Current Report Filing (8-k)

KINDRED HEALTHCARE, INC.

Date: January 12, 2016

/s/ Joseph L. Landenwich

Joseph L. Landenwich

General Counsel and Corporate Secretary

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 11, 2016

KINDRED HEALTHCARE, INC.

(Exact name of registrant as specified in its charter)

Delaware

001-14057

61-1323993

(State or other jurisdiction

of incorporation or organization)

(Commission

File Number)

(IRS Employer

Identification No.)

680 South Fourth Street

Louisville, Kentucky

(Address of principal executive offices)

40202-2412

(Zip Code)

Registrant’s telephone number, including area code: (502) 596-7300

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation to the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01.

Entry into a Material Definitive Agreement.

On January 12, 2016, Kindred Healthcare, Inc. (the “Company”) entered into a settlement agreement (the “Settlement Agreement”) with the United States of America, acting through the United States Department of Justice (the “DOJ”) and on behalf of the Office of Inspector General of the Department of Health and Human Services (the “OIG,” and, collectively, the “United States”) and the relators under the related civil action to resolve the pending DOJ investigation and civil action concerning the operations of RehabCare Group, Inc. (“RehabCare”), a therapy services company acquired by the Company on June 1, 2011. The DOJ asserted, among other things, that rehabilitation therapy services provided to patients in skilled nursing centers were not delivered or billed in accordance with Medicare requirements (including possible violations of the federal False Claims Act), and that there may have been questionable financial arrangements between RehabCare and a vendor and certain skilled nursing facility customers (including possible violations of the federal Anti-Kickback Statute) (collectively, the “Covered Conduct”).

Under the Settlement Agreement, a copy of which is attached as Exhibit 10.1 hereto, the Company will pay $125 million plus accrued interest from August 31, 2015, at the rate of 1.875% per annum to the United States (the “Settlement Payment”). The Company expects to make the Settlement Payment during the first quarter of 2016. The Company previously recorded a $95 million loss reserve for this matter in the first quarter of 2015 and disclosed an estimated settlement range of $95 million to $125 million. Based on the progress of continuing settlement discussions through October 2015, the Company recorded an additional $30 million loss provision in the third quarter of 2015. The Company has recorded an additional loss reserve of approximately $2 million in the fourth quarter of 2015 related to the Settlement Agreement and associated costs and, in connection with establishing the final terms of the Settlement Agreement, the Company also intends to record an income tax benefit in the fourth quarter of 2015.

Under the Settlement Agreement, the United States agrees to release the Company and its subsidiaries from any civil or administrative monetary liability arising from the Covered Conduct. Additionally, under the Settlement Agreement, the United States and the relators agree to dismiss the civil action filed by the relators under the qui tam provisions of the federal False Claims Act, and the OIG agrees, conditioned upon the Company’s full payment of the Settlement Payment, and in consideration of the Company’s obligations under the Corporate Integrity Agreement (as defined and described below), to release its permissive exclusion rights and refrain from instituting any administrative action seeking to exclude the Company or any Company affiliate from participating in Medicare, Medicaid or other Federal health care programs as a result of the Covered Conduct.

The Settlement Agreement reflects the Company’s disagreement with the United States’ claims and contains no admissions of facts or liability on the part of the Company or any of its subsidiaries. The Settlement Agreement does not include a release for any conduct other than the Covered Conduct or any criminal liability related to the Covered Conduct. Nevertheless, it is our understanding that the United States does not intend to proceed with any criminal charges in connection with this matter.

In connection with the resolution of this matter, and in exchange for the OIG’s agreement not to exclude the Company from participating in the federal health care programs, on January 11, 2016, the Company entered into a five-year corporate integrity agreement (the “Corporate Integrity Agreement”) with the OIG. The Corporate Integrity Agreement, a copy of which is attached as Exhibit 10.2 hereto, imposes monitoring, reporting, certification, oversight, screening and training obligations on the Company, certain of which have previously been implemented. Among the expanded requirements are the following:

•

Retention of an independent review organization to perform duties under the Corporate Integrity Agreement, which include reviewing RehabCare’s compliance with federal program requirements and accepted medical practices; and

•

Annual reporting obligations to the OIG regarding the Company’s compliance with the Corporate Integrity Agreement (including corresponding certification by senior management and the Board of Directors or a committee thereof).

In the event of a breach of the Corporate Integrity Agreement, the Company could become liable for payment of certain stipulated penalties, or its RehabCare subsidiaries could be excluded from participation in federal health care programs. The costs associated with compliance with the Corporate Integrity Agreement could be substantial and may be greater than the Company currently anticipates.

The foregoing descriptions of the Settlement Agreement and the Corporate Integrity Agreement are qualified in their entirety by the full terms of the Settlement Agreement and the Corporate Integrity Agreement, which are attached as Exhibit 10.1 and Exhibit 10.2 hereto, respectively, and incorporated herein by reference.

Item 2.03.

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth above under Item 1.01 regarding the Settlement Agreement is incorporated by reference into this Item 2.03.

Item 7.01.

Regulation FD Disclosure.

Incorporated by reference is a press release issued by Kindred Healthcare, Inc. on January 12, 2016, which is attached hereto as Exhibit 99.1. This information is being furnished under Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section, nor shall this information be deemed incorporated by reference in any filing made by Kindred under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits


Exhibit No.		Description of Exhibit

10.1		Settlement Agreement, effective as of January 12, 2016, by and among the United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General of the Department of Health and Human Services, RehabCare Group, Inc. and RehabCare Group East, Inc., Kindred Healthcare, Inc., and Janet Halpin and Shawn Fahey.

10.2		Corporate Integrity Agreement, effective as of January 11, 2016, by and between the Office of Inspector General of the Department of Health and Human Services, RehabCare Group, Inc. and Kindred Healthcare, Inc.

99.1		Press release dated January 12, 2016.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized.

EXHIBIT INDEX


Exhibit		Description

10.1		Settlement Agreement, effective as of January 12, 2016, by and among the United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General of the Department of Health and Human Services, RehabCare Group, Inc. and RehabCare Group East, Inc., Kindred Healthcare, Inc., and Janet Halpin and Shawn Fahey.

10.2		Corporate Integrity Agreement, effective as of January 11, 2016, by and between the Office of Inspector General of the Department of Health and Human Services, RehabCare Group, Inc. and Kindred Healthcare, Inc.

99.1		Press release dated January 12, 2016.

Exhibit 10.1

SETTLEMENT AGREEMENT

This Settlement Agreement (Agreement) is entered into among the United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General (OIG-HHS) of the Department of Health and Human Services (HHS) (collectively the “United States”), RehabCare Group, Inc., and RehabCare Group East, Inc. (collectively “RehabCare”), Kindred Healthcare, Inc. (“Kindred,” with Kindred and RehabCare hereafter collectively referred to as “Defendants”), and Janet Halpin and Shawn Fahey (collectively the “Relators”) (hereafter collectively referred to as “the Parties”), through their authorized representatives.

RECITALS

A. RehabCare provides rehabilitative services, including physical, occupational, and speech therapy, to patients at numerous skilled nursing facilities (SNFs) nationwide. Kindred, a Delaware corporation with its headquarters in Louisville, Kentucky, is a healthcare services company that operates various businesses through its subsidiaries. On June 1, 2011, Kindred Healthcare Development, Inc., a subsidiary of Kindred, merged with and into RehabCare Group, Inc., with RehabCare Group, Inc. continuing as the surviving corporation. In 2010 and 2011, the SNFs at which RehabCare provided rehabilitative services included those listed on Attachment A. These SNFs billed Medicare for services provided to their patients, and their bills were based, in part, on the information and rehabilitation therapy provided by their contractor, RehabCare.

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B. On December 7, 2011, Janet Halpin and Shawn Fahey filed a qui tam action in the United States District Court for the District of Massachusetts captioned United States ex rel. Halpin and Fahey v. Kindred Healthcare, Inc., Case No. 1:11cv12139-RGS, pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. § 3730(b) (the “Civil Action”). Among other things, the qui tam complaint alleged that RehabCare caused its SNF customers to bill for unreasonable and unnecessary rehabilitation therapy. On February 3, 2015, the United States intervened in the Civil Action as to Relators’ allegations that RehabCare caused the submission of false claims under Medicare Part A. Relators subsequently filed an amended complaint on March 9, 2015.

C. The United States contends that Defendants caused to be submitted claims for payment to the Medicare Program (Medicare), Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395-1395kkk-1.

D. The United States contends that it has certain civil claims against Defendants arising from RehabCare’s conduct of allegedly causing the submission of false claims to Medicare Part A as alleged in the United States’ Complaint in Intervention insofar as it applies to patients who were provided therapy at the SNFs listed on Attachment A during the period from January 1, 2009 to September 30, 2013, had a length of stay of at least 33 days, and whose care was billed to Medicare at the highest resource utilization group (RUG) rate, ultra high, at least once during that Medicare Part A stay. The United States further contends that it has certain civil claims against Defendants arising from RehabCare’s conduct in allegedly providing a kickback, as described in the United States’ Complaint in Intervention, which allegedly caused the

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submission of false claims to Medicare by: Friendship Village SNF in Dublin, Ohio; The Forum at Ranch San Antonio SNF in Cupertino, California; Aldersly Gardens SNF in San Rafael, California; Wesley Pines SNF in Lumberton, North Carolina; Henry Ford Village SNF in Dearborn, Michigan; and the Residences of Thomas Circle SNF in Washington, DC. The conduct described in this Paragraph D is referred to herein as the “Covered Conduct.”

E. Defendants deny the allegations in Paragraph D and in the Civil Action.

F. This Agreement is neither an admission of liability by Defendants nor a concession by the United States that its claims are not well founded.

G. Relators claim entitlement under 31 U.S.C. § 3730(d) to a share of the proceeds of this Settlement Agreement and to Relators’ reasonable expenses, attorneys’ fees and costs.

To avoid the delay, uncertainty, inconvenience, and expense of protracted litigation, and in consideration of the mutual promises and obligations of this Settlement Agreement, the Parties agree and covenant as follows:

TERMS AND CONDITIONS

1. Defendants shall pay to the United States $125 million plus interest at a rate of 1.875 percent from August 31, 2015 through the date of full payment (Settlement Amount), no later than 10 days after the Effective Date of this Agreement by electronic funds transfer pursuant to written instructions to be provided by the Office of the United States Attorney for the District of Massachusetts.

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2. Conditioned upon the United States receiving the Settlement Amount from Defendants and as soon as feasible after receipt, the United States shall pay $23,888,000 to Relators by electronic transfer.

3. Relators and their counsel Jeffrey Newman Esq. have claims for their attorney’s fees and costs incurred in the prosecution of this action (the “Fees Claim”), evidence of which has been presented to the Defendant. In addition, Relator Janet Halpin has asserted a 3730(h) retaliation claim (the “3730(h) Claim”) against the Defendant.

The Fees Claim and Relator Halpin’s 3730(h) Claim are not released herein. Should the parties be unable to resolve the Fees Claim and/or the 3730(h) Claim, then the United States District Court shall have continuing jurisdiction to issue an order with regard to the Fees Claim, and the 3730(h) Claim shall be allowed to litigate to completion.

4. Subject to the exceptions in Paragraph 7 (concerning excluded claims) below, and conditioned upon Defendants’ full payment of the Settlement Amount, the United States fully and finally releases Defendants, together with their current and former parent corporations; current and former direct and indirect subsidiaries; current and former brother or sister corporations; current and former divisions; current and former owners; current and former directors, officers, and employees; and the predecessors, successors, transferees, and assigns of any of them, from any civil or administrative monetary claim the United States has for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-33; the Civil Monetary Penalties Law, 42 U.S.C. § 1320a-7a; the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-12; any statutory provision creating a cause of action for civil damages or civil penalties for which the Civil Division

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of the Department of Justice has actual and present authority to assert and compromise pursuant to 28 C.F.R. Part O, Subpart I, § 0.45(d); or the common law theories of payment by mistake, unjust enrichment, and fraud.

5. Subject to the exceptions in Paragraph 7 below, and conditioned upon Defendants’ full payment of the Settlement Amount, Relators, for themselves and for their heirs, successors, attorneys, agents, and assigns, fully and finally release Defendants, together with their current and former parent corporations; current and former direct and indirect subsidiaries; current and former brother or sister corporations; current and former divisions; current and former owners; current and former directors, officers, and employees; and the predecessors, successors, transferees, and assigns of any of the them from any civil monetary claim Relators have on behalf of the United States for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-33. Nothing herein shall be deemed as a release by the Relators or their counsel of the Defendants concerning their existing claims for fees and costs relating to the prosecution of these claims, or a Release of the Defendants by Relator Halpin for her pending claim against the Defendants pursuant to 31 U.S.C. § 3730(h).

6. In consideration of the obligations of Defendants in this Agreement, and in the Corporate Integrity Agreement (CIA) entered into between OIG-HHS and Defendants, and conditioned upon Defendants’ full payment of the Settlement Amount, the OIG-HHS agrees to release and refrain from instituting, directing, or maintaining any administrative action seeking exclusion from Medicare, Medicaid, and other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) against Defendants under 42 U.S.C. § 1320a-7a (Civil Monetary Penalties Law) or 42 U.S.C. § 1320a-7(b)(7)

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(permissive exclusion for fraud, kickbacks, and other prohibited activities) for the Covered Conduct, except as reserved in Paragraph 7 (concerning excluded claims), below, and as reserved in this Paragraph. The OIG-HHS expressly reserves all rights to comply with any statutory obligations to exclude Defendants from Medicare, Medicaid, and other Federal health care programs under 42 U.S.C. § 1320a-7(a) (mandatory exclusion) based upon the Covered Conduct. Nothing in this Paragraph precludes the OIG-HHS from taking action against entities or persons, or for conduct and practices, for which claims have been reserved in Paragraph 7, below.

7. Notwithstanding the releases given in paragraphs 4, 5 and 6 of this Agreement, or any other term of this Agreement, the following claims of the United States are specifically reserved and are not released:

Any liability arising under Title 26, U.S. Code (Internal Revenue Code);

Any criminal liability;

Except as explicitly stated in this Agreement, any administrative liability, including mandatory exclusion from Federal health care programs;

Any liability to the United States (or its agencies) for any conduct other than the Covered Conduct;

Any liability based upon obligations created by this Agreement;

Any liability for express or implied warranty claims or other claims for defective or deficient products or services, including quality of goods and services;

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Any liability for personal injury or property damage or for other consequential damages arising from the Covered Conduct; and

Except as otherwise provided for in this Agreement, any liability of individuals.

8. Relators and their heirs, successors, attorneys, agents, and assigns shall not object to this Agreement but agree and confirm that this Agreement is fair, adequate, and reasonable under all the circumstances, pursuant to 31 U.S.C. § 3730(c)(2)(B). Conditioned upon Relators’ receipt of the payment described in Paragraph 2, Relators and their heirs, successors, attorneys, agents, and assigns fully and finally release, waive, and forever discharge the United States, its agencies, officers, agents, employees, and servants, from any claims arising from the filing of the Civil Action or under 31 U.S.C. § 3730, and from any claims to a share of the proceeds of this Agreement and/or the Civil Action.

9. Relators, for themselves, and for their heirs, successors, attorneys, agents, and assigns, release Defendants, and their officers, agents, and employees, from any liability to Relators arising from the filing of the Civil Action, or under 31 U.S.C. § 3730(d) for expenses or attorney’s fees and costs.

