Physical Therapy Clinics to Pay Nearly $5M Settlement for Fraudulent Billing Scheme

In a significant healthcare fraud settlement, Team Rehabilitation Services has agreed to pay nearly $5 million to resolve allegations of participating in a fraudulent billing scheme, federal authorities announced Wednesday.

The physical rehabilitation clinic chain, which operates approximately 140 locations across Macomb and Oakland counties in Michigan and facilities in Illinois, Indiana, Wisconsin, and Georgia, was accused of violating the False Claims Act by submitting false claims to federal healthcare programs.

U.S. Attorney Jerome F. Gorgon Jr. emphasized the importance of combating healthcare fraud, stating, “Improperly billing federal healthcare programs depletes valuable resources and erodes public trust. This case is further proof that this office will continue to aggressively root out fraud, waste, and abuse in our healthcare system.”

The settlement addresses allegations that from January 2018 through December 2024, Team Rehab “knowingly and improperly submitted false claims” to Medicare, Medicaid, TRICARE, the Federal Employees Health Benefits Program, and the Department of Veterans Affairs. According to federal prosecutors, the company billed for time-based Current Procedural Terminology (CPT) codes intended for one-on-one physical therapy services when the services were actually provided in group settings.

In healthcare billing, certain CPT codes are time-based and specifically designated for one-on-one care. Providers must maintain sufficient direct patient contact throughout the service to appropriately bill for these codes. The allegations suggest Team Rehab failed to meet these standards while still charging the premium rates.

Dr. David Krulak, director of the TRICARE Health Plan at the Defense Health Agency, highlighted the significance of the settlement: “Protecting the integrity of the TRICARE program and ensuring responsible stewardship of taxpayer dollars are top priorities. 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.”

Federal authorities noted that after learning of the investigation, Team Rehab cooperated with the government by self-identifying improper claims and implementing additional compliance controls to prevent future overbilling. This cooperation likely factored into the settlement terms.

The case originated from a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act, which allows private citizens to file lawsuits on behalf of the government against entities defrauding federal programs. The whistleblower, William Thornton, will receive $919,356 from the settlement proceeds as compensation for bringing the case forward.

The False Claims Act has become one of the government’s most effective tools in combating healthcare fraud. In fiscal year 2023 alone, the Justice Department recovered over $2.2 billion in settlements and judgments from False Claims Act cases related to healthcare fraud and abuse.

Healthcare fraud remains a persistent issue in the United States, costing taxpayers billions annually. The National Health Care Anti-Fraud Association estimates that fraud accounts for approximately 3-10% of annual healthcare expenditures, translating to tens of billions of dollars each year.

Federal prosecutors emphasized that the claims resolved by this settlement are allegations only, as there has been no determination of liability. Court records relating to the case have been sealed from public view.

Authorities encourage reporting of potential fraud, waste, abuse, and mismanagement in healthcare programs. Tips and complaints can be reported to the U.S. Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The Macomb Daily reported reaching out to Samuel R. Simkins, Team Rehab’s listed attorney, for comment, though no response was mentioned in available reports.