Unqualified Physical Therapists Equals Medicaid Fraud

Many of us have had to seek physical therapy before. Maybe it was after an operation or an accident at work. When we go for our appointment, we automatically assume the therapist is properly licensed and qualified. A recent case from Alabama suggests that isn’t always the case.

Unqualified Physical Therapists Equals Medicaid Fraud

A former physiologist who worked at the Baldwin Bone & Joint clinic in Baldwin, Alabama blew the whistle on his former employer. He said the clinic was using physiologists, athletic trainers, assistants, and physical therapists interchangeably.

Medicare and Medicaid allow physical therapists to bill at higher rates than trainers and assistants.  The employee, John Seddon, said when non-therapists performed physical therapy, they simply left the billing sheet and progress notes unsigned. A licensed therapist would later sign off as if they had seen the patient and performed the therapy.

Like many whistleblowers, Seddon first shared his concerns with the doctors who ordered the therapy and others at work. Instead of listening to him, he was instead fired. When that happened, he stepped forward and blew the whistle.

This month Baldwin Bone & Joint agreed to pay $1.2 million to settle Medicare and Medicaid fraud charges, Seddon was awarded $200,000.

Baldwin Bone Routinely Employed Unqualified Therapists

Seddon worked at the clinic as an exercise physiologist for 8 years.  Although holding a master’s degree he was not licensed as a physical therapist and didn’t have the required training to become licensed. Despite his employers knowing he was not licensed, he was repeatedly asked to perform therapy on patients. So were the other unqualified therapists.

When Seddon became suspicious that the clinic’s actions were illegal, he began to copy records so that he would have proof of the wrongdoing. When he first complained to management, however, he was fired. The good news is that he had plenty of proof.

Under state and federal law, it is illegal to retaliate against workers who report Medicaid fraud, even if the report is made internally. Workers who are wrongfully terminated can collect double damages, future lost wages and attorney’s fees.

Seddon Reported More than Just Unlicensed Therapists

Seddon’s biggest beef was using assistants to treat patients and then billing as if the patient was treated by a qualified physical therapist. Patients don’t get the quality of care they deserve and the clinics get paid money they don’t deserve. Our money. Medicare and Medicaid are funded with tax dollars.

Seddon had several other complaints with the clinic. He said Baldwin Bone & Joint was also

Using unqualified healthcare workers constitutes Medicare fraud. But Seddon says that wasn’t all that was going on. According to him. He says the clinic was also:

  • Performing and billing for physical therapy services in excess of the annual limit imposed by Medicare (“the cap”) without properly evaluating, certifying, and providing written medical justification that patients qualify for an exception;
  • Performing and billing for physical therapy services and treatments performed under deficient evaluations and care plans that are not properly certified and contain generic short and long term goals and little or no measurable expected outcomes;
  • Performing and billing for physical therapy services and treatments without appropriate supervision;
  • Performing and billing for physical therapy services with inadequate or false documentation in the patient’s medical records used to justify the services billed; and
  • Making improper referrals and paying kickbacks for medical, imaging, and physical therapy services.

In other words, the clinic was doctoring records, paying kickbacks, not supervising therapists and billing for medically unnecessary services. All are serious Medicaid violations and all allow whistleblowers to receive a cash reward for reporting these violations.

Medicaid Fraud – Kickbacks

The Stark Law prohibits physicians to making “self-referrals.” That means they can’t try to profit by sending patients to other facilities they or a spouse may own. That means an orthopedist cannot refer a patient to an MRI clinic he owns and then to pharmacy her husband owns. Congress passed the Stark law because they were concerned that doctors were more likely to order tests or certain other health services if they stood to gain financially from the referral.

The Stark law only applies to patients receiving government healthcare benefits such as Medicaid, Medicare or Tricare.