10. Defendants waive and shall not assert any defenses Defendants may have to any criminal prosecution or administrative action relating to the Covered Conduct that may be based in whole or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution, this Agreement bars a remedy sought in such criminal prosecution or administrative action. Nothing in this paragraph or any other

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provision of this Agreement constitutes an agreement by the United States concerning the characterization of the Settlement Amount for purposes of the Internal Revenue laws, Title 26 of the United States Code.

11. Defendants fully and finally release the United States, its agencies, officers, agents, employees, and servants, from any claims (including attorney’s fees, costs, and expenses of every kind and however denominated) that Defendants have asserted, could have asserted, or may assert in the future against the United States, its agencies, officers, agents, employees, and servants, related to the Covered Conduct and the United States’ investigation and prosecution thereof.

12. Defendants fully and finally release Relators from any claims (including attorney’s fees, costs, and expenses of every kind and however denominated) that Defendants have asserted, could have asserted, or may assert in the future against the Relator, related to the Relators’ claims in the Civil Action and the Relators’ investigation and prosecution thereof.

13. The Settlement Amount shall not be decreased as a result of the denial of claims for payment now being withheld from payment by any Medicare contractor (e.g., Medicare Administrative Contractor, fiscal intermediary, carrier) or any state payer, related to the Covered Conduct; and Defendants agree not to resubmit to any Medicare contractor or any state payer any previously denied claims related to the Covered Conduct, and agree not to appeal any such denials of claims.

14. Defendants agree to the following:

a. Unallowable Costs Defined: All costs (as defined in the Federal Acquisition Regulation, 48 C.F.R. § 31.205-47; and in Titles XVIII and XIX of the

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Social Security Act, 42 U.S.C. §§ 1395-1395kkk and 1396-1396w-5; and the regulations and official program directives promulgated thereunder) incurred by or on behalf of Defendants, their present or former officers, directors, employees, shareholders, and agents in connection with:

(1)

the matters covered by this Agreement;

(2)

the United States’ audit(s) and civil and criminal investigation(s) of the matters covered by this Agreement;

(3)

Defendants’ investigation, defense, and corrective actions undertaken in response to the United States’ audit(s) and civil and criminal investigation(s) in connection with the matters covered by this Agreement (including attorney’s fees);

(4)

the negotiation and performance of this Agreement;

(5)

the payment Defendants make to the United States pursuant to this Agreement and any payments that Defendants may make to Relators, including costs and attorney’s fees; and

(6)

the negotiation of, and obligations undertaken pursuant to the CIA to:

(i)

retain an independent review organization to perform annual reviews as described in Section III of the CIA; and

(ii) prepare and submit reports to the OIG-HHS,

are unallowable costs for government contracting purposes and under the Medicare Program, Medicaid Program, TRICARE Program, and Federal Employees Health Benefits Program (FEHBP) (hereinafter referred to as Unallowable Costs). However,

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nothing in paragraph 14.a.(6) that may apply to the obligations undertaken pursuant to the CIA affects the status of costs that are not allowable based on any other authority applicable to Defendants.

b. Future Treatment of Unallowable Costs: Unallowable Costs shall be separately determined and accounted for by Defendants, and Defendants shall not charge such Unallowable Costs directly or indirectly to any contracts with the United States or any State Medicaid program, or seek payment for such Unallowable Costs through any cost report, cost statement, information statement, or payment request submitted by Defendants or any of their subsidiaries or affiliates to the Medicare, Medicaid, TRICARE, or FEHBP Programs.

c. Treatment of Unallowable Costs Previously Submitted for Payment: Defendants further agree that within 90 days of the Effective Date of this Agreement they shall identify to applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and Medicaid and FEHBP fiscal agents, any Unallowable Costs (as defined in this Paragraph) included in payments previously sought from the United States, or any State Medicaid program, including, but not limited to, payments sought in any cost reports, cost statements, information reports, or payment requests already submitted by Defendants or any of their subsidiaries or affiliates and shall request, and agree, that such cost reports, cost statements, information reports, or payment requests, even if already settled, be adjusted to account for the effect of the inclusion of the Unallowable Costs. Defendants agree that the United States, at a minimum, shall be entitled to recoup from Defendants any overpayment plus applicable interest and penalties as a result of the inclusion of such Unallowable Costs on previously-submitted cost reports, information reports, cost statements, or requests for payment.

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Any payments due after the adjustments have been made shall be paid to the United States pursuant to the direction of the Department of Justice and/or the affected agencies. The United States reserves its rights to disagree with any calculations submitted by Defendants or any of its subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this Paragraph) on Defendants or any of their subsidiaries’ or affiliates’ cost reports, cost statements, or information reports.

d. Nothing in this Agreement shall constitute a waiver of the rights of the United States to audit, examine, or re-examine Defendants’ books and records, or the books and records of its subsidiaries or affiliates to determine that no Unallowable Costs have been claimed in accordance with the provisions of this Paragraph.

15. This Agreement is intended to be for the benefit of the Parties, their current and former parent corporations, subsidiaries, predecessors, successors, and assigns only. The Parties do not release any claims against any other person or entity, except to the extent provided for in Paragraph 16 (waiver for beneficiaries paragraph), below.

16. Defendants agree that they waive and shall not seek or cause others to seek payment for any of the health care billings covered by this Agreement from any health care beneficiaries or their parents, sponsors, legally responsible individuals, or third party payors based upon the claims defined as Covered Conduct.

17. Upon the United States’ receipt of the Settlement Amount described in Paragraph 1, above, the United States and Relators shall promptly sign and file in the

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Civil Action a Joint Stipulation To Dismiss Defendants from the Civil Action pursuant to Rule 41(a)(1). The Civil Action will be dismissed as to Defendants with prejudice as to Relators, but as to the United States with prejudice only as to the Covered Conduct.

18. Each Party shall bear its own legal and other costs incurred in connection with this matter, including the preparation and performance of this Agreement.

19. Each party and signatory to this Agreement represents that it freely and voluntarily enters in to this Agreement without any degree of duress or compulsion.

20. This Agreement is governed by the laws of the United States. The exclusive jurisdiction and venue for any dispute relating to this Agreement is the United States District Court for the District of Massachusetts. For purposes of construing this Agreement, this Agreement shall be deemed to have been drafted by all Parties to this Agreement and shall not, therefore, be construed against any Party for that reason in any subsequent dispute.

21. This Agreement constitutes the complete agreement between the Parties. This Agreement may not be amended except by written consent of the Parties.

22. The undersigned represent and warrant that they are fully authorized to execute this Agreement on behalf of the persons and entities indicated below.

23. This Agreement may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same Agreement.

24. This Agreement is binding on Defendants’ successors, transferees, heirs, and assigns.

25. This Agreement is binding on Relators’ successors, transferees, heirs, and assigns.

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26. All parties consent to the United States’ disclosure of this Agreement, and information about this Agreement, to the public.

27. This Agreement is effective on the date of signature of the last signatory to the Agreement (Effective Date of this Agreement). Facsimiles of signatures shall constitute acceptable, binding signatures for purposes of this Agreement.

[signatures follow]

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THE UNITED STATES OF AMERICA


DATED: January 12, 2016	BY:	/s/ Gregg Shapiro
		GREGG SHAPIRO
		Assistant United States Attorney
		District of Massachusetts

DATED: January 11, 2016	BY:	/s/ Christelle Klovers
		CHRISTELLE KLOVERS
		ROHITH SRINIVAS
		Trial Attorneys
		Commercial Litigation Branch
		Civil Division
		U.S. Department of Justice

DATED: January 11, 2016	BY:	/s/ Robert K. Deconti
		ROBERT K. DECONTI
		Assistant Inspector General for Legal Affairs
		Office of Counsel to the Inspector General
		Office of Inspector General
		U.S. Department of Health and Human Services

		RELATORS

DATED: January 6, 2016	BY:	/s/ Janet Halpin
		JANET HALPIN

DATED: January 6, 2016	BY:	/s/ Shawn Fahey
		SHAWN FAHEY

DATED: January 6, 2016	BY:	/s/ Jeffrey A. Newman
		JEFFREY A. NEWMAN
		Law Offices of Jeffrey A. Newman & Associates
		Counsel for Relators

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DEFENDANTS


DATED: January 8, 2016	BY:	/s/ Benjamin A. Breier
		BENJAMIN A. BREIER
		Chief Executive Officer
		Kindred Healthcare, Inc.

DATED: January 7, 2016	BY:	/s/ Jon B. Rousseau
		JON B. ROUSSEAU
		President
		RehabCare Group, Inc.

DATED: January 7, 2016	BY:	/s/ Jon B. Rousseau
		JON B. ROUSSEAU
		President
		RehabCare Group East, Inc.

DATED: January 8, 2016	BY:	/s/ Glenn P. Hendrix
		GLENN P. HENDRIX
		Arnall Golden Gregory, LLP
		Counsel for Kindred Healthcare, Inc., RehabCare
		Group, Inc., and RehabCare Group East, Inc.

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ATTACHMENT A


Count	SNF Name	City	State
1	Abbey Delray North	Delray Beach	FL
2	Abbey Delray South	Delray Beach	FL
3	Aberdeen Village	Olathe	KS
4	Abramson Center for Jewish Life	North Wales	PA
5	Ackert Park Skilled Care Community	University City	MO
6	Advanced Health & Rehab Center of Garland	Garland	TX
7	Alexander Nininger SVNH	Pembroke Pines	FL
8	All Faith Pavilion	Chicago	IL
9	Althea Woodland	Silver Spring	MD
10	Amenity Manor	Topsham	ME
11	Anderson House	Shoreline	WA
12	Arkansas Convalescent Center	Pine Bluff	AR
13	Arkansas Nursing and Rehab Center	Texarkana	AR
14	Arlington Residence & Rehab	Arlington	TX
15	Ashford Hall	Irving	TX
16	Atrium Health Care and Rehabilitation Center	Cahokia	IL
17	Aurora Rehab & Living Center	Aurora	IL
18	Ausable Valley Continuing Care Retirement Community	Fairview	MI
19	Avalon Helath Care Center at Stoneridge	Mystic	CT
20	Aviston Countryside Manor	Aviston	IL
21	Bala Nursing Center	Philadelphia	PA
22	Baya Pointe Nursing Center	Lake City	FL
23	Baywood Court	Castro Valley	CA
24	Beacon Hill	Lombard	IL
25	Beacon Ridge	Indiana	PA
26	Beauvais Manor on the Park	St Louis	MO
27	Becker Shoop Center	Racine	WI
28	Bedford Court	Silver Spring	MD
29	Belleville Healthcare and Rehabilitation	Belleville	IL
30	Bellevue Health and Rehabilitation Center	Oklahoma City	OK
31	Berkeley Square Retirement Community	Hamilton	OH
32	Bethany Community Home	Alexandria	MN
33	Bethany Lutheran Home, Inc.	Council Bluffs	IA
34	Bethany on 42nd	Fargo	ND
35	Bethesda Dilworth	St Louis	MO
36	Bethesda Meadow	Ellisville	MO
37	Bethesda Southgate	St. Louis	MO
38	Bishop Care Ctr	Bishop	CA
39	Blair House of Tewksbury	Tewksbury	MA
40	Blaire House of Milford	Milford	MA
41	Blough Healthcare Center	Bethlehem	PA
42	Bon Secours - DePaul Medical Center TCU	Norfolk	VA
43	Bon Secours - Maryview Nursing Center	Suffolk	VA
44	Bon Secours St. Petersburg	St Petersburg	FL
45	Brandon Woods of Dartmouth Inc.	South Dartmouth	MA
46	Brandon Woods of New Bedford	New Bedford	MA
47	Brentwood Place IV	Dallas	TX
48	Brentwood Place One	Dallas	TX
49	Brentwood Place Three	Dallas	TX


50	Brentwood Place Two	Dallas	TX
51	Breton Rehabilitation and Living Centre	Grand Rapids	MI
52	Brightmoor Nursing Center	Griffin	GA
53	Brighton Gardens of Bellaire	Bellaire	TX
54	Brighton Gardens Yorba Linda	Yorba Linda	CA
55	Broad Creek Care Center	Hilton Head Island	SC
56	Broomall Rehab and Nursing Center	Broomall	PA
57	Buckingham’s Choice	Adamstown	MD
58	Buckner Villa Siesta Home	Austin	TX
59	Calhoun County Medical Care Facility	Battle Creek	MI
60	Camp Care	Inman	SC
61	Canterbury Towers Health Center	Tampa	FL
62	Carillon Senior Living Campus	Lubbock	TX
63	Carlyle Healthcare Center	Carlyle	IL
64	Carrington Place	Wytheville	VA
65	Casa Arena Blanca Health Care	Alamogordo	NM
66	Casa De Oro Care Center	Las Cruces	NM
67	Casa Del Sol Senior Care Center	Las Cruces	NM
68	Casa Maria Nursing Center	Roswell	NM
69	CC Young Memorial Home	Dallas	TX
70	Cedar Creek	Norman	OK
71	Cedar Crest	Janesville	WI
72	Cedar View Rehab & Healthcare Ctr	Austin	TX
73	Cedarcrest Manor	Washington	MO
74	Cedars at the JCA	Chesterfield	MO
75	Cedarview Care Center	Owatonna	MN
76	Charleston Rehabilitation & Health Care Center	Charleston	IL
77	Christian Care Center of Bedford County	Shelbyville	TN
78	Christian Care Center of Johnson City	Johnson City	TN
79	Christian Care Center of Kuttawa	Kuttawa	KY
80	Christian Care Center of Springfield	Springfield	TN
81	Christian Care Ctr of Rutherford County	Smyrna	TN
82	Christian Health Center of Corbin	Corbin	KY
83	Christian Health Center of Hopkinsville	Hopkinsville	KY
84	Christian Health Center of Louisville	Louisville	KY
85	Church Creek	Arlington Heights	IL
86	Citizens Care & Rehab Center of Frederick	Frederick	MD
87	Clare Oaks in Bartlett	Bartlett	IL
88	Claridge House	North Miami	FL
89	Clark Lindsey Village	Urbana	IL
90	Clark Retirement Community	Grand Rapids	MI
91	Clement Manor	Greenfield	WI
92	Clover Manor Inc.	Auburn	ME
93	Collington Episcopal Life Care Community	Mitchellville	MD
94	Colonial Acres	Golden Valley	MN
95	Colonial Healthcare	Auburn	CA
96	Columbia	Wyocena	WI
97	Community Care Ctr	Chicago	IL
98	Community Nursing & Rehab	Naperville	IL
99	Concordia Life Care Community	Oklahoma City	OK


