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The many extracts on this page are from copyright material. They are reproduced here for educational purposes and to stimulate public debate about the provision of health care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes.


In March 2001 Vencor was renamed Kindred Healthcare

Disclaimer:- The material is selective and not all inclusive. The extracts do not necessarily reflect the perspective of the original. Corporate denials and explanations have not been included. No claim is made that all of the matters referred to are true. The intention is to give the flavour of the material and an idea of the extent of the allegations. Can there be so much smoke without a large fire? This is a matter of public welfare and the interests of the pubic must be placed before those of the corporations.

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Introduction to this Page

Vencor and its charismatic chairman were models of health care entrepreneurialism. They enjoyed enormous success, and were widely admired. Their credibility was such that no one would have dared challenge their integrity. They undoubtedly believed this themselves and they "internalised" this image of what they were. Financial success became a measure of their humanity.

In reality this success was built on deceit and a failure to provide the care with which they had been charged. The available information suggests that they systematically defrauded the Medicare system. Instead of spending the money which the community and government paid to provide care to its members they adopted policies which systematically reduced staffing and equipment so that many were neglected. They selected those patients whose insurance system paid best and dumped those who paid badly without considering their well being.

This page contains extracts reporting the fraud and the response of the system to it. Note that all of it was exposed by whistleblowers and none of it by surveillance.

Note that none of the fraud actions will come to court. As a consequence the reports of witnesses and the content of internal documents will never become public. I was fortunate to see unofficially some of the evidence amassed against Tenet/NME in 1994. I never obtained copies of this material because it was never presented in court. The affair was consequently underreported in the press and the public were never fully informed of what actually happened.


Justice Department Probes Medicare Billing by Vencor
The Wall Street Journal 11/18/98
By Chris Adams and Michael Moss
COMMENT:- Vencor faced a US $1.3 billion fraud claim by the end of the year 2000. This is the start of it.

Vencor Inc., the embattled health-care company, said it is the subject of an investigation by the Justice Department into its Medicare billing practices.

One person familiar with the subpoena, however, said it focused on the company's hospital operations. This person said the subpoena was "excruciatingly broad," and asked for reams of financial and other records from each of Vencor's hospitals. Included were general ledgers, expense reports, Medicare billing information and private-pay patient billings. The subpoena also asked for some information on Vencor's other operations.
Another person said the investigators were primarily interested in Vencor's billing practices, as well as whether Vencor was providing the care it was supposed.

U.S. attorney investigating Vencor;
The Tampa Tribune November 19, 1998

TAMPA - The company insists there is no connection between this probe and an earlier one regarding patient evictions.
Vencor received a subpoena for company records about two weeks ago, said Vencor spokeswoman Susan Moss. Moss would not disclose what federal authorities had requested; she called the inquiry a "routine" look at the company's Medicare billing practices.

Vencor, based in Louisville, Ky., informed its stockholders about the investigation in a U.S. Securities and Exchange Commission report this week.

Vencor suit sheds light on probe
St. Petersburg Times November 20, 1998
COMMENT:- Doctors do not figure prominently in nursing home actions as they play less part in care. Nursing is more critical. It is clear however that doctors knew what was happening and either turned a blind eye or participated. With few exceptions they did not speak out. Many clearly identified with marketplace patterns of thought and became part of the corporate system. Care for the corporation replaced care for the patient. This article is one of the few that touches on this issue.

The nursing home company is notified of a billing investigation after settling over a doctor's pre-dated progress notes.

Vencor Inc., which owns seven health care facilities in the Tampa Bay area and 273 nationwide, has not said why the federal government is investigating its Medicare billing practices. Dr. James T. Nichols may be one reason.

Nichols is a family doctor in Titusville who cares for 20 to 30 patients at Vencor's 157-bed Titusville nursing home. In April 1997, Tampa attorney James Wilkes sued the nursing home for negligence on behalf of a patient.

During depositions, Wilkes learned that the director of nursing, administrator and medical director had evidence that Nichols was generating progress reports on patients without seeing them. Identically worded reports were pre-dated and signed by Nichols for several patients. In one case, Nichols reported "vital signs are essentially normal" for a patient who had died 27 days earlier.
The nursing home administrator sent Nichols a letter complaining of the practice and noting that "in the eyes of a Medicare reviewer, these progress notes may be considered fraudulent." But no one at the nursing home alerted Medicare or Medicaid.

Wilkes did. - - - - "I told Vencor that I'd turned over my files to state and federal authorities," said Wilkes, who settled the case with Vencor for an undisclosed sum last month.

Soon afterward, the Louisville, Ky., chain received subpoenas from the U.S. Attorney's office in Tampa. Susan Moss, spokeswoman for Vencor, said the request for documents was broad.
Wilkes is suing Vencor in a class-action suit stemming from the Tampa incident, alleging widespread patient dumping. He is not sure what motivated the government's recent interest in Vencor's billing. But he has no doubt that practices like the one uncovered in Titusville led to overbilling.

"Every time the doctor and nursing home billed Medicare for care that wasn't provided, it was a false claim," said Wilkes, who has filed notice of intent to sue Nichols for malpractice. "It could amount to tens of millions of dollars."
"Nursing homes like doctors who don't interfere, who will rubber-stamp orders and authorize therapies," Wilkes said. "But they don't want someone who goes so overboard he gets caught."

