Lessons from the Frontlines: A Case Study in Medical Necessity Enforcement 

About the Medical Necessity Series 

This is the third in our series of articles on medical necessity. In the first, we described the compliance risks associated with submission of claims for medically unnecessary services.   

In the second, we highlighted a case where an organization of long-term care hospitals were alleged to have violated the Federal False Claims Act (FCA) for holding patients in the hospital longer than medically necessary to increase reimbursement from Medicare. 

In this next article, we spotlight another recent example of a healthcare provider entity agreeing to pay a six-figure sum to resolve allegations of submission of claims for medically unnecessary services1.  This time, the providers consisted of three affiliated skilled nursing facilities (SNF) that were alleged to have submitted claims for medically unnecessary rehabilitation services.   

False Claims Act Metrics Make Significance Clear 

The Department of Justice has reported that False Claims Act settlements and judgments reached $6.8 billion in Fiscal Year 2025. Over $5.7 billion of that total was derived entirely from the healthcare sector. Most of these healthcare recoveries stem from whistleblower lawsuits targeting corporate billing schemes, upcoding, and medically unnecessary services. 

Case Involves SNF Reimbursement Dispute Over Therapy Services 

For the period in question, skilled nursing facilities (SNFs) were reimbursed for therapy services based on a patient’s resource utilization group (RUG). The RUG was determined by the amount of services the patient received, such as: 

  •  Physical therapy 
  • Occupational therapy  
  • Speech pathology services 

In short, the more services provided, the higher the reimbursement.  However, as discussed in our two prior articles, if the services don’t meet medical necessity requirements, they should not have been performed or billed in the first place. 

Whistleblower Lawsuit Triggers Investigation 

As is frequently the case, these allegations were first brought forth through a qui tam, or whistleblower, lawsuit. The whistleblower, or relator, claimed the defendants implemented a five-pronged scheme to fraudulently bill for unnecessary “Ultra High Rehab,” (the most intensive therapy provided by SNFs) and to keep patients in Ultra High Rehab for longer than necessary. 

The five prongs of the alleged scheme were: 

  1. Pressure to perform excessive, unnecessary services: The organization’s leadership exerted pressure on therapy staff to administer excessive Ultra High Rehab and to do so for longer than necessary.   

This pressure was exerted not only by administrators who oversaw SNF operations, but also by regional directors of operations who managed the facility administrators. Such pressure was also exerted by directors of rehab (DORwho managed therapists at each facility, and regional managers who directly managed the DORs.  

whistleblowers in medical necessity

In other words, management, from top to bottom, spoke to therapists and staff in one voice: increase Ultra High Rehab, regardless of patient need. 

  1. Financial vs. medical reasons to provide care:  Instead of letting therapists determine the appropriate level of therapy needed based on their professional evaluation, leadership insisted that each patient’s level of therapy be at least in part determined by whether the patient qualified for lucrative Medicare Part A benefits. 
  1. Care for functional patients: The organizations pressured therapists to continue providing therapy to patients who were fully functional and in no way required intensive therapy. A scheme called “Bridge to Success” was employed which mandated an additional week of Ultra High Rehab be tacked on even after patients were ready for discharge. 
  1. Too sick for care: The organizations pressured therapists to provide therapy to patients who were too sick to benefit from therapy and even to patients who were actually harmed by it.  

Since therapy minutes were dictated by management and not assigned based on the professional opinion of evaluating therapists, patients ended up receiving more therapy than they could tolerate, including instances where therapy was forced on patients about to pass away. 

  1. Maximizing minutes: The focus on maximizing therapy minutes to hit therapy goals also resulted in leadership encouraging an array of fraudulent billing practices. 

This included: 

  • Billing non-therapeutic minutes as therapy  
  • Allowing therapists to bill for therapy without actually providing it 
  • Encouraging therapists to bill evaluation sessions as therapy. 

Widespread Occurrences Involve $14.6+ Billion in Alleged Intended Losses 

Federal enforcement actions emphasize the commonality of these practices. The 2025 National Health Care Fraud Takedown alone resulted in criminal charges against 324 defendants nationwide, involving over $14.6 billion in alleged intended losses tied to fraudulent billing and medical necessity abuses. 