100	Copper Ridge	Sykesville	MD
101	Cornerstone Nursing and Rehabilitation Center	Dunn	NC
102	Courtland Terrace	Gastonia	NC
103	Courtyards at Fort Worth	Fort Worth	TX
104	Courville at Manchester	Manchester	NH
105	Courville of Nashua	Nashua	NH
106	Covenant Village of Florida	Plantation	FL
107	Cranford Health and Extended Care Center	Cranford	NJ
108	Crawford County Care Center	Saegertown	PA
109	Crestview Manor Nursing & Rehabilitation Center	Belton	TX
110	Crestwood Care Centre	Crestwood	IL
111	Crouse Community Center	Morrisville	NY
112	Cumberland Nursing and Rehabilitation Center	Fayetteville	NC
113	Cypress Club Inc	Hilton Head	SC
114	Dallas Retirement Village	Dallas	OR
115	Daughters of Israel Nursing Home	West Orange	NJ
116	Deer Meadows Residence	Philadelphia	PA
117	Deerbrook Skilled Nursing & Rehab Center	Humble	TX
118	Delta Nursing & Rehab Ctr	Visalia	CA
119	Denton Rehabilitation and Nursing Center	Denton	TX
120	Derby Health and Rehabilitation Center	Derby	KS
121	Doctors Nursing and Rehabilitaion Center	Salem	IL
122	Donalson Care Centers	Fayetteville	TN
123	Douglas Rehabilitation and Care Center	Mattoon	IL
124	E.F. Bertha Kruse Memorial Lutheran Village	Brenham	TX
125	Eden Hill Communities	New Braunfels	TX
126	Edgehill	Stamford	CT
127	El Dorado Care Ctr	Placerville	CA
128	Ephrata Manor	Ephrata	PA
129	Episcopal Church Home	St. Paul	MN
130	Estrella Oaks Rehabilitation and Care Center	Georgetown	TX
131	Eventide at Sheyenne Crossings	West Fargo	ND
132	Eventide on Eighth	Moorhead	MN
133	Evergreen Nursing and Rehab	Effingham	IL
134	Excelsior Springs Nursing & Rehab	Excelsior Springs	MO
135	Fairhaven	Sykesville	MD
136	Fairmount Homes	Ephrata	PA
137	Falcons Landing	Potomac Falls	VA
138	Fall Brook Nursing & Rehab	Houston	TX
139	Falmouth By the Sea	Falmouth	ME
140	Family Health and Rehabilitation Center	Wichita	KS
141	Ferncliff Nursing Home	Rhinebeck	NY
142	Fleet Landing	Altantic Beach	FL
143	Flora Rehabilitation & Health Care Center	Flora	IL
144	Florida Presbyterian Homes	Lakeland	FL
145	Focus Rehab and Nursing at Utica	Utica	NY
146	Foothill Oaks Care Ctr	Auburn	CA
147	Fountain at Bronson Place (or the Springs at the Fountains)	Kalamazoo	MI
148	Fountainview Center for Alzheimer’s Disease	Atlanta	GA
149	Four Fountains Convalescent Center	Belleville	IL


150	Franciscan Villa	Milwaukee	WI
151	Friendship Village	Kalamazoo	MI
152	Friendship Village Chesterfield	Chesterfield	MO
153	Friendship Village of Columbus Ohio, Inc.	Columbus	OH
154	Friendship Village of South County	St. Louis	MO
155	Garden Manor Extended Care Center	Middletown	OH
156	Garden Spot Village	New Holland	PA
157	Garden View Care Center at Dougherty Ferry	Valley Park	MO
158	Garden Villa of Bedford	Bedford	IN
159	Garden Villa of Bloomington	Bloomington	IN
160	Glenbrook Health Center	Carlsbad	CA
161	Glenburn Home	Linton	IN
162	Good Samaritan Hot Springs Village	Hot Springs	AR
163	Good Samaritan Society - Bonell Community	Villag Greeley	CO
164	Gorham House	Gorham	ME
165	Grace Care Center	Wichita Falls	TX
166	Grace Care Center of Lufkin	Lufkin	TX
167	Grace Pointe Continuing Care Senior Campus	Greeley	CO
168	Grand Village	Grand Rapids	MN
169	Greene Acres Nursing Home	Paragould	AR
170	Greenery Specialty Care Center	Canonsburg	PA
171	Greenwood Village South	Greenwood	IN
172	Hanford Nursing & Rehabilitation Center	Hanford	CA
173	Harbour Health Center	Port Charlotte	FL
174	Harbour’s Edge	Delray Beach	FL
175	Harnett Woods Nursing and Rehabilitation Center	Dunn	NC
176	Hawthorne House	Freeport	ME
177	Helia Healthcare of Benton	Benton	IL
178	Heritage Manor of Canton	Canton	TX
179	Heritage Oaks	Arlington	TX
180	Heritage Place	Mesquite	TX
181	Hidden Lake Center	Raytown	MO
182	Highland Acres Nursing and Rehabilitation Center	Lumberton	NC
183	Highland Pines	Longview	TX
184	Hillside Heights Rehabilitation Suites	Canyon	TX
185	Hillside Rehab & Care Center	Yorkville	IL
186	Hobbs Health Care Center	Hobbs	NM
187	Holiday Nursing Center	Center	TX
188	Holiday Resorts - Salina	Salina	KS
189	Holland Home - Raybrook Manor	Grand Rapids	MI
190	Holzer Consolidated Health System	Bidwell	OH
191	Hometown Nursing and Rehab	Hometown	PA
192	Horizons Living and Rehab Center	Brunswick	ME
193	Hunter Hills Nursing and Rehabilitation Center	Rocky Mountain	NC
194	Hy-Pana House Care Ctr	Fresno	CA
195	IHS Treyton Oaks	Louisville	KY
196	Imboden Creek	Decatur	IL
197	Inn at Sarasota Bay Club	Sarasota	FL
198	Jackson County Medical Care Facility	Jackson	MI
199	Jewish Home and Care Center	Milwaukee	WI


200	Jordan’s Nursing Home	Bridgman	MI
201	Kansas City Presbyterian Manor	Kansas City	KS
202	Kewanee Care Home	Kenwanee	IL
203	Kings Nursing & Rehab Ctr	Hanford	CA
204	Kingswood Senior Living Community	Kansas City	MO
205	Kirby Pines Manor	Memphis	TN
206	Kirkwood by the River	Birmingham	AL
207	Knox County Nursing Home	Knoxville	IL
208	Ladera Nursing & Rehab Center	Albuquerque	NM
209	Lake Harris Health Center	Leesburg	FL
210	Lake Winona Manor	Winona	MN
211	Lakebridge Health Care Center	Johnson City	TN
212	Lakeland Health Care Center	Elkhorn	WI
213	Lakeshore Lutheran Home	Duluth	MN
214	Lakeshore Manor	Racine	WI
215	Lakeside Nursing Center	Jacksonville	FL
216	Lakeview Nursing and Rehabilitation Centre	Chicago	IL
217	Landis Homes Retire Comm Indep Living Facility	Lititz	PA
218	Las Cruces Nursing Center	Las Cruces	NM
219	Las Palomas Nursing & Rehab Center	Albuquerque	NM
220	Laurel Baye Healthcare of Greenville	Greenville	SC
221	Laurel View Village	Davidsville	PA
222	Legend Healthcare & Rehabilitation of Euless	Euless	TX
223	Legend Healthcare and Rehabilitation - Greenville	Greenville	TX
224	Lexington Manor Healthcare	Lexington	MO
225	Liberty Inn	Delray Beach	FL
226	Liberty Nursing Center of Englewood	Englewood	OH
227	Liberty Nursing Center of Hempstead Manor	Portsmouth	OH
228	Liberty Retirement Comm. of Washington	Dayton	OH
229	Lincoln Meadows Care Center	Lincoln	CA
230	Lincoln Village	Racine	WI
231	Linwood Gardens Care Ctr	Visalia	CA
232	Live Oak Manor	Live Oak	CA
233	Logan Elm	Circleville	OH
234	Longhorn Village	Austin	TX
235	Longmeadow Healthcare Center	Justin	TX
236	Loretto Health and Rehabilitation Center	Syracuse	NY
237	Lourdes Nursing Home	Waterford	MI
238	Lutheran Haven	Oveido	FL
239	Lutheran Home Frankenmuth	Frankenmuth	MI
240	Lutheran Home Livonia	Livonia	MI
241	Lutheran Home Monroe	Monroe	MI
242	Macon Health Care Center	Macon	MO
243	Magnolia Manor of Columbia	Columbia	SC
244	Magnolia Manor of Greenwood	Greenwood	SC
245	Magnolia Manor of Inman	Inman	SC
246	Magnolia Manor of Rock Hill	Rock Hill	SC
247	Magnolia Manor of Spartanburg	Spartanburg	SC
248	Magnolia Place of Greenville	Greenville	SC
249	Magnolia Place of Spartanburg	Spartanburg	SC


250	Magnum Health & Rehab of Adrian	Adrian	MI
251	Magnum Health & Rehab of Albion	Albion	MI
252	Magnum Health & Rehab of Hastings	Hastings	MI
253	Magnum Health & Rehab of Monroe	Monroe	MI
254	Manor Park	Midland	TX
255	Manzano Del Sol	Albuquerque	NM
256	Marianna Health & Rehabilitation Center	Marianna	FL
257	Marigold Rehab & Health Care Center	Galesburg	IL
258	Mark Twain Caring Center	Poplar Bluff	MO
259	Marquette	Indianapolis	IN
260	Mary Queen and Mother Center	St. Louis	MO
261	Masonic Center for Health & Rehab	Dousman	WI
262	McKinley Health Care Ctr	Sacramento	CA
263	McKinley Manor	Gallup	NM
264	Meadow Ridge	Redding	CT
265	Meadow View Manor	Grass Valley	CA
266	Meadows	Nashville	TN
267	Menno Haven Inc.	Chambersburg	PA
268	Mercy Medical Daphne	Daphne	AL
269	Mercy Retirement & Care Ctr	Oakland	CA
270	Merry Haven Care Center	Snohomish	WA
271	Messiah Lifeways at Messiah Village	Mechanicsburg	PA
272	Meth Wick Health Center	Cedar Rapids	IA
273	Mid-America Care Center	Chicago	IL
274	Milton Health Care LLC	Milton	MA
275	Mimosa Manor	Keller	TX
276	Mission Arch Care Center	Roswell	NM
277	Mission Nursing and Rehabilitation Center	Mission	TX
278	Monroe Manor	Paris	MO
279	Montebello Healthcare Ctr	Hamilton	IL
280	Montereau in Warren Woods	Tulsa	OK
281	Monterey Pines Care Ctr	Monterey	CA
282	Montgomery Nursing Home	Montgomery	NY
283	Montgomery Place	Chicago	IL
284	Moravian Village of Bethlehem	Bethlehem	PA
285	Mount Carmel Nursing and Rehab	Mount Carmel	PA
286	Mountain View Specialty Care Center, Inc.	Greensburg	PA
287	Mt Vernon Countryside Manor	Mt. Vernon	IL
288	Mulberry Manor	Stephenville	TX
289	Napa Nursing Ctr	Napa	CA
290	New Hope Manor	Cedar Park	TX
291	NMS Healthcare of Hagerstown	Hagerstown	MD
292	North Point	Paola	KS
293	Northridge Care Center	Reseda	CA
294	Northview	St. Louis	MO
295	Oakland Heights Nursing & Rehab	Oakland	CA
296	Oakview Heights Continuous Care & Rehab	Mt Carmel	IL
297	Oklahoma Methodist Manor	Tulsa	OK
298	Osprey Point	Bushnell	FL
299	Ozark Mountain Regional H/C	Crane	MO


300	Pacific Haven Healthcare Center	Garden Grove	CA
301	Palm Terrace of Mattoon	Mattoon	IL
302	Park Manor of Conroe	Conroe	TX
303	Park Manor of Cyfair	Houston	TX
304	Park Manor of Cypress Station	Houston	TX
305	Park Manor of Humble	Humble	TX
306	Park Manor of Quail Valley	Missouri City	TX
307	Park Manor of Southbelt	Houston	TX
308	Park Manor of The Woodlands	The Woodlands	TX
309	Park Manor of Tomball	Tomball	TX
310	Park Manor of Westchase	Houston	TX
311	Park Manor Rehab & Health Care Ctr	Middletown	NY
312	Park Place Manor Inc	Belton	TX
313	Park Ridge Nursing Center	Jacksonville	FL
314	Park View Health Center	Oshkosh	WI
315	Park Vista Health Center	Fullerton	CA
316	Parkhouse	Royersord	PA
317	Parkway Place	Houston	TX
318	Pataskala Oaks Care Center	Pataskala	OH
319	Pathstone Living	Mankato	MN
320	Pecan Valley Rehab and Healthcare Ctr	San Antonio	TX
321	Pine Ridge	Stevensville	MI
322	Placerville Pines Care Ctr	Placerville	CA
323	Pleasant Springs Healthcare Center	Mt. Pleasant	TX
324	Pleasant Valley Nursing Center	Derry	NH
325	Pleasant View	Corunna	MI
326	Premier Estates of Muscatine (previously Carrington Place of Muscatine)	Muscatine	IA
327	Preston Residence at Jenners Pond	West Grove	PA
328	Prestonwood Rehabilitation & Nursing Center	Plano	TX
329	Providence Place	Kansas City	KS
330	Quality Care of Waco	Waco	TX
331	Querencia at Barton Creek	Austin	TX
332	Red Cliffs Regional	St. George	UT
333	Redbanks Nursing Home	Henderson	KY
334	Regency Nursing Care Residence	Springfield	IL
335	Regents Park at Aventura	Aventura	FL
336	Regents Park of Boca Raton	Boca Raton	FL
337	Retama Manor South	Victoria	TX
338	Retirement Nursing Center	Austin	TX
339	Riddle Village	Media	PA
340	Ridgetop Haven Health Care Center	Ridgetop	TN
341	Rio Rancho Nursing & Rehab Center	Rio Rancho	NM
342	Riverside Health and Rehab (previously Driftwood Rehab and Nursing Center)	Charleston	SC
343	Riverview Health & Rehabilitation Center	Savannah	GA
344	Roan Highlands Nursing Center	Roan Mountain	TN
345	Roanoke Landing Nursing and Rehabilitation Center	Plymouth	NC
346	Roanoke River Nursing and Rehabilitation Center	Williamston	NC
347	Rochelle Rehabilitation Health Care Center	Rochelle	IL
348	Rome Hosp - Res. Health Care Facility	Rome	NY


349	Roseville Care Ctr	Roseville	CA
350	Ross Manor	Bangor	ME
351	Royal Manor Health Center	Waco	TX
352	Saint Ann’s Home for the Aged	Grand Rapids	MI
353	Samaritan Keep Hom	Watertown	NY
354	San Juan Manor	Farmington	NM
355	Sandalwood Manor, Inc	Wheat Ridge	CO
356	Seacrest Village Ret Comm	Encinitas	CA
357	Seal Rock LLC	Saco	ME
358	Seaside Retirement & Nursing Center	Portland	ME
359	Seven Acres Jewish Senior Care Services	Houston	TX
360	Shady Lane	Manitowoc	WI
361	Sharmar Village Care Center	Pueblo	CO
362	Shell Point Village Nursing Pavilion	Ft. Myers	FL
363	Shenandoah Manor Nursing Center	Shenandoah	PA
364	Sheridan Health Care Center (or The Grove at the Lake)	Zion	IL
365	Sienna Extended Care & Rehab	Midwest City	OK
366	Sierra Hills Care Center, Inc.	Roseville	CA
367	Silverado Senior Living/Turtle Creek	Dallas	TX
368	Simpson House	Philadelphia	PA
369	Sister Servants of the Immaculate Heart of Mary	Monroe	MI
370	Skyline Ridge Nursing and Rehabilitation Center	Canon City	CO
371	South Elgin Rehabilitation and Health Care Center	South Elgin	IL
372	Southview Manor	Chicago	IL
373	Southwest Nursing and Rehab -	Ft. Worth	TX
374	Spokane Veterans’ Home	Spokane	WA
375	St Lukes Miners Memorial Geriatric Center	Coaldale	PA
376	St. Andre Health Care	Biddeford	ME
377	St. Anne Home, Inc.	Greensburg	PA
378	St. Catherine Laboure’ Manor	Jacksonville	FL
379	St. Clair Nursing Center	St. Clair	MO
380	St. Francis Nursing Center	Newport News	VA
381	St. Martins in the Pines	Irondale	AL
382	Stillwater Healthcare	Bangor	ME
383	Stone Oak Care Center	San Antonio	TX
384	Stoneridge Towne Center	Myerstown	PA
385	Sunrise View	Everett	WA
386	Sunset Hills Health and Rehab Center	St. Louis	MO
387	Sunset Villa Care Center	Roswell	NM
388	Sylvan Health Center	Clearwater	FL
389	TableRock HealthCare	Kimberling City	MO
390	Terence Cardinal Cooke Health Care Center	New York	NY
391	Terrace NH Operator	Waukegan	IL
392	Terrace of Daytona Beach LLC	Daytona Beach	FL
393	Texoma Healthcare Center	Sherman	TX
394	The Arbors	Amarillo	TX
395	The Blakeford at Green Hills	Nashville	TN
396	The Bluffs (Formerly Boone)	Columbia	MO
397	The Carriage House of Bay City	Bay City	MI
398	The Chesapeake	Newport News	VA