In addition to filing a report on a dead patient in Titusville, Nichols filed identical reports over four months on Wilke's patient, Meadie Jordan. Although Nichols called Jordan's condition unchanged, the patient had been hospitalized and had a leg amputated.

Vencor Discloses Investigation of Its Medicare Billings
Health Care Fraud Litigation Reporter December 1998 Vol. 4; No. 3; Pg. 15

According to a spokeswoman for the company, the investigation could go on for years. "Given the current regulatory environment, this investigation is not unique," said Vencor spokeswoman Susan Moss

Nursing home company's billing is probed
The Atlanta Journal and Constitution March 31, 1999

Shares of Centennial HealthCare, - - - - received a federal subpoena for Medicare billing records.

Two other long-term care companies, Beverly Enterprises and Vencor, have also been investigated on possible Medicare billing problems. The initiative is part of a crackdown on health-care fraud commonly known as Operation Restore Trust. The five-year campaign has produced hundreds of criminal convictions and billions of dollars in savings for taxpayers. Restore Trust also has provoked criticism of investigators' tactics

U.S. joins fraud suit against Vencor --- The government claims the struggling chain of hospitals and nursing homes overbilled Medicare.
St. Petersburg Times May 21, 1999,
COMMENT:- This eventually escalated into a US $1.3 billion fraud allegation.

TAMPA - Vencor Inc., the struggling nursing home and hospital chain, has been accused by the government of overbilling Medicare in a complaint unsealed Wednesday in Tampa's U.S. District Court.

The government is joining a whistle-blower suit filed about 18 months ago by two former employees of Vencor's Central Tampa hospital. Virginia - - - - . Both women were employed at the hospital when it was acquired by Vencor from Transitional Hospital Corp. in June 1997.

The lawsuit accuses Vencor of double-billing Medicare for nursing home patients who received services from Vencor's respiratory therapy, rehabilitation and pharmaceutical subsidiaries.

All of Vencor's hospitals are named in the suit on the basis of the government's belief that the billing fraud alleged by the Tampa women was a companywide practice. The suit claims the practices date at least to 1993 and continue to date.
According to the government's lawsuit, Vencor used its hospitals and nursing homes to double dip for Medicare reimbursements. Hospital cost reports included the costs of running Vencor's respiratory, pharmaceutical and rehab subsidiaries, claiming these services were being provided to outpatients, the suit alleges. In fact, these services were going to Vencor's nursing home residents, who are not considered outpatients. By boosting the hospitals' overall costs, Vencor increased its Medicare reimbursement.

At the same time, Vencor's nursing homes were contracting with the subsidiaries on a fee-for-service basis and being reimbursed for these services by Medicare.

The suit further claims that while Vencor engaged in this fraudulent billing practice on Medicare reports, it submitted correct Medicaid hospital cost reports to the state. The suit claims Vencor treated Medicaid differently to avoid paying higher indigent care taxes

Legal Times May 24, 1999
COMMENT:- Interesting that companies including Beverly, Sun and Vencor, all charged with fraud and accused of neglecting elderly citizens can exert so much influence and get so many politicians to back their cause. How strongly money talks - even when you are bankrupt! -- so much for a social conscience.

The nursing home industry has launched a major lobbying campaign to try to regain some of the Medicare dollars it lost as a result of the Balanced Budget Act of 1997. - - - - A coalition of 10 of the nation's biggest nursing home companies has brought on some top influence brokers to help them navigate this tricky terrain.
Coalition lobbyists say Sens. Pete Domenici (R-N.M.) and Jeff Bingaman (D-N.M.) have collected 40 signatures on a letter supporting the nursing homes' position

Medical services firm sues two nursing home companies - - -Lawsuit alleges Medicare breach, seeks payment
Dallas Business Journal June 4, 1999
COMMENT:- If Vencor defrauded Medicare then it should not complain when it is defrauded by subcontractors.

NORTH DALLAS - The owners of Vencor Hospital-Dallas and Vencare Rehab Services Inc. are suing nursing home companies in Texas and Louisiana for more than $ 456,000 in unpaid invoices and violation of Medicare requirements

Kentucky-Based Long-Term-Care Provider Negotiates Restructuring Pact
COMMENT:- Shareholders rightly become very resentful when arrogant and overconfident directors act irresponsibly and also deliberately misinform and deceive them. Directors do not have a mandate to break the law, nor to misuse citizens. Vencor has done all of these things. As with Tenet/NME, Columbia/HCA, SmithKline Beecham, Sun Healthcare and many others shareholders have suffered and are seeking redress.

"There are probably already lawsuits out there."

There are. One class-action suit, filed in Louisville, alleged that Vencor and its executives misled the public, artificially inflated the value of the company by acquisitions and underestimated the effect of Medicare changes. The suit was dismissed in January and has been appealed. Another suit makes similar allegations against Vencor founder W. Bruce Lunsford, who has left Vencor but remains chairman of Ventas' board.

Massachusetts company files suit against Vencor
The Associated Press State & Local Wire June 16, 1999

A Massachusetts nursing-home company has sued Vencor Inc., accusing the struggling Louisville company of fraud and breach of contract stemming from their business transactions in 1996.