After imposing the $1.2 million fine, the Justice Department issued a statement saying, “The Stark Law allegations concerned BB&J’s direct compensation arrangements with its shareholder physicians, namely, that those arrangements violated the Stark Law because the compensation BB&J paid to its shareholder physicians directly or indirectly related to the volume of each shareholder physician’s referrals for designated health services such as physical therapy, X-rays and MRI’s.”

To learn more about the Stark law and self-referrals, visit our Stark law Medicaid fraud page.

Medicare Fraud – Billing for Unnecessary Services

Medical decisions should always be based on the needs of the patient, not the clinic owner or doctor’s wallet. When a healthcare provider orders unnecessary services, he or she commits healthcare fraud.

Related to unnecessary therapy is billing for services or therapy that was never performed.

Medicare’s chief law enforcement officer, Special Agent in Charge Derrick Jackson, said, after the Baldwin Bone settlement, “Providers who falsely bill Medicare for services they didn’t provide, as alleged in this case, not only harm their patients, they also hurt all beneficiaries who depend on Medicare funding to provide access to quality services.”

To learn more about medically unnecessary services, visit our medical necessity whistleblower page.

2018 Case for Unauthorized Physical Therapy

In June 2018, the Justice Department settled a similar case with Scripps Health, a huge California based healthcare provider.

According to the Justice Department, Scripps was billing federal health care programs “for physical therapy services that were rendered by therapists who did not have billing privileges for these programs and were not supervised by an authorized provider.”  

Scripps agreed to pay a penalty of $1.5 million. In announcing the settlement, a top level Justice Department official said, “Federal health care programs require that services are rendered by authorized providers or under the appropriate supervision of an enrolled physician. These requirements help protect patients from unscrupulous or unqualified medical professionals.”

The Scripps case was initiated by another brave whistleblower, Suzanne Forrest, a former Scripps employee. She received a $225,000 reward.

Largest Physical Therapy Medicare Fraud Case Pays $1.6 Million Whistleblower Reward

The largest physical therapy Medicare fraud case involved Drayer Physical Therapy Institute, LLC. Based in South Carolina, the company operates physical therapy clinics in 15 states. Two whistleblowers stepped forward and claimed the company’s clinics “performed group therapy sessions supplied to multiple patients at once.  Drayer Physical Therapy Institute then allegedly billed the government health care programs as if the services were for performed for each individual patient, one appointment at a time, by a physical therapist or physical therapist assistant.”

In 2016 the company paid a fine of $7 million. The two whistleblowers shared a reward of $1.6 million!

Whistleblower Rewards for Medically Unqualified Therapists

Medicaid fraud can occur in many ways. This post included billing Medicare and Medicaid for unqualified physical therapists, not properly supervising physical therapists, billing group therapy sessions as if each member of the group received one on one care, billing for medically unnecessary therapy and engaging in prohibited self-referrals (Stark law violations).

If you are a healthcare worker and have inside information about one of these schemes, you may qualify for a cash reward.

All of these cases involved Medicare, Medicaid or Tricare services. All are taxpayer funded meaning they are eligible for cash whistleblower rewards.

Under the federal False Claims Act, whistleblowers can receive a reward of between 15% and 30% of what the government collects. 29 states have their own Medicaid fraud whistleblower reward that can help you receive even more money.

Whistleblowers are heroes. They help stop fraud, improve patient care and save taxpayers billions of dollars each year.

There are two ways of reporting fraud, contacting Medicare (1-800-MEDICARE) or your state Medicaid fraud control unit. Doing that is great and can be anonymous. Doing this does not qualify you for a reward, however.

Interested in a reward?

If you are a past or present healthcare worker and have inside information about unqualified, unlicensed or unsupervised physical therapists or other credentialed healthcare workers, contact us. We can help assure your information gets into the right hands. 

To learn more you can reach an operator by calling 888.742.7248 or by filling out our confidential online form. Someone will contact you shortly if we believe you may qualify for a reward.


Medicaid Fraud Hotline: 888.742.7248 or Report Online
and claim reward