399	The Cloisters of Mission Hills (or Shea Family Health Mission Hills)	San Diego	CA
400	The Fountains at the Carlotta	Palm Desert	CA
401	The Fountains of Canterbury	Oklahoma City	OK
402	The Highlands of Dallas (or Forest Lane Healthcare Center)	Dallas	TX
403	The Jefferson	Arlington	VA
404	The Legacy at Preston Hollow	Dallas	TX
405	The Legacy at Willow Bend	Plano	TX
406	The Meadows at Edgewood	North Andover	MA
407	The Neighborhoods at Quail Creek - Americare	Springfield	MO
408	The Neighbors	Byron	IL
409	The Park in Plano	Plano	TX
410	The Renaissance of Kessler Park	Dallas	TX
411	The Riverside	New York	NY
412	The Riverview	St. Louis	MO
413	The Sarah Chudnow Campus	Mequon	WI
414	The Springs at Crystal Lake	Crystal Lake	IL
415	The Springs at Pacific Regent (or the Fountains at Pacific Regent)	Bellevue	WA
416	The Village at Gleannloch Farms	Spring	TX
417	The Village at Northrise - Desert Willow	Las Cruces	NM
418	The Village at Richardson	Richardson	TX
419	The Village of Germantown - Skilled	Germantown	TN
420	The Villages of North Branch	North Branch	MN
421	The Washington House (or the Fountains at the Washington House)	Alexandria	VA
422	The Waterford Health Care Center	Juno Beach	FL
423	Timberlake Care Ctr	Kansas City	MO
424	Trail Lake Nursing and Rehab	Fort Worth	TX
425	Trezevant Manor (or Allen Morgan Health & Rehabilitation Center)	Memphis	TN
426	Tri County Nursing Home	Trenton	FL
427	Tri-County Extended Care Center	Fairfield	OH
428	Tudor Oaks Retirement Community	Muskego	WI
429	Tulare Nursing & Rehab Ctr	Tulare	CA
430	United Methodist Village North	Lawrenceville	IL
431	United Zion Retirement Community	Lititz	PA
432	Valley View Skilled Nursing Ctr	Ukiah	CA
433	Vantage House	Columbia	MD
434	Vi at Aventura	Aventura	FL
435	Vi at Bentley Village	Naples	FL
436	Vi at Highlands Ranch	Highlands Ranch	CO
437	Vi at Lakeside Village	Lantana	FL
438	Vi at the Glen	Glenview	IL
439	Villa Valencia	Laguna Hills	CA
440	Vindobona Nursing Home	Braddock Heights	MD
441	Vista Grande Villa	Jackson	MI
442	Wadley Care Center	Purcell	OK
443	Walnut Hills	Austin	TX
444	Warr Acres	Oklahoma City	OK
445	Washington Veterans’ Home	Retsil	WA
446	Wasserman Hebrew Home	Rockville	MD


447	Water’s Edge Extended Care	Delray Beach	FL
448	Wesley Commons	Greenwood	SC
449	West Ridge Associates	Cedar Rapids	IA
450	Westbury	Jackson	GA
451	Westbury Health & Rehabilitation	McDonough	GA
452	Westgate Gardens Care Ctr	Visalia	CA
453	Westminster Manor	Austin	TX
454	Westminster Village Terre Haute	Terre Haute	IN
455	Westmont Nursing & Rehab Center	Westmont	IL
456	Westmoreland	Chillicothe	OH
457	Westover Hills	San Antonio	TX
458	Westover Retirement Community	Hamilton	OH
459	Whispering Pines (now Aperion Care Valparaiso)	Valparaiso	IN
460	White Oak Rehabilitation & Health Care Center	Mount Vernon	IL
461	Wichita Presbyterian Manor	Wichita	KS
462	William Hill Manor	Easton	MD
463	Willow Gardens Care Center	Marion	IA
464	Willow Park	Lawton	OK
465	Willowcreek Rehabilitation and Nursing Center	Belleville	IL
466	Willows Health Center	Rockford	IL
467	Windsong Village Convalescent Center	Pearland	TX
468	Windsor - Monterey Care Center	Monterey	CA
469	Windsor Chico Care Center	Chico	CA
470	Windsor Chico Creek Care & Rehabilitation Center	Chico	CA
471	Windsor Gardens Rehabilitation Center of Salinas	Salinas	CA
472	Windsor Hills	Oklahoma City	OK
473	Windsor Redding Care Center	Redding	CA
474	Windsor-Hampton Care Center	Stockton	CA
475	Wingate at Andover	Andover	MA
476	Wingate at Beacon	Beacon	NY
477	Wingate at Brighton (or Wingate at Boston)	Boston	MA
478	Wingate at Dutchess	Fishkill	NY
479	Wingate at East Longmeadow	East Longmeadow	MA
480	Wingate at Haverhill	Haverhill	MA
481	Wingate at Lowell	Lowell	MA
482	Wingate at Needham	Needham	MA
483	Wingate at Reading	Reading	MA
484	Wingate at Silver Lake	Kingston	MA
485	Wingate at South Hadley	South Hadley	MA
486	Wingate at Springfield	Springfield	MA
487	Wingate at Sudbury	Sudbury	MA
488	Wingate at Ulster	Highland	NY
489	Wingate at West Springfield	West Springfield	MA
490	Wingate at Wilbraham	Wilbraham	MA
491	Winterhaven Health Care Center	Houston	TX
492	Wisconsin Lutheran Care Center	Milwaukee	WI
493	Wolf Creek Care Center	Grass Valley	CA
494	Woodland Terrace of Citrus County	Hernanado	FL
495	Wood-Lawn	Batesville	AR
496	Woodside Lutheran Home	Green Bay	WI
497	Wyndemere	Wheaton	IL
498	Zerbe Sisters Nursing Center	Narvon	PA

Exhibit 10.2

CORPORATE INTEGRITY AGREEMENT

BETWEEN THE

OFFICE OF INSPECTOR GENERAL

OF THE

DEPARTMENT OF HEALTH AND HUMAN SERVICES

AND

REHABCARE GROUP, INC.

AND

KINDRED HEALTHCARE, INC.

I.	PREAMBLE

RehabCare Group Inc., (RehabCare) and Kindred Healthcare, Inc., (Kindred) hereby enter into this Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG) of the United States Department of Health and Human Services (HHS) to promote compliance with the statutes, regulations, and written directives of Medicare, Medicaid, and all other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) (Federal health care program requirements).

RehabCare provides contract rehabilitation therapy services to patients in skilled nursing facilities (SNFs), hospitals, and outpatient clinics, and is a wholly-owned subsidiary of Kindred, a healthcare services company that provides a continuum of post-acute care services in a variety of care settings. Except as otherwise provided herein, this CIA shall apply only to RehabCare and the provision of contract rehabilitation therapy services. Although Kindred undertakes certain obligations under this CIA, all obligations relate to the operation of RehabCare and shall specifically exclude Kindred subsidiaries or operating divisions that are not involved in providing contract rehabilitation therapy services. Contemporaneously with this CIA, Kindred and RehabCare are entering into a Settlement Agreement with the United States.

Prior to the Effective Date of this CIA (as defined below), Kindred established a voluntary corporate compliance program (the Compliance Program) which includes a Chief Compliance Officer, Code of Conduct, written policies and procedures, a disclosure program, screening measures, regular compliance training for employees, and various compliance auditing programs. Kindred shall continue its Compliance Program throughout the term of this CIA and shall do so in accordance with the terms set forth below. Kindred may modify its Compliance Program as appropriate, but, at a minimum, Kindred shall ensure that during the term of this CIA, it shall comply with the obligations set forth herein.

RehabCare and Kindred - Corporate Integrity Agreement

II.

TERM AND SCOPE OF THE CIA

A. The period of the compliance obligations assumed by Kindred under this CIA shall be five years from the effective date of this CIA. The “Effective Date” shall be the date on which the final signatory of this CIA executes this CIA. Each one-year period, beginning with the one-year period following the Effective Date, shall be referred to as a “Reporting Period.”

B. Sections VII, X, and XI shall expire no later than 120 days after OIG’s receipt of: (1) Kindred’s final annual report; or (2) any additional materials submitted by Kindred pursuant to OIG’s request, whichever is later.

C. The scope of this CIA shall be governed by the following definitions:

1. “Covered Persons” includes:

all owners who are natural persons (other than shareholders who: (1) have an ownership interest of less than 5% in Kindred’s stock, and (2) acquired the ownership interest through public trading);

all officers, directors, and employees of RehabCare;

officers, directors, and employees of Kindred who provide operational oversight of services provided by RehabCare;

all contractors, subcontractors, agents, and other persons who are involved in the provision, oversight, or support of contract rehabilitation therapy services provided by RehabCare;

Notwithstanding the above, this term does not include part-time or per diem employees, contractors, subcontractors, agents, and other persons who are not reasonably expected to work more than 160 hours during a Reporting Period, except that any such individuals shall become “Covered Persons” at the point when they work more than 160 hours during a Reporting Period.

2. “Relevant Covered Persons” includes all Covered Persons who directly provide contract rehabilitation therapy services, or provide oversight of or support for contract therapy services, provided by RehabCare in third party owned and operated SNFs.

RehabCare and Kindred - Corporate Integrity Agreement

III.

CORPORATE INTEGRITY OBLIGATIONS

Kindred shall establish and maintain a Compliance Program that includes the following elements:

Compliance Officer and Committee

1. Compliance Officer. Within 90 days after the Effective Date, Kindred shall appoint an employee to serve as its Compliance Officer and shall maintain a Compliance Officer for the term of the CIA. The Compliance Officer shall be a member of senior management of Kindred, shall report directly to the Chief Executive Officer of Kindred, and shall not be or be subordinate to the General Counsel or Chief Financial Officer or have any responsibilities that involve acting in any capacity as legal counsel or supervising legal counsel functions for Kindred. The Compliance Officer shall be responsible for, without limitation:

developing and implementing policies, procedures, and practices designed to ensure compliance with the requirements set forth in this CIA and with Federal health care program requirements;

making periodic (at least quarterly) reports regarding compliance matters directly to the Board of Directors of Kindred, and shall be authorized to report on such matters to the Board of Directors at any time. Written documentation of the Compliance Officer’s reports to the Board of Directors shall be made available to OIG upon request;

monitoring the day-to-day compliance activities engaged in by Kindred and RehabCare as well as for any reporting obligations created under this CIA.

Any noncompliance job responsibilities of the Compliance Officer shall be limited and must not interfere with the Compliance Officer’s ability to perform the duties outlined in this CIA.

RehabCare and Kindred - Corporate Integrity Agreement

Kindred shall report to OIG, in writing, any changes in the identity or position description of the Compliance Officer, or any actions or changes that would affect the Compliance Officer’s ability to perform the duties necessary to meet the obligations in this CIA, within five days after such a change.

2. Compliance Committee. Within 90 days after the Effective Date, Kindred shall appoint a Compliance Committee. The Compliance Committee shall, at a minimum, include the Compliance Officer and other members of senior management necessary to meet the requirements of this CIA (e.g., senior executives of relevant Kindred and RehabCare departments, such as billing, clinical, human resources, audit, and operations). The Compliance Officer shall chair the Compliance Committee and the Committee shall support the Compliance Officer in fulfilling his/her responsibilities (e.g., shall assist in the analysis of RehabCare’s risk areas and shall oversee monitoring of internal and external audits and investigations). The Compliance Committee shall meet at least quarterly. The minutes of the Compliance Committee meetings shall be made available to OIG upon request.

Kindred shall report to OIG, in writing, any changes in the composition of the Compliance Committee, or any actions or changes that would affect the Compliance Committee’s ability to perform the duties necessary to meet the obligations in this CIA, within 15 days after such a change.

3. Board of Directors Compliance Obligations. The Board of Directors (or a committee of the Board) of Kindred (Board) shall be responsible for the review and oversight of matters related to compliance with Federal health care program requirements and the obligations of this CIA. The Board must include independent (i.e., non-executive) members.

The Board shall, at a minimum, be responsible for the following:

meeting at least quarterly to review and oversee Kindred’s compliance program for RehabCare, including but not limited to the performance of the Compliance Officer and Compliance Committee;

submitting to the OIG a description of the documents and other materials it reviewed, as well as any additional steps taken, such as the engagement of an independent advisor or other third party resources, in its oversight of the compliance program and in support of making the resolution below during each Reporting Period; and

for each Reporting Period of the CIA, adopting a resolution, signed by each member of the Board summarizing its review and oversight of RehabCare’s compliance with Federal health care program requirements and the obligations of this CIA.

RehabCare and Kindred - Corporate Integrity Agreement

At minimum, the resolution shall include the following language:

“The Board of Directors has made a reasonable inquiry into the operations of Kindred’s Compliance Program for RehabCare including the performance of the Compliance Officer and the Compliance Committee. Based on its inquiry and review, the Board has concluded that, to the best of its knowledge, Kindred has implemented an effective Compliance Program for RehabCare to meet Federal health care program requirements and the obligations of the CIA.”

If the Board is unable to provide such a conclusion in the resolution, the Board shall include in the resolution a written explanation of the reasons why it is unable to provide the conclusion and the steps it is taking to implement an effective Compliance Program for RehabCare.

Kindred shall report to OIG, in writing, any changes in the composition of the Board, or any actions or changes that would affect the Board’s ability to perform the duties necessary to meet the obligations in this CIA, within 15 days after such a change.

4. Management Certifications. In addition to the responsibilities set forth in this CIA for all Covered Persons, certain Kindred and RehabCare employees (Certifying Employees) are specifically expected to monitor and oversee activities within their areas of authority and shall annually certify that the applicable RehabCare division is in compliance with applicable Federal health care program requirements and with the obligations of this CIA. These Certifying Employees shall include, at a minimum, the following employees (or their functional equivalents): RehabCare - President, Senior Vice President of Finance, Senior Vice President of Quality, Division Vice President of Clinical Operations, Division Vice President of Clinical Services, Division Senior Vice President of Skilled Rehabilitation Services (SRS),

RehabCare and Kindred - Corporate Integrity Agreement

Senior Vice Presidents of SRS, Regional Vice Presidents of SRS, and Vice President of Sales & Business Development of SRS, Regional Vice Presidents of SRS; and, Kindred - any Kindred executives who have direct oversight responsibilities for RehabCare including but not limited to the Chief Executive Officer, and Chief Financial Officer.

For each Reporting Period, each Certifying Employee shall sign a certification that states:

“I have been trained on and understand the compliance requirements and responsibilities as they relate to [insert name of department], an area under my supervision. My job responsibilities include ensuring compliance with regard to the [insert name of department] with all applicable Federal health care program requirements, obligations of the Corporate Integrity Agreement, and Kindred’s policies, and I have taken steps to promote such compliance. To the best of my knowledge, the [insert name of department] of RehabCare is in compliance with all applicable Federal health care program requirements and the obligations of the Corporate Integrity Agreement. I understand that this certification is being provided to and relied upon by the United States.”

