Team Rehab Physical Therapy agrees to pay nearly $5 Million to resolve False Claims Act allegations related to fraudulent billing scheme

DETROIT - United States Attorney Jerome F. Gorgon Jr. announced today that Team Rehabilitation Services, LLC ("Team Rehab"), which operates approximately 140 physical therapy clinics in Michigan, Illinois, Indiana, Wisconsin, and Georgia, has agreed to pay $4,969,494 to settle allegations that it violated the False Claims Act by submitting false claims for payment for physical therapy services to several federal healthcare programs.

Healthcare providers charge services to federal healthcare programs using Current Procedural Terminology ("CPT") codes. Some CPT codes are time-based, whereby the provider bills based on the amount of time spent delivering a service to the patient. Additionally, some CPT codes are only appropriate where the provider is administering care on a one-to-one basis. Healthcare providers certify that the CPT codes they charge to the federal healthcare programs are accurate.

The settlement resolves allegations that, from January 1, 2018, through December 31, 2024, Team Rehab knowingly and improperly submitted false claims to Medicare, Medicaid, TRICARE, the Federal Employees Health Benefits Program (FEHBP), and the United States Department of Veterans Affairs for time-based CPT codes for one-to-one physical therapy services even though those services occurred in a group setting where the provider did not maintain sufficient direct patient contact throughout the service to appropriately bill for those time-based CPT codes.

"Improperly billing federal healthcare programs depletes valuable resources and erodes public trust," said U.S. Attorney Gorgon. "This case is further proof that this office will continue to aggressively root out fraud, waste, and abuse in our healthcare system."

"Protecting the integrity of the TRICARE program and ensuring responsible stewardship of taxpayer dollars are top priorities for the Defense Health Agency. This settlement sends a clear message that we will not tolerate practices that exploit the program and inflate costs at the expense of our service members, veterans, and their families," said Dr. David Krulak, director, TRICARE Health Plan, Defense Health Agency.

"Taxpayers pay the price when medical services under federal health care programs are improperly billed," said Derek M. Holt, Special Agent in Charge at the U.S. Office of Personnel Management Office of the Inspector General. "We are grateful to our colleagues at the Department of Justice for continuing to pursue accountability for these actions and protecting the integrity of programs like the FEHBP."

After learning of the United States' investigation in this case, Team Rehab cooperated with the United States by self-identifying improper claims for payment and implementing additional compliance controls to prevent future overbilling.

This civil settlement resolved a sealed lawsuit originally filed under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and share in a portion of the government's recovery. The qui tam case is captioned United States ex rel. Thornton v. Team Rehabilitation Physical Therapy, No. 2:23-cv-11592 (E.D. Mich.). The whistleblower will receive $919,356 of the settlement proceeds.

The resolution obtained in this matter was the result of a coordinated effort among the U.S. Department of Health and Human Services - Office of the Inspector General, Defense Criminal Investigative Service, the U.S. Department of Veterans Affairs - Office of Inspector General, the United States Attorney's Office for the Eastern District of Michigan, and the Michigan Attorney General Health Care Fraud Division. Assistant United States Attorney Anthony Gentner from the U.S. Attorney's Office for the Eastern District of Michigan handled this matter for the United States.