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Employees of whistleblower to share in $5.7M award

By John O'Brien | Jan 25, 2014


ST. LOUIS (Legal Newsline) - Employees of a health care company that operates in three northern states will share in a $5.7 million whistleblower award recently announced by the U.S. Department of Justice.

On Jan. 17, the DOJ announced a False Claims Act settlement between it and defendants RehabCare Group and Rehab Systems of Missouri worth $30 million. Erroneously, the press release said the award to be given to the whistleblower that first brought the allegations was only $700,000.

But Jonathan M. Bye, of the Minneapolis firm Lindquist Vennum, noted that the award is much larger and will be spread around. He represented Health Dimensions Rehabilitation, the whistleblower.

"HDR is pleased it was able to bring this situation to the Government's attention and is very appreciative of the efforts of Chad Blumenfield and his colleagues in the Minnesota U.S. Attorneys' office in pursuing and resolving this case," Bye said.

"HDR is also pleased that as an employee-owned company, its employees will be sharing in the settlement."

HDR provides rehabilitation services in Minnesota, Wisconsin and North Dakota. According to its website, HDR employees collectively own 80 percent of the company through its stock ownership plan.

"This allows all eligible employees to directly share in the growth and financial success of the company," the site says.

Health Dimensions Rehabilitation brought suit against RehabCare Group in Minnesota federal court in 2007, alleging RCG offered and paid kickbacks in violation of the federal Anti-Kickback Statute.

HDR and the United States alleged RCG arranged with Rehab Systems of Missouri to obtain its contracts to provide therapy to patients in 60 nursing homes controlled by the company.

In exchange, RCG paid Rehab Systems between $400,000 and $600,000 in an upfront payment and allowed Rehab Systems to retain a percentage of the revenue generated by each referral, it is alleged.

In 2011, Kindred Healthcare purchased RCG.

According to the settlement agreement, RCG is to pay $25 million and Rehab Systems of Missouri is to pay $5 million.

Representing RCG were attorneys at Armstrong Teasdale in St. Louis, and representing Rehab Systems of Missouri was Sean C. Cenawood of Dentons US in New York City.

From Legal Newsline: Reach editor John O'Brien at

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