Lenox Healthcare Inc. of Pittsfield, Mass., bought 15 facilities and leased 15 others from Vencor that year.

The federal suit filed early this month accuses Vencor of "intentionally submitting inflated book values" of accounts that were part of the deal and concealing the true values from Lenox. (Lenox Healthcare Inc. of Pittsfield, Mass) - - - owes more than $ 956,000 because of its alleged misrepresentation of accounts - - - failing to pay its former employees at the nursing homes $ 871,805 - - - -failing to turn over $ 111,321 listed as a cash asset that was supposed to be part of the purchase.- - - - also is seeking another $ 128,636 for repairs and utility services that it alleges Vencor promised at other homes but didn't deliver

U.S. accuses Vencor of false claims Action also names Ventas as defendant
The Courier-Journal (Louisville, KY.) July 29, 1999
HAROLD J. ADAMS, The Courier-Journal

The U.S. Justice Department has formally accused Vencor Inc. of cheating the Medicare program out of perhaps hundreds of millions of dollars since 1993. - - - - adding its own complaint to a whistle-blower suit begun in 1997 - - - - Ventas Inc.- - - is also named as a defendant. - - - - The complaint - - centers on the nearly $ 2.4 billion in revenues brought in by Vencor's contract-services division from 1993 through 1998.
The government complaint says the Louisville-based company billed the outside nursing homes - then also charged Medicare for the same services as if they had been provided to Vencor's own hospital patients. - - - including those items in ''specially created sub-accounts . . . identified only as 'cardiopulmonary' services.''
At that time, Watney said the government was aware of Vencor's desperate financial condition and usually takes such factors into account in settlement arrangements

GAO Found Array Of Overcharges By Providers Troubled Times in Nursing Homes
Albuquerque Journal August 1, 1999, Sunday
COMMENT:- Note this fraud was before the Medicare funding changes in 1997 and reveals why the changes were made. Specific chains are not mentioned in the article.

Auditors estimate about $3.1 billion in improper Medicare payments were made in '96 and '97 - - - Medicare's $1,503 wheelchair cushions, its $45 gauze bandages and its $688-an-hour costs for occupational and speech therapy? Congress' General Accounting Office documented those overcharges and more in reports about Medicare fraud and abuse in the nursing-home industry

Vencor faces federal Medicare lawsuit
St. Petersburg Times August 03, 1999, Tuesday
COMMENT:- These practices have been going on at least since 1993. Will any of the three founders who must have known what was happening go to prison -- of course not. The greater the fraud the less chance of prison!

The company is accused of double-billing the government through a lucrative subsidiary.

In 1997, Vencor Inc. was flying high, making more than $ 3-billion caring for the elderly and chronically ill in nursing homes and long-term care hospitals nationwide. Of its revenues, more than one-fifth - $ 642-million - came from a lucrative subsidiary that contracted to provide respiratory, pharmacy and mobile radiology services to patients in nursing homes.

Now the government says that much of that contract income came from ripping off the Medicare system.- - - And in 1995, when Medicare auditors nearly stumbled on the scheme, the government claims Vencor officials consistently supplied information that was "false, fraudulent and misleading."

Modern Healthcare August 09, 1999
COMMENT:- Here is more evidence that what we are dealing with is not a single group of deviant individuals but a system wide problem. To compete successfully fraud was essential. Those who were honest failed. Columbia/HCA built its enormous success on similar practices.

In a lawsuit filed last month the federal government alleged that a major long-term-care company used a companywide scheme to defraud Medicare but kept internal records in the event the fraud was discovered and reimbursement was denied. - - - The complaint is a detailed version of a whistleblower lawsuit filed in 1997
In a similar scheme that the lawsuit claims was inspired by Vencor's approach to its cost reports, Las Vegas-based Transitional Hospital Corp. allegedly caused double-billing for contract respiratory therapy to skilled-nursing facilities from 1995 to 1997. Vencor acquired THC's 16 long-term acute-care hospitals in 1997 for $640 million

Regulators Scrutinize Nursing Home Companies' Texas Operations
FORT WORTH STAR-TELEGRAM August 18, 1999, Wednesday
COMMENT:- Note that in the year or so since Comyn replaced Dan Morales as attorney general in Texas he has extracted $US $800,000 from 25 nursing homes. Fraud is part of doing business in the aged care marketplace. Note the US $40.3 million budget devoted do this. Is $US $800,000 a good return on the money invested - or is there a better way.

State and federal regulators are stepping up their financial scrutiny of nursing homes in light of recent troubles at some companies with big operations in Texas. - - - - The concern is that financial difficulties can lead to a poor quality of care for residents.
Lehrman said his agency is keeping a particularly close eye on two operators, Sun Healthcare Group and Vencor.
To bolster the agency's oversight ability, lawmakers gave Lehrman's department a $ 5.8 million budget increase for long-term care monitoring. The department's overall budget will increase to $ 40.3 million.
Texas Attorney General John Cornyn was also given more authority to prosecute nursing home operators and to expedite the collection of penalties from operators found to provide insufficient care.