If any Certifying Employee is unable to provide such a certification, the Certifying Employee shall provide a written explanation of the reasons why he or she is unable to provide the certification outlined above.

Written Standards

1. Code of Conduct. Within 90 days after the Effective Date, Kindred shall develop, implement, and distribute a written Code of Conduct to all Covered Persons. Kindred shall make the performance of job responsibilities in a manner consistent with the Code of Conduct an element in evaluating the performance of all employees covered by this CIA. The Code of Conduct shall, at a minimum, set forth:

Kindred’s commitment to full compliance with all Federal health care program requirements, including its commitment to prepare and submit accurate rehabilitation therapy data to its customers, for the purpose of enabling those customers to submit claims that are consistent with all Federal health care program requirements;

RehabCare and Kindred - Corporate Integrity Agreement

Kindred’s requirement that all of its Covered Persons shall be expected to comply with all Federal health care program requirements and with Kindred’s own Policies and Procedures;

the requirement that all of Kindred’s Covered Persons shall be expected to report to the Compliance Officer, or other appropriate individual designated by Kindred, suspected violations of any Federal health care program requirements or of Kindred’s Policies and Procedures; and

the right of all individuals to use the Disclosure Program described in Section III.F, and Kindred’s commitment to nonretaliation and to maintain, as appropriate, confidentiality and anonymity with respect to such disclosures.

Kindred shall review the Code of Conduct at least annually to determine if revisions are appropriate and shall make any necessary revisions based on such review. The Code of Conduct shall be distributed at least annually to all Covered Persons.

2. Policies and Procedures. Within 90 days after the Effective Date, Kindred shall develop and implement written Policies and Procedures regarding the operation of its compliance program, including the compliance program requirements outlined in this CIA and Kindred’s compliance with Federal health care program requirements. Throughout the term of this CIA, Kindred shall enforce and comply with its Policies and Procedures and shall make such compliance an element of evaluating the performance of all employees covered by this CIA. The Policies and Procedures shall address, at a minimum:

the compliance program requirements outlined in this CIA; and

delivery, management and oversight of rehabilitation therapy services by RehabCare to patients in SNFs, including, but not limited to, the requirements that skilled rehabilitation therapy: (1)

RehabCare and Kindred - Corporate Integrity Agreement

be pursuant to a comprehensive assessment and individualized therapy treatment plan; (2) be consistent with the nature and severity of the patient’s individual illness or injury; (3) comply with accepted standards of medical practice; (4) be reasonable in terms of duration and quantity; (5) be reasonable and necessary given the patient’s condition, and therapy treatment plan to improve, maintain, slow deterioration of the patient’s condition; and (6) only include services that are so inherently complex that they can be safely and effectively performed only by, or under the supervision of a qualified therapist.

Within 120 days after the Effective Date, the Policies and Procedures shall be distributed to all Covered Persons. Appropriate and knowledgeable staff shall be available to explain the Policies and Procedures.

At least annually (and more frequently, if appropriate), Kindred shall assess and update, as necessary, the Policies and Procedures. Within 30 days after the effective date of any revisions or addition of new Policies and Procedures, a description of the revisions shall be communicated to all affected Covered Persons and any revised or new Policies and Procedures shall be made available to all Covered Persons.

Training and Education

1. Training Plan. Within 90 days after the Effective Date, Kindred shall develop a written plan (Training Plan) that outlines the steps Kindred will take to ensure that: (a) all Covered Persons receive adequate training regarding Kindred’s CIA requirements and Compliance Program, including the Code of Conduct and (b) all Relevant Covered Persons receive adequate training regarding: (i) the Federal health care program requirements regarding the accuracy of the data required under the Minimum Data Set (MDS) as specified by the Resident Assessment Instrument User’s Manual, and ensuring appropriate and accurate use of the current Resource Utilization Groups (RUG) classification system; (ii) policies, procedures, and other requirements applicable to the documentation of therapy services; (iii) the coordinated interdisciplinary approach to providing care and the related communications between rehabilitation therapy disciplines and between skilled nursing and skilled rehabilitation therapy; (iv) the personal obligation of each individual involved in the provision of therapy services to ensure that a service provided is medically necessary and reasonable given the patient’s condition and treatment plan and meets professionally recognized standards of care; (v) examples of proper and improper rehabilitation

RehabCare and Kindred - Corporate Integrity Agreement

therapy services, including evaluations and treatment plans; (vi) the personal obligation of each individual involved in the generation and provision of therapy-related information to RehabCare’s external customers to ensure that such information is accurate and that such skilled therapy services are covered when an individualized assessment of the patient’s clinical condition demonstrates that the specialized judgment, knowledge, and skills of a qualified therapist are necessary for the performance of the rehabilitation services; (vii) applicable reimbursement statutes, regulations, and program requirements and directives; and (viii) reporting obligations and legal sanctions for violations of the Federal health care program requirements.

The Training Plan shall include information regarding the training topics, the categories of Covered Persons and Relevant Covered Persons required to attend each training session, the length of the training, the schedule for training, and the format of the training. Within 30 days of the OIG’s receipt of Kindred’s Training Plan, OIG will notify Kindred of any comments or objections to the Training Plan. Absent notification by the OIG that the Training Plan is unacceptable, Kindred may implement its Training Plan. Kindred shall furnish training to its Covered Persons and Relevant Covered Persons pursuant to the Training Plan during each Reporting Period.

If Kindred provided training within 90 days prior to the Effective Date that fully satisfies the all the requirements set forth in Section III.C.1 above, except for the requirement of prior approval by OIG, then OIG will credit that training for purposes of satisfying the applicable part of either Kindred’s training and education obligations for the first Reporting Period of the CIA.

2. Board Member Training. Within 120 days after the Effective Date, Kindred shall provide at least two hours of training to each member of the Board of Directors. This training shall address the CIA requirements for Kindred and Kindred’s Compliance Program for RehabCare (including the Code of Conduct), the corporate governance responsibilities of board members, and the responsibilities of board members with respect to review and oversight of the Compliance Program. Specifically, the training shall address the unique responsibilities of health care Board members, including the risks, oversight areas, and strategic approaches to conducting oversight of a health care entity. This training may be conducted by an outside compliance expert hired by the Board and should include a discussion of the OIG’s guidance on Board member responsibilities.

RehabCare and Kindred - Corporate Integrity Agreement

New members of the Board of Directors shall receive the Board Member Training described above within 30 days after becoming a member or within 120 days after the Effective Date, whichever is later.

3. Certification. Each individual who is required to attend training shall certify, in writing or in electronic form, that he or she has received the required training. The certification shall specify the type of training received and the date received. The Compliance Officer (or designee) shall retain the certifications, along with all course materials.

4. Qualifications of Trainer. Persons providing the training shall be knowledgeable about the subject area.

5. Update of Training Plan. Kindred shall review the Training Plan annually, and, where appropriate, update the Training Plan to reflect changes in Federal health care program requirements, any issues discovered during internal audits or the audits required under this CIA, and any other relevant information. Any material updates to the Training Plan must be reviewed and approved by the OIG prior to the implementation of the revised Training Plan. Within 30 days of OIG’s receipt of any updates or revisions to Kindred’s Training Plan, OIG will notify Kindred of any comments or objections to the revised Training Plan. Absent notification from the OIG that the revised Training Plan is unacceptable, Kindred may implement the revised Training Plan.

6. Computer-based Training. Kindred may provide the training required under this CIA through appropriate computer-based training approaches. If Kindred chooses to provide computer-based training, they shall make available appropriately qualified and knowledgeable staff or trainers to answer questions or provide additional information to the individuals receiving such training.

Review Procedures

1. General Description

Engagement of Independent Review Organization. Within 90 days after the Effective Date, Kindred shall engage an entity (or entities), such as an accounting, auditing, or consulting firm (hereinafter “Independent Review Organization” or “IRO”), to perform the reviews listed in

RehabCare and Kindred - Corporate Integrity Agreement

this Section III.D. The applicable requirements relating to the IRO are outlined in Appendix A to this CIA, which is incorporated by reference.

Retention of Records. The IRO and Kindred shall retain and make available to OIG, upon request, all work papers, supporting documentation, correspondence, and draft reports (those exchanged between the IRO and Kindred) related to the reviews.

2. Rehabilitation Therapy Services Medical Necessity and Appropriateness Review. For each Reporting Period, the IRO shall review RehabCare’s provision of rehabilitation therapy services under contracts between RehabCare and third party owned and operated SNFs to determine RehabCare’s adherence to federal program requirements and conformance to generally accepted medical practices (Rehab Medical Review), and shall prepare a Rehab Medical Review Report, as outlined in Appendix B to this CIA, which is incorporated by reference.

3. Validation Review. In the event OIG has reason to believe that: (a) any Rehab Medical Review fails to conform to the requirements of this CIA; or (b) the IRO’s findings or Rehab Medical Review results are inaccurate, OIG may, at its sole discretion, conduct its own review to determine whether the Rehab Medical Review complied with the requirements of the CIA and/or the findings or Rehab Medical Review results are inaccurate (Validation Review). Kindred shall pay for the reasonable cost of any such review performed by OIG or any of its designated agents. Any Validation Review of a Rehab Medical Review submitted as part of Kindred’s final Annual Report shall be initiated no later than one year after Kindred’s final submission (as described in Section II) is received by OIG.

Prior to initiating a Validation Review, OIG shall notify Kindred in writing of its intent to do so and provide an explanation of the reasons OIG has determined a Validation Review is necessary. Kindred shall have 30 days following the date of the OIG’s written notice to submit a written response to OIG that includes any additional information to clarify the results of the Rehab Medical Review or to correct the inaccuracy of the Rehab Medical Review; and/or propose alternatives to the proposed Validation Review. The final determination as to whether or not to proceed with a Validation Review shall be made at the sole discretion of OIG.

RehabCare and Kindred - Corporate Integrity Agreement

4. Independence and Objectivity Certification. The IRO shall include in its report(s) to Kindred a certification that the IRO has (a) evaluated its professional independence and objectivity with respect to the reviews required under this Section III.D and (b) concluded that it is, in fact, independent and objective, in accordance with the requirements specified in Appendix A to this CIA.

Risk Assessment and Internal Review Process

Within 90 days after the Effective Date, Kindred shall develop and implement a centralized annual risk assessment and internal review process to identify and address risks associated with the provision of rehabilitation therapy information, items or services furnished to Medicare and Medicaid program beneficiaries for which claims may be submitted. The risk assessment and internal review process should require compliance, legal, and department leaders, at least annually, to: (1) identify and prioritize risks, (2) develop internal audit work plans related to the identified risk areas, (3) implement the internal audit work plans, (4) develop corrective action plans in response to the results of any internal audits performed, and (5) track the implementation of the corrective action plans in order to assess the effectiveness of such plans. Kindred shall maintain the risk assessment and internal review process for the term of the CIA.

Disclosure Program

Within 90 days after the Effective Date, Kindred shall establish a Disclosure Program that includes a mechanism (e.g., a toll-free compliance telephone line) to enable individuals to disclose, to the Compliance Officer or some other person who is not in the disclosing individual’s chain of command, any identified issues or questions associated with Kindred’s policies, conduct, practices, or procedures with respect to a Federal health care program believed by the individual to be a potential violation of criminal, civil, or administrative law. Kindred shall appropriately publicize the existence of the disclosure mechanism (e.g., via periodic e-mails to employees or by posting the information in prominent common areas).

The Disclosure Program shall emphasize a nonretribution, nonretaliation policy, and shall include a reporting mechanism for anonymous communications for which appropriate confidentiality shall be maintained. Upon receipt of a disclosure, the Compliance Officer (or designee) shall gather all relevant information from the disclosing individual. The Compliance Officer (or designee) shall make a preliminary, good faith inquiry into the allegations set forth in every disclosure to ensure that he or

RehabCare and Kindred - Corporate Integrity Agreement

she has obtained all of the information necessary to determine whether a further review should be conducted. For any disclosure that is sufficiently specific so that it reasonably: (1) permits a determination of the appropriateness of the alleged improper practice; and (2) provides an opportunity for taking corrective action, Kindred shall conduct an internal review of the allegations set forth in the disclosure and ensure that proper follow-up is conducted.

The Compliance Officer (or designee) shall maintain a disclosure log for all disclosures directly or indirectly related to the provision of contract rehabilitation therapy services and shall record each disclosure in the disclosure log within 48 hours of receipt of the disclosure. The disclosure log shall include a summary of each disclosure received (whether anonymous or not), the status of the respective internal reviews, and any corrective action taken in response to the internal reviews.

Ineligible Persons

1. Definitions. For purposes of this CIA:

an “Ineligible Person” shall include an individual or entity who:

is currently excluded, debarred, or suspended from participation in the Federal health care programs or in Federal procurement or nonprocurement programs; or

ii.

has been convicted of a criminal offense that falls within the scope of 42 U.S.C. § 1320a-7(a), but has not yet been excluded, debarred, or suspended.

“Exclusion Lists” include:

the HHS/OIG List of Excluded Individuals/Entities (LEIE) (available through the Internet at http://www.oig.hhs.gov); and

ii.

the General Services Administration’s System for Award Management (SAM) (available through the Internet at http://www.sam.gov).

RehabCare and Kindred - Corporate Integrity Agreement

2. Screening Requirements. Kindred shall ensure that all prospective and current Covered Persons are not Ineligible Persons, by implementing the following screening requirements.

Kindred shall screen all prospective Covered Persons against the Exclusion Lists prior to engaging their services and, as part of the hiring or contracting process, shall require such Covered Persons to disclose whether they are Ineligible Persons.

Kindred shall screen all current Covered Persons against the Exclusion Lists within 90 days after the Effective Date and thereafter shall screen against the LEIE on a monthly basis and screen against SAM on an annual basis.

Kindred shall implement a policy requiring all Covered Persons to disclose immediately any debarment, exclusion, or suspension.

Nothing in this Section III.G affects Kindred’s responsibility to refrain from (and liability for) billing Federal health care programs for items or services furnished, ordered, or prescribed by an excluded person. Kindred understands that items or services furnished, ordered, or prescribed by excluded persons are not payable by Federal health care programs and that Kindred may be liable for overpayments and/or criminal, civil, and administrative sanctions for employing or contracting with an excluded person regardless of whether Kindred meets the requirements of Section III.G.

3. Removal Requirement. If Kindred has actual notice that a Covered Person has become an Ineligible Person, Kindred shall remove such Covered Person from responsibility for, or involvement with, Kindred’s provision of services or other business operations related to the Federal health care programs and shall remove such Covered Person from any position for which the Covered Person’s compensation or the items or services furnished, ordered, or prescribed by the Covered Person are paid in whole or part, directly or indirectly, by Federal health care programs or otherwise with Federal funds at least until such time as the Covered Person is reinstated into participation in the Federal health care programs.

RehabCare and Kindred - Corporate Integrity Agreement

4. Pending Charges and Proposed Exclusions. If Kindred has actual notice that a Covered Person is charged with a criminal offense that falls within the scope of 42 U.S.C. §§ 1320a-7(a), 1320a-7(b)(1)-(3), or is proposed for exclusion during the Covered Person’s employment or contract term, Kindred shall take all appropriate actions to ensure that the responsibilities of that Covered Person have not and shall not adversely affect the quality of care rendered to any beneficiary, patient, or resident, or the accuracy of any information provided for the preparation of claims submitted to any Federal health care program.

