A civil complaint filed by the U.S. Department of Justice alleges that Lexington-based Nurses' Registry used cash, concert tickets and University of Kentucky basketball tickets to induce doctors to refer patients to the agency, in violation of federal Medicare rules.
According to a news release issued by the U.S. Attorney for the Eastern District of Kentucky, the amended complaint was filed Friday in a case that accuses Nurses' Registry of widespread Medicare abuse.
The new complaint adds allegations that Nurses' Registry; its owner, Lennie G. House; and its corporate secretary and board director, Vicki S. House — Lennie House's wife — gave cash and other inducements, such as tickets, to physicians and their staff to influence them to refer patients to Nurses' Registry, according to the news release.
Doing so amounted to a violation of the federal "anti-kickback statute," according to the complaint.
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"Federal law prohibited Nurses' Registry from submitting claims to Medicare that resulted from these kickbacks, and yet the company proceeded to do so," the news release said.
Frankfort attorney J. Guthrie True, who represents Nurses' Registry in the case, issued a written statement denying the government's allegations and the original allegations of Medicare fraud.
The statement said physician referrals are a result of Nurse's Registry's quality health care, not kickbacks.
"Physicians are required by law to allow patients the freedom to select the home health agency of their choice," the statement said. "We assume all physicians abide by this mandate."
The civil lawsuit originally was filed by former Nurses' Registry employees Alicia Robinson-Hill and David A. Price in 2008. They alleged widespread Medicare abuse in the lawsuit, which was filed qui tam, meaning on behalf of the U.S. government.
The original complaint alleged that the company submitted "false and fraudulent records, statements and Medicare claims" resulting in overpayment for services from the taxpayer-financed system. The abuse had gone on for nearly a decade, resulting in millions of dollars in overpayment, the lawsuit says.
The lawsuit says Nurses' Registry executives encouraged case managers to exaggerate patients' medical conditions to bill for more expensive services, provide services to patients with no medical problems, back-date patient records and create a program to waive Medicare cost-sharing requirements.
True's statement denied those claims as well, saying that Nurses' Registry serves 14,000 patients and files almost that many Medicare claims each year.
"Nurses' Registry submits more than 12,000 claims to Medicare annually. Given this volume of claims, it would come as no surprise that some unintended mistakes may have occurred as a result of human error," True's statement said. "But any notion that Nurses' Registry has knowingly submitted false claims for payment is not supported by the facts."
The statement also said that the company voluntarily submitted annual business reports to the U.S. Department of Health and Human Services during the decade in question, and that the government billing practices were monitored by the government.
"It makes no sense to suggest that, under those circumstances, Nurses' Registry would have or could have engaged in improper billing conduct," the statement said.
The U.S. government took over the case in July but did not immediately file any claims in addition to those submitted by Robinson-Hill and Price, who would be eligible to receive 15 percent to 30 percent of damages under the Federal False Claims Act as a reward for bringing allegations to the attention of the government if the fraud is proven.
The Department of Justice's new complaint, including the allegations of kickbacks, was filed Friday. The amended complaint adds Lennie and Vicki House as defendants and outlines the government's allegations, which resulted from a lengthy federal investigation.
The litigation is being handled jointly by the Department of Justice in Washington, D.C., and the U.S. Attorney's Office in Lexington, the news release said.
Lennie House, whose interests include banking and real estate, regularly appears alongside former UK basketball coach Joe B. Hall and current coach John Calipari in commercials promoting Nurses' Registry.
UK spokesman Jay Blanton said the university is not involved in the allegations that tickets were used as kickbacks. Blanton said House receives four season tickets every year to UK basketball home games because he is a "significant contributor" to the K Fund, a donor program that supports UK student athletes.
"That entitles him to an allotment of tickets," as it would any other donor, Blanton said.
"We have no control over how he disperses those tickets," he said.