Since taking office in January, Cornyn has filed 13 civil lawsuits against 25 nursing homes. More than $ 800,000 in penalties and fees assessed to nursing home operators have been collected, up from $ 450,000 in 1998

Vencor Cost-Shifting Defrauded Medicare, U.S. Claims
CASE: False Claims Act:U.S. ex rel. Lanford v. Vencor Inc.
Government Contract Litigation Reporter August 26, 1999

Hospital owner Vencor Inc. fraudulently included costs associated with its multimillion dollar contract services business on hospital reimbursement reports, resulting in double-billing of Medicare, the United States contends in a qui tam case that it joined in May. United States ex rel. Lanford and Cavanaugh v. Vencor Inc. et al. , No. 97-2845-CIV-T-23B (MD FL, amended complaint filed July 23, 1999); see Government Contract LR , June 24, 1999, P. 5.
- - since 1993, Vencor has illegally shifted costs stemming from services provided by Vencare Inc. to hospital Medicare cost reports. Vencare is a wholly-owned subsidiary of Vencor that provides contractual health services to skilled nursing facilities (SNFs).

The United States claims that the scheme has allowed Vencor to dramatically increase cost-to-charge ratios and, in turn, improperly increase total cost report reimbursements.

The targeted Vencare contracts cover respiratory therapy, pharmacy, and mobile radiology services provided to patients at the SNFs. According to the allegations, Vencor hospitals, which provided the Vencare services, failed to identify a separate revenue-producing category, called a "cost center," on Medicare cost reports for the Vencare business. Rather, the government claims, the hospitals folded Vencare operating expenses into existing hospital cost centers by creating subaccounts for these charges

Vencor, Ventas face more lawsuits
The Associated Press State & Local Wire September 11, 1999, Saturday,
COMMENT:- A similar fraud in another Vencor subsidiary

Vencor Inc. and parent company Ventas Inc. face several more lawsuits as the two attempt to work out a deal in which Vencor can pay back millions of dollars in delinquent rent payments.

The existence of the suits - all but one still under seal by federal courts, but acknowledged in financial statements filed by Ventas - complicate the struggle to stabilize the finances of the two Louisville-based health care companies.

In May, Vencor and Ventas were added as defendants to a suit recently made public against a Vencor subsidiary in Arkansas. The case led to criminal convictions against four executives of the subsidiary, American X-Rays Inc. of Little Rock.

The suit was filed in 1997 by an American X-Rays employee and later taken up by the U.S. Department of Justice.
The American X-Rays case relates to portable X-ray and diagnostic services that the company provided to nursing homes between 1992 and 1998.

Medicare pays only one transportation fee for each trip the company makes to a nursing home, no matter how many X-rays are taken at the home. But the suit says American X-Rays charged a separate fee for each service provided and each patient served per trip.

American X-Rays' president Michael Falkner and regional managers Cheryl Peterson, Ruth Ferguson and Martin were all convicted of one count of conspiracy and multiple counts of filing false claims and mail fraud. The mail fraud charge, the most serious, carries a penalty of not more than 30 years in prison and/or a fine of up to $ 1 million.

In the ongoing civil case, the government is seeking no less than $ 1 million and triple damages

Vencor executive sentenced to 37 months in Arkansas case
The Courier-Journal (Louisville, KY.) September 24, 1999, Friday

A Vencor Inc. executive convicted of defrauding Medicare was sentenced to 37 months in jail yesterday by a federal judge in Arkansas.

Ruth Ferguson and three others were convicted in May of conspiracy, filing false claims and mail fraud. All worked for American XRays, a Vencor subsidiary. - - - convicted of bilking Medicare of $ 560,000,
The Arkansas litigation is one of several whistleblower suits pending against Vencor and sister company Ventas

3 more from Vencor unit sentenced
The Courier-Journal (Louisville, KY.) September 25, 1999, Saturday

Michael Falkner, president of American X-Rays Inc., was sentenced yesterday to four years in prison to be followed by three years of probation, according to U.S. Attorney Paula Casey.

American X-Rays regional managers Cheryl Peterson and Frank Martin each were sentenced to 37 months in prison and three years of probation by federal Judge Susan Wright. That's the same sentence that another regional manager, Ruth Ferguson, received Thursday. Each of those three also must pay restitution amounts that are still being worked out.
The criminal case sprang from a civil whistle-blower suit that is pending. The government is seeking no less than $ 1 million and triple damages in the civil case.

It is not known how many such cases exist because most are still sealed by court order. - - Only one other case has been unsealed: a Florida suit that accuses Vencor of double-billing Medicare for pharmacy, therapy and mobile radiology services provided to outside nursing homes by its Vencare contract-services division between 1993 and 1998

Four from X-ray firm sentenced to prison for Medicare scheme
The Arkansas Democrat-Gazette September 25, 1999, Saturday

Vencor courts deal on U.S. claims Resolution would give Ventas bill for $ 104 million
The Courier-Journal (Louisville, KY.) October 7, 1999, Thursday

A Vencor Inc. attorney said this week that the company is seeking to negotiate a ''global resolution'' of all United States government claims against it. Such a solution would include paying additional millions in cash and giving up credits for money the government owes the company

Attorneys General Meet On Health Care
The Wall Street Journal 10/27/1999
By Geeta O'Donnell Anand

