HCR ManorCare gets
respite from dropped Medicare fraud lawsuit
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[November 21, 2017] By
CHICAGO (Reuters) - The U.S. Justice
Department withdrew a Medicare fraud lawsuit against HCR ManorCare,
removing a cloud over one the largest U.S. nursing home chains as it
nears a deadline to settle a legal dispute with its landlord.
The motion by the government on Friday to dismiss the case followed
questioning by Magistrate Judge Theresa Buchanan in Alexandria,
Virginia, over the credibility of its expert witness. The motion was
still awaiting U.S. District Judge Claude Hilton's signature on
The Justice Department's whistleblower lawsuit, which accused HCR
ManorCare of receiving millions of dollars in Medicare
reimbursements for unnecessary therapy, had been hanging over the
company since 2015.
The lawsuit had complicated talks with ManorCare's landlord, Quality
Care Properties Inc. The real estate investment trust had sued the
nursing home chain in August over more than $300 million in past-due
ManorCare has until Dec. 1 to respond to that lawsuit, which asks a
court to replace its management with an independent receiver who
would take over operations.
ManorCare is still working toward that deadline, spokeswoman Julie
Beckert said on Monday. Quality Care and the Justice Department did
not immediately comment.
In its 2016 annual report, Quality Care had warned investors that an
adverse judgment in the government's whistleblower lawsuit against
ManorCare or a big settlement obligation could hurt its ability to
While the withdrawal of the Justice Department's lawsuit brings some
relief, Quality Care had also said ManorCare's decline in operating
performance and ability to cover its fixed costs could also affect
Nursing home operators are suffering from lower government
reimbursements, higher costs, lower occupancy and increased federal
scrutiny over billing, making it difficult for some to cover rent
and other payments.
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Defaults have led to friction with landlords, including healthcare
REITs that invested heavily in the skilled nursing sector a decade
ago and are obligated to pay dividend payments to their investors.
Genesis Healthcare Inc, for example, is negotiating new rental deals
with landlords Welltower Inc and Sabra Health Care REIT Inc after
reaching a $53 million fraud settlement with the Justice Department
last year. It posted a $615 million loss in the third quarter.
The Justice Department last week announced settlements of $6.9
million with four nursing homes in the San Diego area over kickback
and fraud allegations and $1.25 million with one in Lumberton,
Mississippi, over alleged false claims for substandard care.
(Reporting by Tracy Rucinski; Editing by Lisa Von Ahn)
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