The most compelling argument for compliance leaders is that medical necessity fraud carries dual liability: 

  • Financial Risk: Organizations face mandatory treble damages (three times the government’s actual loss) plus steep statutory penalties for every individual false claim submitted. 
  • Human Risk: Unlike administrative billing errors, medical necessity fraud directly compromises patient care. Overutilization exposes vulnerable patients to unnecessary, exhausting or potentially harmful procedures simply to satisfy corporate revenue targets. 
medical necessity fraud and liability image

Three Takeaways from Medical Necessity Cases 

Much can be learned from the themes of these allegations, even if your organization isn’t an SNF or doesn’t provide therapy services. Medical necessity requirements are common across most healthcare organizations. 

Key lessons from this case include: 

  1. Decisions about billing for medical care provided need to be based on clinical and regulatory requirements, especially coverage requirements from Medicare and Medicaid, for example.   Such requirements often include statutes about: 
  1. Regular, focused compliance coding and billing audits may identify aberrant practices. This is especially true for services whose corresponding medical documentation doesn’t support compliance with coding or billing rules.   
     
    For example, Medicare reimbursement rules state that routine, non-skilled services aren’t separately reimbursable. In this case, it was alleged that one therapy assistant was coached to include in therapy minutes the time it took him to arrive at a patient’s room starting with the moment he left the therapy department. 
     
  1. Use data analytics to identify outliers. Most whistleblower cases alleging medically unnecessary services are brought by an individual with knowledge from inside the organization. Many times, the individual is a physician, nurse or other clinician with medical expertise.   
     
    This case was different. It was filed by a private analytics firm using publicly available data. Though rare, these cases do exist. If a private firm using public data could find the alleged aberrations, one would hope the organization’s own compliance professionals would be able to find similar aberrations if given the resources to look.  Additionally, the government is using data analytics to identify cases they want to pursue as well. 

Apply These Takeaways to Your Own Regulatory Compliance Program 

False Claims Act allegations alleging a lack of medical necessity can take many forms. The kind of service or type of provider may also vary, but these key themes appear in many cases. The astute compliance professional will learn from them and apply the principles to the operations and services provided at their own healthcare organization. 

The claims resolved by the settlement are allegations only, and there has been no determination of liability. 


Missed the first two installments? Start with CJ Wolf’s overview of medical necessity compliance risk, then read the second article on a False Claims Act case involving medically unnecessary hospital stays. This third installment continues the series with a recent SNF enforcement example and practical red flags compliance teams can monitor.

First installment downloadable guide is available below:

Second installment downloadable guide is available below:

The Compliance Leadership Paradox: Why You Must Choose Your Hard 

compliance leadership paradox with sage the owl

Healthcare compliance leadership requires choosing between the “hard” of stagnation and the “hard” of growth. This post by John R. Nocero and Andrea L. Bordonaro explores how to move beyond basic regulatory tasks toward strategic Revenue Integrity and Operational Excellence

Regulatory compliance leadership isn’t for the faint of heart. Every day, leaders in our field face a fundamental choice that dictates the future of their organizations and their careers. It’s a choice between two distinct types of “hard.” 

One path leads to a plateau of administrative burden, while the other leads to a breakthrough in operational excellence. To move the needle on key compliance metrics, you must decide which challenges you’re willing to embrace. 

Regulatory change rarely lives in one department. It touches:  

  • Compliance  
  • Revenue cycle  
  • Legal 
  • Clinical operations  
  • IT 
  • Quality 

Someone must translate regulatory language into operational tasks that those teams can execute. That translation step is where many organizations struggle. Well, guess what? You’re the translation step. 

compliance leadership responsibilities

Someone must translate regulatory language into operational tasks that those teams can execute. That translation step is where many organizations struggle. Well, guess what? You’re the translation step. 

Pick the Hard Work and Then Do It 

The compliance professional’s goal is to move metrics. Period. Whether it’s an outcome of no findings during a state inspection, ensuring everyone is signed off on education and training modules, or the weekly operational numbers posted for the entire organization to see, it’s your responsibility You know the work needs to happen. The challenge is getting the organization aligned around it. And that’s hard. 

Your organization’s leaders trust you to handle it, and they probably see you as capable of doing more. This visibility is an advantage, especially if you want to move up in the organization. But be aware, because corporate and everyone else is watching, looking for cracks in the armor or making you out as the target.  

Our advice? Choose your hard. Here’s how.  

Choose Your Hard: Two Options  

We all want an easier professional life. Less stress from daily meetings. More happiness from the validation of receiving praise from a job well done. Fewer complications from multiple people coming to your door every day to solve problems that aren’t yours.  

Here’s the truth nobody likes to admit: There’s no easy path. There’s only a choice between hard options. So, choose wisely.  