The attorneys general from all six New England states plan to meet Friday in Boston to forge a common strategy for handling a plethora of problems they face in the health-care industry.
Maine's Mr. Ketterer say the attorneys general, as the statutory representatives of nursing-home residents, also need to strategize on how to handle a spree of recent nursing home bankruptcies. Three major owners of nursing homes in the region -- NewCare Health Corp. of Atlanta; Vencor Inc. of Louisville, Ky.; and Sun Healthcare Group Inc. of Albuquerque, N.M. -- recently sought bankruptcy-court protection.
Perhaps most baffling to the attorneys general has been the question of how to respond to health care providers' complaints that they are suffering because of federal Medicare cutbacks and need to cut back on some services. Attorneys general, as regulators of nonprofit health-care providers, are trying to figure out how much the cutbacks have really affected providers and whether to do anything about it

Former Vencor employee sentenced to 37 months in embezzlement case
The Associated Press State & Local Wire December 2, 1999, Thursday,
COMMENT:- Vencare was busy helping itself to at least US $333 million of Medicare's funds by double billing. At the same time one of its employees helped herself to a few thousand dollars of Vencor's money.

Now politicians are falling over themselves to help Vencor by legislation. The department of justice is helping by reducing its fines and by allowing it to pay in gradual installments. While Lunsford, Barr and Smith who presided over the defrauding of Medicare enjoy their past bonuses this employee loses all her possessions, must repay the fraud and goes to prison.

A former business manager at the now-bankrupt Vencor Inc. has been ordered by a federal judge to repay more than $485,000 she had bilked from the company.

U.S. District Judge John G. Heyburn II also sentenced Susan G. Oldham, 43, of La Grange, to 37 months in a federal prison.

Oldham was in charge of billings and collections staff for the company's Vencare Ancillary Services division in June 1997 when she began making payments to a company called Insurance Processing Center, to reimburse health care providers, Assistant U.S. Attorney Jim Lesousky said. "It was just a fictitious company," Lesousky said.
She also forfeited about $108,000 in personal possessions that include a home, horses, livestock and a small amount of cash, Lesousky said

Vencare chief leaves post; gets $ 530,400
The Courier-Journal (Louisville, KY.) December 23, 1999, Thursday
COMMENT:- Vencare's chief in contrast gets a gift larger than the employees fraud. In fairness the article claims Vencare's fraud occurred before his time but?

The president of Vencor Inc.'s Vencare ancillary-services division has left the company. And a monthly financial report that Vencor is required to file with U.S. Bankruptcy Court during its Chapter 11 reorganization shows Frank Anastasio got a severance payment of $ 530,400 in October.
- - - settle whistle-blower lawsuits that accuse it (Vencor) of using Vencare in a massive scheme to overbill Medicare . - - - Vencor has tentatively agreed to repay at least $ 130 million and forego certain payments from the government

For the record
Modern Healthcare January 31, 2000, Monday

Feds to join Vencor whistleblower cases. The U.S. Justice Department will intervene in "all remaining qui tam actions" connected to a 2-year-old federal investigation of Vencor hospitals and nursing homes in an action that could speed settlement talks between the Louisville, Ky.-based company and the government

Feds join suits against Vencor
Modern Healthcare February 28, 2000, Monday
COMMENT:- Illegal kickbacks to doctors are part of almost every fraud suit. They bribe doctors to induce them to refer patients, to order and comply with moneymaking treatment and to look the other way when care is not what it should be. It is known as incentivisation - a part of modern microeconomic reform.

The federal government has intervened in two more civil whistleblower fraud lawsuits against Vencor, bringing the total to four.

Previously unsealed suits accused the Louisville, Ky. -based long-term-care company of double-billing Medicare for ancillary services.

In the first of the two new complaints, Vencor is accused of a national policy of plying physicians with kickbacks, providing medically unnecessary care to Medicare patients and minimizing care to Medicaid patients, delaying discharges to maximize reimbursement, and overcharging Medicare for oxygen and other medical supplies. - - - - "these various schemes resulted in millions of false or fraudulent Medicare claims," each of which could mean a fine of up to $10,000.
In the second complaint- - three employees of a Vencor -operated hospice accused the company of admitting inappropriate patients to hospice care in an attempt to maximize Medicare reimbursements

U.S. seeks $1.3 billion from nursing home company
The Associated Press March 14, 2000, Tuesday,

The Justice Department is seeking more than $1.3 billion from Vencor, Inc., alleging that the large national nursing-home company has defrauded government health care programs since 1992.

The department made its claims in two filings with the U.S. Bankruptcy Court in Delaware.
In one filing, the Justice Department sought $1.01 billion plus undetermined civil penalties for fraudulent reimbursement claims the company allegedly made against government programs from 1992 to the present. It said the civil penalties amount to $5,000 to $10,000 for each false claim.

