Tennessee nursing home settles whistleblower case for $2 million

NASHVILLE, TENNESSEE, Nov. 9, 2011 -- Vanguard Healthcare and related Vanguard companies have agreed to pay $2 million to the federal government and the state of Tennessee to settle a whistleblower lawsuit brought by Phillips & Cohen LLP and government charges alleging the Vanguard companies cheated Medicare and Medicaid for 10 years in its bills for providing liquid nutrition to patients using feeding tubes.

The alleged fraud centered around Vanguard's bills for enteral nutrition therapy, a way to provide liquid nourishment directly to the digestive tract of patients who cannot eat enough food to maintain an acceptable nutritional status.

The government joined the "qui tam" (whistleblower) lawsuit after investigating the allegations against Vanguard, based in Brentwood, Tenn., and concluded that from 1998 to 2008:

  • Vanguard submitted claims to Medicare for enteral therapy that were also billed to the Tennessee and Mississippi Medicaid programs.
  • Vanguard submitted bills to Medicare for pumps and intravenous poles -- used to administer the liquid nourishment -- that it had received for free.
  • Vanguard's long-term care facilities billed Tennessee and Mississippi Medicaid for enteral therapy while its "alter ego," Vanguard Healthcare Ancillary Services, billed Medicare for the same items and services.

"It is clearly fraud to double-dip and charge both Medicare and Medicaid for the same goods and services," said Peter Chatfield, a Washington, DC, attorney with Phillips & Cohen, which is representing the whistleblower.

As part of the $2 million settlement, Vanguard will pay the federal government $1.88 million and will pay the state of Tennessee $119,380.

The qui tam lawsuit was filed in 2003 in federal district court in Nashville under seal, meaning it wasn't publicly known while the government investigated the allegations. The False Claims Act allows whistleblowers to sue companies that are defrauding the government and recover funds on the government's behalf. Whistleblowers are entitled to a reward of 15 percent to 25 percent of the amount the government recovers as a result of the qui tam lawsuit.