As we see it, you have two options: 

This isn’t difficult. You’re basically choosing to do the same things you’ve been doing in the same manner. Keep leading the daily morning compliance meeting in the same style. Keep walking through the units waving and shimmying around but not really being authoritative or looking for issues. Talking to employees but not finding anything out, just basically wasting time. 

And please, avoid the hard conversations around people constantly interrupting you with their problems instead of doing what you get paid to do.  

This is hard, but not for the reason you think. This is hard because, well, we know you, you’re busy, but not productive. You are seen, but you aren’t really doing anything. You think you’re managing, but you’re really just walking around. 

You Get Credit for Moving the Needle, Not for Inertia 

You also think you should be promoted and moved up for doing what you’re supposed to do.  

Here’s the hard truth. You don’t get credit for the things you’re supposed to do. If you’re supposed to lead orientation, write policies, make presentations, all that is in your job description. It’s a basic function of your job. You’re not getting additional credit for that. You get credit for moving the needle, not stagnation.  

managing compliance leadership

This version will feel easy in the moment. But over time, it becomes a cycle. Anxiety creeps in. Stress builds quietly. Communication gets messy. You start telling yourself little lies to stay comfortable. You get moments of happiness, but they don’t last because they’re built on escape, not stability. 

When a compliance department functions as a separate silo rather than a strategic partner, the friction is constant. You’re working hard, but you are not working toward a breakthrough. You are merely surviving the administrative weight of healthcare regulations. 

The alternative is the “hard” of growth. This involves the difficult work of Revenue Cycle Management (RCM) integration, fostering cross-functional alignment, and ensuring that compliance is viewed as a driver of healthcare quality and patient safety. 

It takes discipline to move beyond the checklist and into this strategy. It’s “hard” because it requires changing the culture of an organization, but it’s the only path that leads to: 

  • Sustainable Revenue Integrity: Moving from reactive auditing to proactive prevention.
  • Enhanced Patient Safety: Aligning regulatory requirements with frontline clinical care. 
  • Professional Authority: Establishing compliance as a core pillar of the leadership team. 

Cut the noise. Reduce the dopamine overload. Sit with discomfort instead of running from it. Say the hard things. Build better habits. Run different meetings. If your boss is giving you a directive that you have to go and talk to the director of nursing and get his or her staff to carry out a particular order, don’t walk up to them and go “Hey, boss, wants you to do this” and tell them exactly the same order that was told to you. That’s not changing. That’s parroting.  

You need to do that a bit differently, such as “boss wants your team to do XYZ. Do you know how to do this? Does your team know how to do this? What are the gaps? What can I do for you right now?” 

The Hard Path Is Uncomfortable but Pays Off Over Time 

See the difference? It’s subtle, but effective. Basketball fans can think of it as the difference between telling your basketball team to run the triangle offense and perfecting the triple-post with all your front court repeatedly until it’s second nature, creating multiple scoring options based on defensive reactions. When you repeatedly do the hard thing, it pays off over the long term. 

This hard path is uncomfortable, and at first, it feels worse, not better. It’s hard to sit in the discomfort. But over time, something starts to change. Your brain slows down. Your emotions stabilize. You stop needing constant stimulation just to feel okay.  

And one day somewhere down the line, you realize: You’re not chasing happiness anymore or trying to be the part. You don’t need to wear a three-piece suit to the corporate board meeting. You can wear a Roman Reigns OTC crewneck. You don’t have to pretend to be the part. You are the part. And you are just experiencing it. 

Choosing the Tough Option Compounds the Benefits 

The tricky part about Option 2 is that it doesn’t feel like it’s working at first. That’s where most people quit. Option 2 is harder. But it compounds. It’s the difference between escaping your life and actually building one you don’t need to escape from.  

Be a long gamer because taking the “easy” path now often becomes the hardest life later. And the hard path now? That’s the one that sets you free. 


Andrea has taught first grade in Willoughby, Ohio for 27 years in the same classroom that she attended school as a child. She earned a Bachelor of Science in elementary education with a minor in language arts from John Carroll University and a Master’s Degree in the Art of Teaching and Education from Marygrove College. 

John builds and fixes quality departments, while currently thriving as the Administrator & Director of Quality, Risk Management and Compliance at River Vista, a behavioral hospital in Columbus, Ohio.


The Q-Kids – John R Nocero and Andrea L Bordonaro – are experts at everything quality, regulatory, education training and compliance and love sharing their knowledge on YouCompli.

Follow them on LinkedIn – for more quality content or send them a message – they’d love to hear from you.



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