Miller said those claims came in the Medicare, Medicaid and federal military health care programs. Some of the claims are trebled in calculating damages under the False Claims Act, Miller said.
The other filing sought more than $290 million. It said more than $289 million was overpayments the company allegedly obtained from Medicare from 1994 through the present. In addition, the government claimed more than $1 million in civil penalties related to those overpayments from 1998 through the present


Vencor Faces $1 Billion Claim; U.S. Seeking Medicare Repayments
The Washington Post March 14, 2000, Tuesday, Final Edition
COMMENT:- Vencor defrauded by US $ 333 million - the law requires triple damages, US $1.3 billion as a deterrent but if looks as if Vencor will only pay US $130 million. Not a word about prison, or even fines for the individuals primarily responsible.

But Vencor, like several big nursing-home chains, is operating under the protection of a federal bankruptcy court. So it is unclear how much taxpayers could recover even if the Justice Department prevails in its civil claims. The government might have to stand in line to collect along with other creditors.
The Vencor case illustrates a predicament the government faces as it attempts to recoup money it believes was defrauded from federal health insurance programs such as Medicare. In some cases, a Chapter 11 bankruptcy can impede its efforts; in others the financial weakness of the companies can force the government to accept less than full repayment.

In October, the Louisville Courier-Journal reported that Vencor and the Justice Department were negotiating a settlement that called for $ 130 million of repayments to the government over five years.
Justice spokesman Miller said the $ 1 billion the government claimed in Vencor's Delaware bankruptcy proceeding includes the triple damages provided by law. That implies that the government estimates the total amount defrauded was about $ 333 million.

But the government may recover only a fraction of its claim.

"It's troubling because the amount that we believe was falsely claimed and paid to Vencor far exceeds what the government will be paid back," said Kenneth Nolan, an attorney in a whistle-blower suit against the company.
Government officials say they try not to press a company so hard that the patients who depend on a company for care would suffer.

"We are very careful to ensure that first and foremost patient care is protected, even if that means we have to compromise some part of our financial rights," said Lewis Morris, assistant inspector general at the Department of Health and Human Services, which oversees Medicare.
"A number of highflying nursing-home chains appear to have incorporated defrauding Medicare as part of their business strategy," Bentivoglio (counsel for health-care fraud at the Justice Department) said

U.S. says Vencor owes it $ 1.3 billion Claim based largely on fraud charges
The Courier-Journal (Louisville, KY.) March 15, 2000, Wednesday MET/METRO
COMMENT:- The allegations against Vencor are very similar to those made against Tenet/NME, Charter's Healthcare and others in Psychiatric, Substance Abuse and Rehabilitation hospitals in 1991-4.

A Justice spokesman also said yesterday that the amount - almost six times the previously disclosed claim - could grow.

Some of the allegations are outlined in five whistle-blower lawsuits filed by Vencor employees whose claims have gained formal support from the Justice Department in recent months.
The total of the two claims is far higher than Vencor lawyers initially signaled that the government might settle for when the company went into Chapter 11 bankruptcy in September. The initial settlement proposal outlined by Vencor lawyer Thomas Moloney called for repayments totaling $ 220 million.
THE JUSTICE Department has always indicated that it will take into account Vencor's ability to pay in any settlement. It has said it does not want to create such a hardship for the company that patient care is disrupted.
Suits claim ''systematically ordered medically unnecessary services'' in order to increase the amount it would receive from Medicare.

'' Vencor changed the diagnosis provided by the referring healthcare professional and inserted a diagnosis which will obtain Medicare reimbursement, often over the objection of the referring physicians.''

He also says the company has consistently billed Medicare for services that were not performed. The complaint says Vencor further padded its billings by systematically avoiding discharging patients on Fridays or holidays, ''thus unnecessarily assessing them in-patient charges (for an) extra day or an entire weekend.''

Vencor placed or kept patients in hospice care who were not sick enough for such care under Medicare guidelines, because Medicare pays more for hospice care than for regular long-term care.

Vencor subsidiary regularly performed unnecessary blood tests on kidney-dialysis patients. The suit charged that the company drew blood from those patients twice a month when only one sample was need for the tests, in an effort to boost Medicare billings

Vencor walloped for $1.3 billion; Government enters fraud and overpayment claims in bankruptcy case; more cases to come
Modern Healthcare March 20, 2000, Monday

When the long-term-care company filed for bankruptcy last September, it said it had $1.7 billion in assets. Because banks are first in the repayment queue, it's unclear how much of the unsecured claims the government will recover.
The U.S. Justice Department has joined at least 11 whistleblower lawsuits - - - - those suits allege double-billing, overbilling, kickback payments and other fraudulent practices.
Bankruptcy court Judge Mary Walrath has ruled against the states in the Sun case, setting a precedent for the other cases. The states have appealed the ruling while continuing to pay Medicaid bills. But they believe that the companies owe them thousands, if not millions, of dollars in overpayments, their attorney Caroline Brown said.

Vencor will most likely settle the federal government claims rather than pursue a lengthy legal battle, sources said. At a recent healthcare bankruptcy conference in Chicago, a lawyer for the company said the settlement could reach $800 million

Vencor to the rescue ; Bankrupt company takes over management of smaller company, also in bankruptcy
Modern Healthcare March 20, 2000, Monday

A midsized nursing home chain that last year emerged from bankruptcy is back in bankruptcy again, this time with plans to liquidate. Stepping in to manage most of the facilities as the company gets out of the business is none other than Vencor, a national chain itself in bankruptcy.