Notification of Government Investigation or Legal Proceeding

Within 30 days after discovery, Kindred shall notify OIG, in writing, of any ongoing investigation or legal proceeding known to Kindred conducted or brought by a governmental entity or its agents involving an allegation that any operational division or operating unit within Kindred Healthcare, Inc. has committed a crime or has engaged in fraudulent activities. This notification shall include a description of the allegation, the identity of the investigating or prosecuting agency, and the status of such investigation or legal proceeding. Kindred shall also provide written notice to OIG within 30 days after the resolution of the matter, and shall provide OIG with a description of the findings and/or results of the investigation or proceeding, if any.

Reportable Events

1. Definition of Reportable Event. For purposes of this CIA, a “Reportable Event” means anything that involves:

a matter that a reasonable person would consider a probable violation of criminal, civil, or administrative laws applicable to any Federal health care program for which penalties or exclusion may be authorized;

the employment of or contracting with a Covered Person who is an Ineligible Person as defined by Section III.G.1.a; or

the filing of a bankruptcy petition by any operating division of Kindred.

A Reportable Event may be the result of an isolated event or a series of occurrences.

RehabCare and Kindred - Corporate Integrity Agreement

2. Reporting of Reportable Events. If Kindred determines (after a reasonable opportunity to conduct an appropriate review or investigation of the allegations) through any means that there is a Reportable Event, Kindred shall notify OIG, in writing, within 30 days after making the determination that the Reportable Event exists.

3. Reportable Events under Section III.I.1.a. For Reportable Events under Section III.I.1.a, the report to OIG shall include:

a complete description of all details relevant to the Reportable Event, including, at a minimum, the types of claims, transactions or other conduct giving rise to the Reportable Event; the period during which the conduct occurred; and the names of entities and individuals believed to be implicated, including an explanation of their roles in the Reportable Event;

a statement of the Federal criminal, civil or administrative laws that are probably violated by the Reportable Event;

the Federal health care programs affected by the Reportable Event;

a description of Kindred’s actions taken to correct the Reportable Event and prevent it from recurring.

4. Reportable Events under Section III.I.1.b. For Reportable Events under Section III.I.1.b, the report to OIG shall include:

the identity of the Ineligible Person and the job duties performed by that individual;

the dates of the Ineligible Persons employment or contractual relationship;

a description of the Exclusion Lists screening that Kindred completed before and/or during the Ineligible Person’s employment or contract and any flaw or breakdown in the Ineligible Persons screening process that led to the hiring or contracting with the Ineligible Person;

RehabCare and Kindred - Corporate Integrity Agreement

a description of how the Reportable Event was discovered; and

a description of any corrective action implemented to prevent future employment or contracting with an Ineligible Person.

5. Reportable Events under Section III.I.1.c. For Reportable Events under Section III.I.1.c, the report to the OIG shall include documentation of the bankruptcy filing and a description of any Federal health care program authorities implicated.

6. Reportable Events Involving the Stark Law. If applicable, notwithstanding the reporting requirements outlined above, any Reportable Event that involves solely a probable violation of section 1877 of the Social Security Act, 42 U.S.C. §1395nn (the Stark Law) should be submitted by Kindred to the Centers for Medicare & Medicaid Services (CMS) through the self-referral disclosure protocol (SRDP), with a copy to the OIG. If Kindred identifies a probable violation of the Stark Law and repays the applicable overpayment directly to the CMS contractor, then Kindred is not required by this Section III.I to submit the Reportable Event to CMS through the SRDP.

IV.

SUCCESSOR LIABILITY; CHANGES TO BUSINESS UNITS OR LOCATIONS

Sale of Business, Business Unit or Location

In the event that, after the Effective Date, Kindred proposes to sell any or all of its contract rehabilitation therapy business, business units or locations (whether through a sale of assets, sale of stock, or other type of transaction) that are subject to this CIA, Kindred shall notify OIG of the proposed sale at least 30 days prior to the sale of its contract rehabilitation therapy business, business unit or location. For purposes of this CIA, a business unit or location shall not include sites of services in which Kindred has no ownership interest. This notification shall include a description of the contract rehabilitation therapy business, business unit or location to be sold, a brief description of the terms of the sale, and the name and contact information of the

RehabCare and Kindred - Corporate Integrity Agreement

prospective purchaser. This CIA shall be binding on the purchaser of the contract rehabilitation therapy business, business unit or location, unless otherwise determined and agreed to in writing by the OIG.

Change or Closure of Business, Business Unit or Location

In the event that, after the Effective Date, Kindred changes locations or closes a contract rehabilitation therapy business, business unit or location Kindred shall notify OIG of this fact as soon as possible, but no later than 30 days after the date of change or closure of the business, business unit or location.

Purchase or Establishment of New Business, Business Unit or Location

In the event that, after the Effective Date, Kindred purchases or establishes a new contract rehabilitation therapy business, business unit or location Kindred shall notify OIG at least 30 days prior to such purchase or the operation of the new contract rehabilitation therapy business, business unit or location. This notification shall include the address of the new contract rehabilitation therapy business, business unit or location, phone number, fax number, and, if applicable, the Medicare and state Medicaid program provider number and/or supplier number(s). Each new contract rehabilitation therapy business, business unit or location and all Covered Persons at each new business, business unit or location shall be subject to the applicable requirements of this CIA, unless otherwise determined and agreed to in writing by the OIG.

V.	IMPLEMENTATION AND ANNUAL REPORTS

Implementation Report

Within 150 days after the Effective Date, Kindred shall submit a written report to OIG summarizing the status of its implementation of the requirements of this CIA (Implementation Report). The Implementation Report shall, at a minimum, include:

1. the name, address, phone number, and position description of the Compliance Officer required by Section III.A, and a summary of other noncompliance job responsibilities the Compliance Officer may have;

2. the names and positions of the members of the Compliance Committee required by Section III.A;

RehabCare and Kindred - Corporate Integrity Agreement

3. the names of the Board members who are responsible for satisfying the Board of Directors compliance obligations described in Section III.A.3;

4. the names and positions of the Certifying Employees required by Section III.A.4;

5. a copy of Kindred’s Code of Conduct required by Section III.B.1;

6. a summary of all Policies and Procedures required by Section III.B (copies of the Policies and Procedures shall be made available to OIG upon request);

7. the Training Plan required by Section III.C.1 and a description of the Board of Directors training required by Section III.C.2 (including a summary of the topics covered, the length of the training; and when the training was provided);

8. the following information regarding the IRO(s): (a) identity, address, and phone number; (b) a copy of the engagement letter; (c) information to demonstrate that the IRO has the qualifications outlined in Appendix A to this CIA; (d) a summary and description of any and all current and prior engagements and agreements between Kindred and the IRO; and (e) a certification from the IRO regarding its professional independence and objectivity with respect to Kindred;

9. a description of the risk assessment and internal review process required by Section III.E;

10. a description of the Disclosure Program required by Section III.F;

11. a certification that Kindred has implemented the screening requirements described in Section III.G regarding Ineligible Persons, or a description of why Kindred cannot provide such a certification;

12. a description of Kindred’s corporate structure, including identification of any parent and sister companies, subsidiaries, and their respective lines of business;

13. a list of all of Kindred’s contract therapy business units or locations as defined by Section IV (including mailing addresses), the corresponding name under which each location is doing business; the corresponding phone numbers and fax numbers, and if applicable, each location’s Medicare and state Medicaid program provider number(s) and/or National Provider Identifier number(s); and

14. the certifications required by Section V.C.

RehabCare and Kindred - Corporate Integrity Agreement

Annual Reports

Kindred shall submit to OIG annually a report with respect to the status of, and findings regarding, Kindred’s compliance activities for each of the five Reporting Periods (Annual Report). Each Annual Report shall include, at a minimum:

1. any change in the identity, position description, or other noncompliance job responsibilities of the Compliance Officer; any change in the membership of the Compliance Committee described in Section III.A, any change in the Board members who are responsible for satisfying the Board of Directors compliance obligations described in Section III.A.3, and any change in the group of Certifying Employees described in Section III.A.4;

2. the dates of each report made by the Compliance Officer to the Board (written documentation of such reports shall be made available to OIG upon request);

3. the Board resolution required by Section III.A.3 and a description of the documents and other materials reviewed by the Board, as well as any additional steps taken, in its oversight of the compliance program and in support of making the resolution;

4. a summary of any significant changes or amendments to Kindred’s Code of Conduct or the Policies and Procedures required by Section III.B and the reasons for such changes (e.g., change in contractor policy);

5. a copy of Kindred’s Training Plan developed under Section III.C and the following information regarding each type of training required by the Training Plan: a description of the training, including a summary of the topics covered; the length of sessions, a schedule of training sessions, a general description of the categories of individuals required to complete the training, and the process by which Kindred ensures that all designated employees receive appropriate training. A copy of all training materials and the documentation to support this information shall be made available to OIG upon request.

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6. a complete copy of all reports prepared pursuant to Section III.D, along with a copy of the IRO’s engagement letter, and Kindred’s response to the reports, along with corrective action plan(s) related to any issues raised by the reports;

7. a summary and description of any and all current and prior engagements and agreements between Kindred and the IRO (if different from what was submitted as part of the Implementation Report) and a certification from the IRO regarding its professional independence and objectivity with respect to Kindred;

8. a description of the risk assessment and internal review process required by Section III.E, a summary of any material changes to the process, and a description of the reasons for such changes;

9. a summary of all internal audits performed pursuant to Section III.E during the Reporting Period and any corrective action plans developed in response to those internal audits. Copies of the internal audit reports and corrective action plans shall be made available to OIG upon request;

10. a summary of the disclosures in the disclosure log required by Section III.F that relate to Federal health care programs (the complete disclosure log shall be made available to OIG upon request);

11. a certification that Kindred has completed the screening required by Section III.G regarding Ineligible Persons;

12. a summary describing any ongoing investigation or legal proceeding required to have been reported pursuant to Section III.H. The summary shall include a description of the allegation, the identity of the investigating or prosecuting agency, and the status of such investigation or legal proceeding;

13. a summary of Reportable Events (as defined in Section III.I) identified during the Reporting Period and the status of any corrective action relating to all such Reportable Events;

14. if applicable, a summary describing any audits conducted during the applicable Reporting Period by a Medicare or state Medicaid program contractor or any government entity or contractor, involving a review of Federal health care program claims for rehabilitation therapy by RehabCare, and Kindred’s response/corrective action plan (including information regarding any Federal health care program refunds) relating to the audit findings;

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15. a description of all changes to the most recently provided list of Kindred’s contract therapy business units or locations (including addresses) as required by Section V.A.13; and

16. the certifications required by Section V.C.

The first Annual Report shall be received by OIG no later than 60 days after the end of the first Reporting Period. Subsequent Annual Reports shall be received by OIG no later than the anniversary date of the due date of the first Annual Report.

Certifications

1. Certifying Employees. In each Annual Report, Kindred shall include the certifications of Certifying Employees as required by Section III.A.4;

2. Compliance Officer and Chief Executive Officer. The Implementation Report and each Annual Report shall include a certification by the Compliance Officer and Chief Executive Officer that:

to the best of his or her knowledge, except as otherwise described in the report, Kindred and RehabCare are in compliance with all of the requirements of this CIA; and

he or she has reviewed the report and has made reasonable inquiry regarding its content and believes that the information in the report is accurate and truthful.

3. Chief Financial Officer. The first Annual Report shall include a certification by Kindred’s Chief Financial Officer that, to the best of his or her knowledge, Kindred has complied with its obligations under the Settlement Agreement: (a) if applicable, not to resubmit to any Federal health care program payors any previously denied claims related to the Covered Conduct addressed in the Settlement Agreement, and not to appeal any such denials of claims; (b) not to charge to or otherwise seek payment from federal or state payors for unallowable costs (as defined in the Settlement Agreement); and (c) to identify and adjust any past charges or claims for unallowable costs.

RehabCare and Kindred - Corporate Integrity Agreement

Designation of Information

Kindred shall clearly identify any portions of its submissions that it believes are trade secrets, or information that is commercial or financial and privileged or confidential, and therefore potentially exempt from disclosure under the Freedom of Information Act (FOIA), 5 U.S.C. § 552. Kindred shall refrain from identifying any information as exempt from disclosure if that information does not meet the criteria for exemption from disclosure under FOIA.

VI.

NOTIFICATIONS AND SUBMISSION OF REPORTS

Unless otherwise stated in writing after the Effective Date, all notifications and reports required under this CIA shall be submitted to the following entities:

OIG:

Administrative and Civil Remedies Branch

Office of Counsel to the Inspector General

Office of Inspector General

U.S. Department of Health and Human Services

Cohen Building, Room 5527

330 Independence Avenue, S.W.

Washington, DC 20201

Telephone: 202.619.2078

Facsimile: 202.205.0604

Kindred and RehabCare:

Kelly Priegnitz

Senior Vice President and Chief Compliance Officer

680 South Fourth Street

Louisville, KY 40202

Telephone: (502) 596-7320

Unless otherwise specified, all notifications and reports required by this CIA may be made by certified mail, overnight mail, hand delivery, or other means, provided that there is proof that such notification was received. For purposes of this requirement, internal facsimile confirmation sheets do not constitute proof of receipt. Upon request by OIG, Kindred may be required to provide OIG with an electronic copy of each notification or report required by this CIA in searchable portable document format (pdf), in addition to a paper copy.

RehabCare and Kindred - Corporate Integrity Agreement

VII.

OIG INSPECTION, AUDIT, AND REVIEW RIGHTS

In addition to any other rights OIG may have by statute, regulation, or contract, OIG or its duly authorized representative(s) may examine and/or request copies of Kindred’s books, records, and other documents and supporting materials that relate to contract rehabilitation therapy services and/or conduct on-site reviews of any of Kindred’s contract rehabilitation therapy business unit locations, for the purpose of verifying and evaluating: (a) Kindred’s and RehabCare’s compliance with the terms of this CIA and (b) Kindred’s and RehabCare’s compliance with the requirements of the Federal health care programs. The documentation described above shall be made available by Kindred to OIG or its duly authorized representative(s) at all reasonable times for inspection, audit, and/or reproduction. Furthermore, for purposes of this provision, OIG or its duly authorized representative(s) may interview any of Kindred’s or RehabCare’s Covered Persons who consent to be interviewed at the individual’s place of business during normal business hours or at such other place and time as may be mutually agreed upon between the individual and OIG. Kindred shall assist OIG or its duly authorized representative(s) in contacting and arranging interviews with such individuals upon OIG’s request. Kindred’s and RehabCare’s Covered Persons may elect to be interviewed with or without a representative of Kindred or RehabCare present.

VIII.

DOCUMENT AND RECORD RETENTION

Kindred and RehabCare shall maintain for inspection all documents and records relating to reimbursement from the Federal health care programs and to compliance with this CIA for six years (or longer if otherwise required by law) from the Effective Date.

IX.

DISCLOSURES

Consistent with HHS’s FOIA procedures, set forth in 45 C.F.R. Part 5, OIG shall make a reasonable effort to notify Kindred prior to any release by OIG of information submitted by Kindred pursuant to its obligations under this CIA and identified upon submission by Kindred as trade secrets, or information that is commercial or financial and privileged or confidential, under the FOIA rules. With respect to such releases, Kindred shall have the rights set forth at 45 C.F.R. § 5.65(d).

RehabCare and Kindred - Corporate Integrity Agreement

X.	BREACH AND DEFAULT PROVISIONS

Kindred and RehabCare are expected to fully and timely comply with all of their CIA obligations.

Stipulated Penalties for Failure to Comply with Certain Obligations

As a contractual remedy, Kindred, RehabCare and OIG hereby agree that failure to comply with certain obligations as set forth in this CIA may lead to the imposition of the following monetary penalties (hereinafter referred to as “Stipulated Penalties”) in accordance with the following provisions.

1. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day Kindred and/or RehabCare, as applicable, fails to establish and implement any of the following obligations as described in Sections III and IV:

a Compliance Officer;

a Compliance Committee;

the Board of Directors compliance obligations;

the management certification obligations;

a written Code of Conduct;

written Policies and Procedures;

the development and/or implementation of a Training Plan for the training of Covered Persons, Relevant Covered Persons, and Board Members;

a risk assessment and internal review process as required by Section III.E;

a Disclosure Program;

Ineligible Persons screening and removal requirements;

RehabCare and Kindred - Corporate Integrity Agreement

notification of Government investigations or legal proceedings;

reporting of Reportable Events; and

disclosure of changes to Kindred’s contract therapy business units or locations.

2. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day Kindred and/or RehabCare, as applicable, fails to engage and use an IRO, as required by Section III.D, Appendix A, or Appendix B.

3. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day Kindred and/or RehabCare, as applicable, fails to submit the Implementation Report or any Annual Reports to OIG in accordance with the requirements of Section V by the deadlines for submission.

4. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day Kindred and/or RehabCare, as applicable, fails to submit any report in accordance with the requirements of Section III.D and Appendix B.

5. A Stipulated Penalty of $1,500 for each day Kindred and/or RehabCare, as applicable, fails to grant access as required in Section VII. (This Stipulated Penalty shall begin to accrue on the date Kindred fails to grant access.)

6. A Stipulated Penalty of $50,000 for each false certification submitted by or on behalf of Kindred and/or RehabCare, as applicable, as part of its Implementation Report, any Annual Report, additional documentation to a report (as requested by the OIG), or otherwise required by this CIA.

7. A Stipulated Penalty of $1,000 for each day Kindred and/or RehabCare, as applicable, fails to comply fully and adequately with any obligation of this CIA. OIG shall provide notice to Kindred stating the specific grounds for its determination that Kindred and/or RehabCare, as applicable, has failed to comply fully and adequately with the CIA obligation(s) at issue and steps Kindred shall take to

RehabCare and Kindred - Corporate Integrity Agreement

comply with the CIA. (This Stipulated Penalty shall begin to accrue 10 days after the date Kindred receives this notice from OIG of the failure to comply.) A Stipulated Penalty as described in this Subsection shall not be demanded for any violation for which OIG has sought a Stipulated Penalty under Subsections 1- 6 of this Section.

Timely Written Requests for Extensions

Kindred may, in advance of the due date, submit a timely written request for an extension of time to perform any act or file any notification or report required by this CIA. Notwithstanding any other provision in this Section, if OIG grants the timely written request with respect to an act, notification, or report, Stipulated Penalties for failure to perform the act or file the notification or report shall not begin to accrue until one day after Kindred fails to meet the revised deadline set by OIG. Notwithstanding any other provision in this Section, if OIG denies such a timely written request, Stipulated Penalties for failure to perform the act or file the notification or report shall not begin to accrue until three days after Kindred receives OIG’s written denial of such request or the original due date, whichever is later. A “timely written request” is defined as a request in writing received by OIG at least five days prior to the date by which any act is due to be performed or any notification or report is due to be filed.

Payment of Stipulated Penalties

1. Demand Letter. Upon a finding that Kindred and/or RehabCare, as applicable, has failed to comply with any of the obligations described in Section X.A and after determining that Stipulated Penalties are appropriate, OIG shall notify Kindred of: (a) Kindred’s or RehabCare’s failure to comply; and (b) OIG’s exercise of its contractual right to demand payment of the Stipulated Penalties. (This notification shall be referred to as the “Demand Letter.”)

2. Response to Demand Letter. Within 10 days after the receipt of the Demand Letter, Kindred and/or RehabCare, as applicable, shall either: (a) cure the breach to OIG’s satisfaction and pay the applicable Stipulated Penalties or (b) request a hearing before an HHS administrative law judge (ALJ) to dispute OIG’s determination of noncompliance, pursuant to the agreed upon provisions set forth below in Section X.E. In the event Kindred and/or RehabCare, as applicable, elects to request an ALJ hearing, the Stipulated Penalties shall continue to accrue until Kindred and/or RehabCare, as applicable, cures, to OIG’s satisfaction, the alleged breach in dispute. Failure to respond to the Demand Letter in one of these two manners within the allowed time period shall be considered a material breach of this CIA and shall be grounds for exclusion of RehabCare under Section X.D.

RehabCare and Kindred - Corporate Integrity Agreement

3. Form of Payment. Payment of the Stipulated Penalties shall be made by electronic funds transfer to an account specified by OIG in the Demand Letter.

4. Independence from Material Breach Determination. Except as set forth in Section X.D.1.c, these provisions for payment of Stipulated Penalties shall not affect or otherwise set a standard for OIG’s decision that Kindred and/or RehabCare has materially breached this CIA, which decision shall be made at OIG’s discretion and shall be governed by the provisions in Section X.D, below.

Exclusion for Material Breach of this CIA

1. Definition of Material Breach. A material breach of this CIA means:

repeated violations or a flagrant violation of any of the obligations under this CIA, including, but not limited to, the obligations addressed in Section X.A;

a failure to report a Reportable Event, take corrective action, or make the appropriate refunds, as required in Section III.I;

a failure to respond to a Demand Letter concerning the payment of Stipulated Penalties in accordance with Section X.C; or

a failure to engage and use an IRO in accordance with Section III.D, Appendix A, Appendix B.

2. Notice of Material Breach and Intent to Exclude. The parties agree that a material breach of this CIA by Kindred or RehabCare constitutes an independent basis for RehabCare’s exclusion from participation in the Federal health care programs. The length of the exclusion shall be in the OIG’s discretion, but not more than five years per material breach. Upon a determination by OIG that Kindred or RehabCare has materially breached this CIA and that exclusion is the appropriate

RehabCare and Kindred - Corporate Integrity Agreement

remedy, OIG shall notify Kindred of: (a) the material breach; and (b) OIG’s intent to exercise its contractual right to impose exclusion. (This notification shall be referred to as the “Notice of Material Breach and Intent to Exclude.”)

3. Opportunity to Cure. Kindred shall have 30 days from the date of receipt of the Notice of Material Breach and Intent to Exclude to demonstrate that:

the alleged material breach has been cured; or

the alleged material breach cannot be cured within the 30 day period, but that: (i) Kindred and/or RehabCare, as applicable, has begun to take action to cure the material breach; (ii) Kindred and/or RehabCare, as applicable, is pursuing such action with due diligence; and (iii) Kindred and/or RehabCare, as applicable, has provided to OIG a reasonable timetable for curing the material breach.

4. Exclusion Letter. If, at the conclusion of the 30 day period, Kindred fails to satisfy the requirements of Section X.D.3, OIG may exclude RehabCare from participation in the Federal health care programs. OIG shall notify Kindred in writing of its determination to exclude RehabCare. (This letter shall be referred to as the “Exclusion Letter.”) Subject to the Dispute Resolution provisions in Section X.E, below, the exclusion shall go into effect 30 days after the date of Kindred’s receipt of the Exclusion Letter. The exclusion shall have national effect. Reinstatement to program participation is not automatic. At the end of the period of exclusion, RehabCare may apply for reinstatement by submitting a written request for reinstatement in accordance with the provisions at 42 C.F.R. §§ 1001.3001-.3004.

Dispute Resolution

1. Review Rights. Upon OIG’s delivery to Kindred of its Demand Letter or Exclusion Letter, and as an agreed-upon contractual remedy for the resolution of disputes arising under this CIA, Kindred and RehabCare shall be afforded certain review rights comparable to the ones that are provided in 42 U.S.C. § 1320a-7(f) and 42 C.F.R. Part 1005 as if they applied to the Stipulated Penalties or exclusion sought pursuant to this CIA. Specifically, OIG’s determination to demand payment of Stipulated Penalties or to seek exclusion shall be subject to review by an HHS ALJ and, in the event of an appeal, the HHS Departmental Appeals Board (DAB), in a manner consistent with the provisions in 42 C.F.R. § 1005.2-1005.21.

RehabCare and Kindred - Corporate Integrity Agreement

Notwithstanding the language in 42 C.F.R. § 1005.2(c), the request for a hearing involving Stipulated Penalties shall be made within 10 days after receipt of the Demand Letter and the request for a hearing involving exclusion shall be made within 25 days after receipt of the Exclusion Letter. The procedures relating to the filing of a request for a hearing can be found at http://www.hhs.gov/dab/divisions/civil/procedures/divisionprocedures.html.

2. Stipulated Penalties Review. Notwithstanding any provision of Title 42 of the United States Code or Title 42 of the Code of Federal Regulations, the only issues in a proceeding for Stipulated Penalties under this CIA shall be: (a) whether Kindred and/or RehabCare, as applicable, were in full and timely compliance with the obligations of this CIA for which OIG demands payment; and (b) the period of noncompliance. Kindred and RehabCare shall have the burden of proving its full and timely compliance and the steps taken to cure the noncompliance, if any. OIG shall not have the right to appeal to the DAB an adverse ALJ decision related to Stipulated Penalties. If the ALJ agrees with OIG with regard to a finding of a breach of this CIA and orders Kindred and/or RehabCare, as applicable, to pay Stipulated Penalties, such Stipulated Penalties shall become due and payable 20 days after the ALJ issues such a decision unless Kindred or RehabCare requests review of the ALJ decision by the DAB. If the ALJ decision is properly appealed to the DAB and the DAB upholds the determination of OIG, the Stipulated Penalties shall become due and payable 20 days after the DAB issues its decision.

3. Exclusion Review. Notwithstanding any provision of Title 42 of the United States Code or Title 42 of the Code of Federal Regulations, the only issues in a proceeding for exclusion based on a material breach of this CIA shall be whether Kindred or RehabCare were in material breach of this CIA and, if so, whether:

Kindred or RehabCare cured such breach within 30 days of its receipt of the Notice of Material Breach; or

the alleged material breach could not have been cured within the 30 day period, but that, during the 30 day period following Kindred’s receipt of the Notice of Material Breach: (i) Kindred or RehabCare had begun to take action to cure the material breach; (ii) Kindred or RehabCare pursued such action with due diligence; and (iii) Kindred or RehabCare provided to OIG a reasonable timetable for curing the material breach.

RehabCare and Kindred - Corporate Integrity Agreement

For purposes of the exclusion herein, exclusion shall take effect only after an ALJ decision favorable to OIG, or, if the ALJ rules for Kindred and/or RehabCare, as applicable, only after a DAB decision in favor of OIG. Kindred’s and/or RehabCare’s, election of its contractual right to appeal to the DAB shall not abrogate OIG’s authority to exclude RehabCare upon the issuance of an ALJ’s decision in favor of OIG. If the ALJ sustains the determination of OIG and determines that exclusion is authorized, such exclusion shall take effect 20 days after the ALJ issues such a decision, notwithstanding that Kindred or RehabCare may request review of the ALJ decision by the DAB. If the DAB finds in favor of OIG after an ALJ decision adverse to OIG, the exclusion shall take effect 20 days after the DAB decision. Kindred and RehabCare shall waive its right to any notice of such an exclusion if a decision upholding the exclusion is rendered by the ALJ or DAB. If the DAB finds in favor of Kindred and RehabCare, RehabCare shall be reinstated effective on the date of the original exclusion.

4. Finality of Decision. The review by an ALJ or DAB provided for above shall not be considered to be an appeal right arising under any statutes or regulations. Consequently, the parties to this CIA agree that the DAB’s decision (or the ALJ’s decision if not appealed) shall be considered final for all purposes under this CIA.

XI.

EFFECTIVE AND BINDING AGREEMENT

RehabCare, Kindred and OIG agree as follows:

A. This CIA shall become final and binding on the date the final signature is obtained on the CIA.

B. This CIA constitutes the complete agreement between the parties and may not be amended except by written consent of the parties to this CIA.

C. OIG may agree to a suspension of Kindred’s and/or RehabCare’s, obligations under this CIA based on a certification by Kindred and/or RehabCare, as applicable, that it is no longer providing health care items or services that will be billed by any entity to any Federal health care program and it does not have any ownership or control interest, as defined in 42 U.S.C. §1320a-3, in any entity that bills any Federal health care program. If Kindred and/or RehabCare, as applicable, is relieved of its CIA obligations, Kindred and/or RehabCare, as applicable, shall be required to notify OIG in writing at least 30 days in advance if Kindred and/or RehabCare, as applicable,

RehabCare and Kindred - Corporate Integrity Agreement

plans to resume providing health care items or services that are billed by any entity to any Federal health care program or to obtain an ownership or control interest in any entity that bills any Federal health care program. At such time, OIG shall evaluate whether the CIA will be reactivated or modified.

D. All requirements and remedies set forth in this CIA are in addition to and do not affect (1) Kindred’s and RehabCare’s responsibility to follow all applicable Federal health care program requirements or (2) the government’s right to impose appropriate remedies for failure to follow applicable Federal health care program requirements.

E. The undersigned RehabCare and Kindred signatories represent and warrant that they are authorized to execute this CIA. The undersigned OIG signatories represent that they are signing this CIA in their official capacities and that they are authorized to execute this CIA.

F. This CIA may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same CIA. Facsimiles of signatures shall constitute acceptable, binding signatures for purposes of this CIA.

G. This CIA is by and between the parties hereto. The CIA is not intended to establish any legal rights for or confer any legal rights upon any non-governmental entities or persons not a party to the CIA. The parties agree, however, that this CIA is a public document and it may be admissible in a judicial or administrative proceeding.

RehabCare and Kindred - Corporate Integrity Agreement

ON BEHALF OF KINDRED HEALTHCARE DBA REHABCAREGROUP INC.

AND KINDRED HEALTHCARE INC.


/s/ JON B. ROUSSEAU				January 7, 2016
JON B. ROUSSEAU				DATE
President
RehabCare Group, Inc.

/s/ BEN BREIER				January 8, 2016
BEN BREIER				DATE
President and Chief Executive Officer, Kindred Healthcare, Inc.

/s/ GLENN P. HENDRIX				January 8, 2016
GLENN P. HENDRIX				DATE
Arnall Golden Gregory LLP

RehabCare and Kindred - Corporate Integrity Agreement

ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL

OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES


/s/ ROBERT K. DECONTI				January 11, 2016
ROBERT K. DECONTI				DATE
Assistant Inspector General for Legal Affairs Office of Inspector General
U. S. Department of Health and Human Services

/s/ TONYA KEUSSEYAN				January 11, 2016
TONYA KEUSSEYAN				DATE
Senior Counsel
Office of Inspector General
U. S. Department of Health and Human Services

RehabCare and Kindred - Corporate Integrity Agreement

APPENDIX A

INDEPENDENT REVIEW ORGANIZATION

This Appendix contains the requirements relating to the Independent Review Organization (IRO) required by Section III.D of the CIA.

A.	IRO Engagement

1. Kindred shall engage an IRO that possesses the qualifications set forth in Paragraph B, below, to perform the responsibilities in Paragraph C, below. The IRO shall conduct the review in a professionally independent and objective fashion, as set forth in Paragraph D. Within 30 days after OIG receives the information identified in Section V.A.8 of the CIA or any additional information submitted by Kindred in response to a request by OIG, whichever is later, OIG will notify Kindred if the IRO is unacceptable. Absent notification from OIG that the IRO is unacceptable, Kindred may continue to engage the IRO.

2. If Kindred engages a new IRO during the term of the CIA, that IRO must also meet the requirements of this Appendix. If a new IRO is engaged, Kindred shall submit the information identified in Section V.A.8 of the CIA to OIG within 30 days of engagement of the IRO. Within 30 days after OIG receives this information or any additional information submitted by Kindred at the request of OIG, whichever is later, OIG will notify Kindred if the IRO is unacceptable. Absent notification from OIG that the IRO is unacceptable, Kindred may continue to engage the IRO.

