMERY, ALABAMA – Diversicare Healthcare Services, LLC, with related subsidiary Diversicare entities (Diversicare), along with Certified Occupational Therapy Assistants Kellie S. Lemons and Charles M. James, have agreed to pay the United States $1,377,696.00 to resolve allegations that they violated the False Claims Act (FCA) by submitting claims to Medicare for occupational therapy services that they did not provide, announced United States Attorney Sandra J. Stewart.

            The FCA is a federal law that imposes civil liability on any persons or entities who submit false claims for payment to the federal government or its contractors. It imposes damages three times the loss caused by the false claims and a civil penalty between $13,508.00 to $27,018.00 per false claim. The FCA is the primary authority used by the Civil Division of the United States Attorney’s Office to redress fraud, waste, and abuse within federal programs, including Medicare.

            Diversicare is a group of private companies providing long-term care and rehabilitation services in approximately 43 locations across five states — Alabama, Mississippi, Tennessee, Texas, and Kansas. Prior to March 1, 2023, Diversicare operated the Canterbury Health Care Facility in Phenix City, Alabama.

            The civil settlement resolves a lawsuit that a former Diversicare employee brought under the qui tam, or whistleblower, provisions of the FCA. The complaint alleged that Lemons and James falsified occupational therapy records when they clocked into work at Diversicare’s Canterbury facility, left the premises, and “moonlighted” for other home health care companies in the area, meanwhile billing for services at Diversicare that they did not perform. The complaint also alleged that Diversicare permitted and even condoned these practices and knowingly submitted false claims to Medicare for reimbursement for these services.

            The United States has intervened in the lawsuit for purposes of settlement. The settlement resolves the allegations that from March 1, 2018, through September 25, 2020, Diversicare, Lemons, and James submitted, or caused to be submitted, false claims to Medicare Part A for occupational therapy services that were not rendered to patients at Canterbury Health Care Facility.

            The FCA permits private citizens to initiate a suit on behalf of the United States and share in any recovery. The whistleblower who brought the lawsuit will receive in excess of $200,000.00 of the settlement as his share of the government’s recovery in the matter.

            The case was investigated by the United States Attorney’s Office for the Middle District of Alabama in cooperation with the Office of Inspector General for the United States Department of Health and Human Services. Assistant U.S. Attorneys MaryLou E. Bowdre and Samantha R. Miller represented the United States in the matter, assisted by Investigative Analyst Rita E. Richard, Paralegal Specialist Stacey H. VanAlst, and Investigator (Contractor) Gregory T. Holston.

            The claims resolved by the settlement are allegations only, and there has been no determination of liability.