RainTree Healthcare Corp. a Phoenix-based chain with 35 facilities in six states, filed for protection,
With bankruptcy court approval, Omega (a REIT) took possession of 30 of RainTree's nursing homes and contracted with Vencor to manage them. RainTree's other five homes have been returned to their landlords.

"Our concern was to stabilize patient care," said Omega Chief Operating Officer Scott Kellman,- - - "We are far more concerned about the patients than how much money we are going to make on this, or lose on it," he said

CBS News Transcripts May 18, 2000, Thursday
COMMENT:- The full text of this television report describes the way good homes are suffering because of the conduct of the bad chains.

Tonight's Eye on America digs deep into the problem of health-care fraud. It's the latest in a series of nursing home investigations by CBS' Vince Gonzales. This time, correspondent Gonzales reports why even the best nursing homes have trouble staying up and running.


Mr. JAMES WILKES (Attorney): The industry right now is in a crisis. It's in a crisis that they've created. We have a crisis in care. We don't have a litigation crisis.
Ms. BARBARA HENGSTEBECK (Coalition to Protect America's Elders): The industry will complain about it financial problems, but it won't acknowledge its own fraud and mismanagement that caused them.

GONZALES: The amount of fraud is staggering. For example, the government recently filed a billion-dollar claim against Vencor, which runs nearly 300 nursing homes.

Ms. HENGSTEBECK: The industry says, 'Protect our pa--our parents,' but what they really want is to protect their profits

Vencor and Office of Inspector General Agree On Quality Improvement Plan in Corporate Integrity Agreement
Business Wire August 8, 2000, Tuesday
COMMENT:- The solution to gross dishonesty and corruption is not prison but to sign an an integrity agreement with people who have shown themselves to be without integrity! If you couldn't detect fraud and mistreatment without whistle blowers how are you going to enforce this. As John Ralston Saul has indicated we increasingly live in a world of abstractions which have little if any connection with the real world.

Vencor, Inc. (the "Company") announced today it has entered into a Corporate Integrity Agreement with the Office of the Inspector General ("OIG") of the Department of Heath and Human Services. Under the agreement, Vencor will implement a comprehensive internal quality improvement program in its nursing centers and long-term hospitals and its regional and corporate offices


From list in the www

COMPANY/PERSON: Vencor Inc. and Ventas Inc.
ALLEGATIONS: ãFailure of careä (billing for allegedly substandard nursing home care); improper cost report claims; overbilling for respiratory care services and supplies
AMOUNT: $104.5 million ($20 million for failure of care allegations, $54 million for improper cost report claims, and $24 million for respiratory care services and supplies)

COMPANY/PERSON: Transitional Hospitals Corp. (acquired by Vencor Inc.)
ALLEGATIONS: Overbilling Medicare for medically unnecessary tests on terminally ill dialysis patients
AMOUNT: $1.5 million

Blowing whistle on bosses brings them millions
St. Petersburg Times March 25, 2001

COMMENT:- This article tells us about Vencor's alleged fraud and a lot about whistleblowers. Note that government allowed Vencor to settle "without admitting criminal wrongdoing". This means that they will not be barred from receiving Medicare payments so can continue to operate. Government will not have to assume responsibility for hundreds of aged care nursing homes. This is how the law is applied to corporations. How often would ordinary citizens be so lucky. In modern democratic societies corporations are far more "equal" than citizens.

By pointing out possible Medicare fraud, two former employees are entitled to part of the settlement.
To Cavanaugh, a widow who was assistant finance administrator at the hospital, and to Lanford, a divorced mother of two who was quality review manager, it looked like Vencor was padding its reports to get bigger reimbursement checks from Medicare.

Studying cost reports, Cavanaugh discovered the accounting method was increasing Vencor's reimbursement from the U.S. government dramatically, from $ 400,000 to $ 800,000 in one month.

She also heard Vencor officials openly discuss this path to higher profits.-
Ultimately, they decided to sacrifice their jobs and risk their careers by blowing the whistle on Vencor.
Last week, more than three years after the whistleblowers action was filed, Vencor announced it would settle that suit and eight others alleging false claims submitted to Medicare and Medicaid.

Without admitting criminal wrongdoing, Vencor agreed to pay $ 104.5-million, the second largest settlement in a nursing home case under the False Claims Act, U.S. Justice Department officials say.-
Justice officials determined that the two women will receive 15 percent of the $ 54.68-million. That means they will split $ 8,203,064.27 with their Fort Lauderdale attorney, Kenneth J. Nolan.

The two new millionaires were elated to learn of last week's settlement, but said their intention was never to get rich.

"The settlement will certainly help with my own retirement," said Cavanaugh, - - - - - "- - - it was never about the money. It was about doing the right thing."-
"We could have just walked away and kept our mouths shut, but we both agreed we couldn't live with ourselves if we did. After all, it looked like they were cheating all of us taxpayers."-
The Qui Tam suit filed under seal against Vencor in 1997 lists the United States of America as the plaintiff, with Virginia Lee Lanford and Gwendolyn E. Cavanaugh as relators. The suit asserted the belief that 38 Vencor Hospitals had been defrauding Medicare since 1993.-
The allegation presented by Cavanaugh and Lanford involved Vencor's Vencare outreach respiratory therapy services program, in which oxygen services were supplied to nursing homes. The nursing homes billed Medicare for the services, then repaid Vencor.