B.	IRO Qualifications

The IRO shall:

1. assign individuals to conduct the Rehabilitation Therapy Services Medical Necessity and Appropriateness Review (Rehab Medical Review) who have expertise in the Medicare requirements relating to rehabilitation therapy in skilled nursing facilities and in the general requirements of the Federal health care program(s) from which RehabCare’s customers seeks reimbursement

2. assign individuals to design and select the Rehab Medical Review sample who are knowledgeable about the appropriate statistical sampling techniques;

3. assign individuals to conduct the Rehab Medical Review who have expertise in the established practice guidelines and generally accepted standards of medical practice for rehabilitation therapy including those set forth by the American Physical Therapy Association, the American Occupational Therapy Association, and the American Speech-Language-Hearing Association; and

4. have sufficient staff and resources to conduct the review required by the CIA on a timely basis.


Kindred dba RehabCare CIA– Appendix A		1

C.	IRO Responsibilities

The IRO shall:

1. perform each Rehab Medical Review in accordance with the specific requirements of the CIA;

2. follow all applicable Medicare rules and reimbursement guidelines in making assessments in the Rehab Medical Review;

3. request clarification from the appropriate authority (e.g., Medicare contractor), if in doubt of the application of a particular Medicare policy or regulation;

4. respond to all OIG inquires in a prompt, objective, and factual manner; and

5. prepare timely, clear, well-written reports that include all the information required by Appendix B to the CIA.

D.	IRO Independence and Objectivity

The IRO must perform the Rehab Medical Review in a professionally independent and objective fashion, as defined in the most recent Government Auditing Standards issued by the U.S. Government Accountability Office.

E.	IRO Removal/Termination

1. Kindred and IRO. If Kindred terminates its IRO or if the IRO withdraws from the engagement during the term of the CIA, Kindred must submit a notice explaining (a) its reasons for termination of the IRO or (b) the IRO’s reasons for its withdrawal to OIG, no later than 30 days after termination or withdrawal. Kindred must engage a new IRO in accordance with Paragraph A of this Appendix and within 60 days of termination or withdrawal of the IRO.

2. OIG Removal of IRO. In the event OIG has reason to believe the IRO does not possess the qualifications described in Paragraph B, is not independent and objective as set forth in Paragraph D, or has failed to carry out its responsibilities as described in


Kindred dba RehabCare CIA– Appendix A		2

Paragraph C, OIG shall notify Kindred in writing regarding OIG’s basis for determining that the IRO has not met the requirements of this Appendix. Kindred shall have 30 days from the date of OIG’s written notice to provide information regarding the IRO’s qualifications, independence or performance of its responsibilities in order to resolve the concerns identified by OIG. If, following OIG’s review of any information provided by Kindred regarding the IRO, OIG determines that the IRO has not met the requirements of this Appendix, OIG shall notify Kindred in writing that Kindred shall be required to engage a new IRO in accordance with Paragraph A of this Appendix. Kindred must engage a new IRO within 60 days of its receipt of OIG’s written notice. The final determination as to whether or not to require Kindred to engage a new IRO shall be made at the sole discretion of OIG.


Kindred dba RehabCare CIA– Appendix A		3

APPENDIX B

REHABILITATION THERAPY SERVICES

MEDICAL NECESSITY AND APPROPRIATENESS REVIEW

A. Rehabilitation Therapy Medical Necessity and Appropriateness Review. Kindred shall retain an IRO to perform reviews of RehabCare’s provision of rehabilitation therapy services under contracts between RehabCare and third party owned and operated SNFs (Rehab Medical Review). The purpose of the Rehab Medical Review is to determine RehabCare’s: 1) adherence to Federal healthcare program requirements applicable to rehabilitation therapy services furnished to SNF patients under Medicare Part A and 2) conformance with practice guidelines and generally accepted medical practices applicable to rehabilitation therapy services. The IRO shall perform the Rehab Medical Review annually to cover each of the five Reporting Periods. The IRO shall perform all components of each Rehab Medical Review.

1. Definitions. For the purposes of the Rehab Medical Review, the following definitions shall be used:

Rehab Therapy Patient: A Medicare patient who is covered under Medicare Part A and who received rehabilitation therapy services from RehabCare during the patient’s stay in a third party owned or operated SNF.

Rehab Therapy Patient Population: The Rehab Therapy Patient Population shall be defined as all Rehab Therapy Patients at a randomly selected Service Location during the 12-month period covered by the Rehab Medical Review.

Service Location: A third party owned or operated SNF at which RehabCare provides contract rehabilitation therapy services.

Service Location Population: The Service Location Population shall be defined to include all Service Locations at which RehabCare provided contract rehabilitation therapy services during the prior 12-month period.

2. Sample. For the first Reporting Period, the IRO shall first randomly select 25 Service Locations from the Service Location Population. The IRO then shall select a random sample of 25 Rehab Therapy Patients from the Rehab Therapy Patient Population for each randomly-selected Service Location. For subsequent Reporting


Kindred dba RehabCare CIA– Appendix B		1

Periods, the OIG may limit the Rehab Therapy Patient Population or the Service Location Population or both to a subset of Rehab Therapy Patients or Service Locations based on Resource Utilization Group (RUG), length of stay, revenue, patient volume, geographical location or other factors determined by the OIG in its discretion. In the event that OIG exercises its discretion to limit the Rehab Therapy Patient Population or the Service Location Population, OIG shall notify RehabCare at least 60 days prior to the end of the Reporting Period of any information needed from RehabCare in order for the OIG to identify the Rehab Therapy Patient Population (e.g., RUG level, length of stay, etc.) or the Service Location Population (e.g., revenue, patient volume information, etc.). The OIG shall notify RehabCare and its IRO of the subset of Rehab Therapy Patients or Service Locations to be reviewed at least 30 days prior to the end of the Reporting Period.

For each Rehab Therapy Patient selected, the IRO shall review all rehabilitation therapy services provided to the Rehab Therapy Patient by RehabCare during the 12-month period covered by the Rehab Medical Review (Rehabilitation Therapy Services). The Rehabilitation Therapy Services shall be reviewed based on all of the portions of the medical record necessary to make the findings required under this Appendix for the selected Rehab Therapy Patient, which may include, but not be limited to, physicians’ orders, nursing records, plans of care, therapy treatment plans, daily therapy treatment notes, interim therapy progress notes, CPT logs, discharge summaries, therapy tests and measurement results. The Rehabilitation Therapy Services shall be reviewed by the IRO to determine if the services provided were medically necessary and appropriate under the applicable regulations, manuals and guidance, including but not limited to: 1) Federal healthcare program rules and regulations governing the provision of skilled rehabilitation therapy in SNFs; 2) the established practice guidelines and generally accepted standards of medical practice including those set forth by the American Physical Therapy Association, the American Occupational Therapy Association, and the American Speech-Language-Hearing Association.

The IRO’s review shall include a determination of whether RehabCare adhered to Medicare requirements related to the following:

eligibility for skilled rehabilitation therapy services;

physician order(s) for any therapy services;

comprehensive, standardized initial therapy assessments based on thorough examination and functional tests and measurements upon admission;

written evaluations describing the needs of the beneficiary including diagnosis, prognosis, physical impairments and specific functional limitations;


Kindred dba RehabCare CIA– Appendix B		2

written therapy treatment plans that list interventions that would be provided to address impairments as well as well-defined goals, measurable objectives and timetables;

provision of skilled therapy services that can safely and effectively performed only by, or under the supervision of, a qualified therapist and the service, or the condition of the beneficiary is of a nature that requires the judgment, knowledge, and skills of physical, speech, or occupational therapists, among other types of medical professionals;

provision of only therapy services that are reasonable and necessary given the beneficiary’s condition and SNF plan of care to improve, maintain, or slow deterioration of the beneficiary’s condition, or restore his or her prior levels of function;

tracking of rehabilitation therapy minutes;

provision of services according to the frequency and duration prescribed in the therapy treatment plan; and

discharge planning and drafting of post discharge therapy treatment plan.

The IRO’s review also shall include a determination of whether RehabCare adhered to established practice guidelines and generally accepted standards of rehabilitation therapy services relating to the following:

best practices in patient management including examination, evaluation, diagnosis, prognosis and intervention;

use of effective tests and measures to quantify a patient’s impairments and functional limitations;

use of appropriate interventions targeted to a patient’s specific impairments and functional limitations;

setting goals consistent with a patient’s diagnosis and prognosis;

preferred evidence-based practice patterns;

consideration of issues specific to gerontology; and

ethics and professionalism standards for therapists.


Kindred dba RehabCare CIA– Appendix B		3

3. Other Requirements.

Supplemental Materials. The IRO shall request all documentation and materials required for its review of the Rehabilitation Therapy Services selected as part of the Sample, and RehabCare shall furnish such documentation and materials to the IRO prior to the IRO initiating its review of the Sample. If the IRO accepts any supplemental documentation or materials from RehabCare after the IRO has completed its initial review of the Sample (Supplemental Materials), the IRO shall identify in the Rehab Medical Review Report the Supplemental Materials, the date the Supplemental Materials were accepted, and the relative weight the IRO gave to the Supplemental Materials in its review. In addition, the IRO shall include a narrative in the Rehab Medical Review Report describing the process by which the Supplemental Materials were accepted and the IRO’s reasons for accepting the Supplemental Materials.

Use of First Samples Drawn. For the purposes of the Sample discussed in this Appendix, the Service Locations or Rehab Therapy Patients selected in each first sample shall be used (i.e., it is not permissible to generate more than one list of random samples and then select one for use with the Sample).

4. Reporting of IRO Findings at Service Locations. RehabCare shall notify each Service Location of any Rehab Therapy Patients or Rehabilitation Therapy Services at that Service Location for which the IRO has made a determination that the Rehabilitation Therapy Services were was not medically necessary and appropriate.

B. Rehab Medical Review Report. The IRO shall prepare a Rehab Medical Review Report as described in this Appendix B for each Rehab Medical Review performed. The following information shall be included in the Rehab Medical Review Report for each Sample.

1. Rehab Medical Review Methodology.

Rehab Medical Review Population. A description of the Service Location Population and the Rehab Therapy Patient Population subject to the Rehab Medical Review.


Kindred dba RehabCare CIA– Appendix B		4

Rehab Medical Review Objective. A clear statement of the objective intended to be achieved by the Rehab Medical Review.

Source of Data. A description of the specific documentation and other information sources relied upon by the IRO when performing the Rehab Medical Review (e.g., patient medical records, RehabCare policies and procedures; Medicare carrier or intermediary manual or bulletins (including issue and date); practice guidelines issued by the American Physical Therapy Association, the American Occupational Therapy Association, and the American Speech-Language-Hearing Association; other policies, regulations, or directives; and interviews with relevant RehabCare representatives).

Review Protocol. A narrative description of how the Rehab Medical Review was conducted and what was evaluated.

Supplemental Materials. A description of any Supplemental Materials as required by Section A.3.a above.

2. Statistical Sampling Documentation.

A description or identification of the statistical sampling software package used to select the Sample.

A copy of the printout of the random numbers generated by the “Random Numbers” function of the statistical sampling software used by the IRO.

3. Rehab Medical Review Findings.

A narrative explanation of the IRO’s findings and supporting rationale (including adequacy of documentation, patterns noted, etc.) regarding whether each Rehabilitation Therapy Service reviewed by the IRO was medically necessary and appropriate.

Total number and percentage of Rehabilitation Therapy Services reviewed that the IRO determined were not supported by the medical record and not medically necessary and appropriate.


Kindred dba RehabCare CIA– Appendix B		5

A listing Rehab Therapy Patients and Rehabilitation Therapy Services at each Service Location for which the IRO has made a determination that the Rehabilitation Therapy Services were not supported by the medical record and not medically necessary and appropriate.

The IRO’s report shall include any recommendations for improvements to RehabCare’s services and processes for determining the appropriate rehabilitation services to be provided and for documenting such services, based on the findings of the Rehab Medical Review.

4. Credentials. The names and credentials of the individuals who: (1) designed the statistical sampling procedures and the review methodology utilized for the Rehab Medical Review and (2) performed the Rehab Medical Review.


Kindred dba RehabCare CIA– Appendix B		6

EXHIBIT 99.1

LOGO

Contact:

Susan E. Moss

Senior Vice President, Marketing and Communications

(502) 596-7296

KINDRED ANNOUNCES SETTLEMENT WITH

THE UNITED STATES DEPARTMENT OF JUSTICE

OVER REHABCARE INVESTIGATION

LOUISVILLE, Ky. (January 12, 2016) – Kindred Healthcare, Inc. (the “Company”) (NYSE:KND) today announced that it has entered into a settlement agreement with the United States Department of Justice (the “DOJ”) regarding a previously disclosed investigation of RehabCare Group, Inc. (“RehabCare”), a therapy services company acquired by the Company on June 1, 2011.

The settlement agreement, which relates to allegations that rehabilitation therapy services provided to patients in skilled nursing centers were not delivered or billed in accordance with Medicare requirements, includes a payment to the government of $125 million plus accrued interest from August 31, 2015, at the rate of 1.875% per annum. The Company expects to make the payment during the first quarter of 2016. The settlement agreement resolves the DOJ’s review of RehabCare’s business practices, mostly involving conduct which occurred prior to the Company’s 2011 acquisition of RehabCare.

The Company previously recorded a loss reserve of $125 million related to this matter. The Company has recorded an additional loss reserve of approximately $2 million in the fourth quarter of 2015 related to the settlement agreement and associated costs and, in connection with establishing the final terms of the settlement agreement, the Company also intends to record an income tax benefit in the fourth quarter of 2015.

RehabCare has denied engaging in any illegal activity, but in order to provide clarity for contract customers, shareholders, and government oversight entities, RehabCare agreed to the settlement without any admission of wrongdoing. The settlement will serve to avoid the cost and distraction of protracted litigation.

The Company believes that the settlement agreement fully and finally resolves the DOJ’s investigation of RehabCare previously described in the Company’s periodic filings with the Securities and Exchange Commission (the “SEC”). The settlement agreement has been approved by the DOJ and the Office of Inspector General of the Department of Health and Human Services (the “OIG”). In connection with the settlement, the Company has also entered into a Corporate Integrity Agreement with the OIG related to the provision of contract rehabilitation therapy services.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, all statements regarding the Company’s expected future financial position, results of operations, cash flows, dividends, financing plans, business

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680 South Fourth Street Louisville, Kentucky 40202

502.596.7300 www.kindredhealthcare.com

Kindred Announces Settlement with the United States Department of Justice Over RehabCare Investigation

Page 2

January 12, 2016

strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, government investigations, regulatory matters, and statements containing the words such as “anticipate,” “approximate,” “believe,” “plan,” “estimate,” “expect,” “project,” “could,” “would,” “should,” “will,” “intend,” “may,” “potential,” “upside,” and other similar expressions. Statements in this press release concerning the Company’s business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends or other financial items, product or services line growth, and expected outcome of government investigations and other regulatory matters, together with other statements that are not historical facts, are forward-looking statements that are estimates reflecting the best judgment of the Company based upon currently available information.

Such forward-looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from the Company’s expectations as a result of a variety of factors. Such forward-looking statements are based upon management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause the Company’s actual results, performance or plans to differ materially from any future results, performance or plans expressed or implied by such forward-looking statements. These statements involve risks, uncertainties and other factors detailed from time to time in the Company’s filings with the SEC.

Factors that may affect the Company’s plans, results or stock price are set forth in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Many of these factors are beyond the Company’s control. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments.

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