Team Rehab to Pay Nearly $5 Million to Settle False Medical Claims Allegations

Physical therapy clinic operator Team Rehabilitation Services has agreed to pay nearly $5 million to settle allegations of submitting false claims to federal healthcare programs over a six-year period, according to U.S. Attorney Jerome F. Gorgon Jr.

The company, which operates approximately 140 physical therapy clinics across Michigan, Illinois, Indiana, Wisconsin, and Georgia, will pay $4.96 million to resolve civil allegations that it violated the False Claims Act between 2018 and 2024.

Federal prosecutors allege Team Rehab “knowingly and improperly” applied Current Procedural Terminology (CPT) codes intended for one-on-one physical therapy services when patients were actually receiving treatment in group settings. This billing practice resulted in higher reimbursements from Medicare, Medicaid, TRICARE, the Federal Health Benefits Program, and the U.S. Department of Veterans Affairs.

“Improperly billing federal healthcare programs depletes valuable resources and erodes public trust,” Gorgon said in a statement.

According to the U.S. Attorney’s Office, Team Rehab cooperated with investigators after learning of the federal inquiry. The company identified improper payment claims and implemented new compliance controls designed to prevent similar overbilling issues in the future.

The settlement resolves a lawsuit originally filed under the whistleblower provisions of the False Claims Act. The case, titled United States ex rel. Thornton v. Team Rehabilitation Physical Therapy (No. 2:23-cv-11592), was filed in the Eastern District of Michigan. As part of the settlement, the whistleblower will receive $919,356.

Healthcare billing fraud has become a significant concern for federal authorities in recent years. The Department of Justice has increasingly focused on investigating and prosecuting healthcare providers that improperly bill government programs. In 2023 alone, the DOJ recovered over $1.8 billion from healthcare fraud settlements and judgments.

Physical therapy services have come under particular scrutiny, with regulators noting that billing codes for individual therapy sessions typically reimburse at significantly higher rates than group sessions. The difference can amount to hundreds of dollars per patient visit, creating a financial incentive for improper coding.

Industry experts note that billing compliance has become increasingly complex in healthcare settings. “Many providers struggle with the intricacies of proper coding, especially when patients receive a mix of one-on-one care and group activities during the same visit,” explains healthcare attorney Sarah Robertson, who was not involved in this case. “However, the federal government has made it clear that intentional upcoding will not be tolerated.”

Team Rehab’s settlement demonstrates the ongoing emphasis on healthcare billing integrity across multiple federal programs. Medicare alone, which covers approximately 65 million Americans, paid out an estimated $829 billion in benefits in 2022, making it a frequent target for billing improprieties.

For healthcare providers, the case serves as a reminder of the importance of maintaining robust compliance programs and conducting regular internal audits. Many industry professionals recommend regular staff training on proper documentation and coding practices to avoid similar issues.

The settlement also highlights the effectiveness of whistleblower provisions in identifying potential fraud. Under the False Claims Act, whistleblowers can receive between 15 and 30 percent of recovered funds when they bring forward evidence of fraud against government programs.

Neither Team Rehab nor attorneys representing the whistleblower have publicly commented on the settlement agreement at this time.