But the whistleblowers believed that Vencor had added those costs to its Medicare claims as part of a scheme to get reimbursed a second time for the same services.-
The check for $ 8.2-million should be paid to Cavanaugh and Lanford some time in May, a Justice Department spokesman said.

Vencor seems set to exit bankruptcy
Modern Healthcare March 26, 2001, Monday
Vince Galloro and Mark Taylor

- - - - Justice Department announced last week it had accepted a $104.5 million settlement of Medicare fraud charges predating the 1998 spinoff of Ventas. The Justice Department said the agreement is the largest False Claims Act settlement based on failure to provide adequate care.

Vencor and Ventas also will repay $90 million in overpayments received from Medicare and pay $25 million to resolve nonfraud Medicare claims. The companies already have paid back about one-third of the $90 million.

The former Vencor employees whose lawsuits initiated the investigation will collect $15 million from the settlement.

CASE: In re Vencor Inc.
Chapter 11 Update April 2001

COMMENT:- The total sum paid by Vencor and Ventas is 219 million. It includes patient care issues. Government originally alleged a US $1.3 billion fraud. Note government's over the top rhetoric about this low settlement. Why are they ignoring their earlier claims?

Were government wrong? Are they being lenient? Is health care so complex that they are they unable to prove the fraud? Would proving the fraud involve costly and disputed haggling over thousands of individual instances? What influence did the company's past support of politicians have on this?

Note the integrity agreement. Are these the sort of people who can be trusted to fulfill the terms of an integrity agreement involving care? Their track record is far from reassuring. Supposedly independent government monitors have been singularly ineffective in the past. Should the public accept all this?

Vencor Inc. has agreed to enter into a $219 million settlement with the government to resolve allegations of inadequate care at its nursing homes and to resolve claims filed by whistleblowers in nine separate civil False Claims Act cases.-
"This case should put the long-term care industry on notice that we will hold accountable those institutions that care for our nation's most vulnerable citizens, even where the institution has filed for bankruptcy," said Acting Assistant Attorney General Stuart E. Schiffer.

Vencor Inc., one of the nation's largest nursing home chains, and Ventas Inc., a related real estate investment trust, will pay $104.5 million to settle allegations of submitting false claims to Medicare, Medicaid, and TRICARE, - - - -. Of this, $20 million represents payment for failure of care claims, including allegations of inadequate staffing, improper care of pressure sores, and failure to meet residents' dietary needs. The settlement also resolves allegations of improper claims made on Vencor's hospital Medicare cost reports and over billing claims for respiratory care services and supplies.-
The settlement incorporates a Corporate Integrity Agreement reached last fall, which was pending approval by the bankruptcy court. That agreement resolved charges made by the government when it intervened in a False Claims Act lawsuit last year. United States ex rel. Lanford and Cavanaugh v. Vencor Inc. et al., No. 97-2845-CIV-T-23B (M.D. Fla.). The agreement is "unprecedented in its focus on ensuring excellence in the delivery of long-term care," the Office of Inspector General said at the time. The agreement creates a "quality assurance infrastructure," and Vencor has agreed to have a team of independent monitors oversee its policies, procedures and operations.

Medicare claims case settled.
The Union Leader (Manchester NH) April 06, 2001
DENIS PAISTE Union Leader Staff

CONCORD -- Vencor Inc., a health care provider based in Louisville, Ky., has agreed to pay nearly $ 200,000 to settle a civil false claims case filed in U.S. District Court in Concord, U.S. Attorney Paul M. Gagnon said this week.

The suit alleged that Vencor -owned Dover Rehabilitation and Living Center in Dover unlawfully billed Medicare for respiratory services and supplies to its residents that were excessive or medically unnecessary.-
The settlement is part of a comprehensive, national settlement between Vencor and a related real estate company and the departments of Justice, Defense and Health and Human Services resolving several false claims cases alleging improper Medicare claims and inadequate health care at long-term care facilities.

Many of the cases filed against Vencor, including the one in New Hampshire, were brought by whistleblowers on behalf of the United States in nine separate civil suits. Under Vencor's bankruptcy reorganization plan, the whistleblowers will receive more than $15 million of the $104.5 million recovered.-
Last month, the bankruptcy court in Delaware approved Vencor's reorganization plan, which transfers ownership of the company to its major creditors and releases the firm from bankruptcy.

Ventas' Tenant Emerges From Bankruptcy; Ventas Declares Quarterly Dividend of $0.22; Issues FFO and Dividend Guidance; Ventas Receives Equity Stake in Kindred Healthcare
Business Wire April 23, 2001, Monday


On the Effective Date, Ventas paid $34 million to the DOJ as part of its previously-announced settlement of all Medicare billing disputes, investigations and claims. It will pay an additional $69.6 million to the DOJ in equal quarterly installments over a period of five years, at six percent interest.

Hospital administrators split settlement in false-claims suit

The Suit: Two former hospital administrators, Gwendolyn Cavanaugh of Tampa and Virginia Lanford, formerly of Tampa, filed a lawsuit under seal in December 1997 against Vencor, - - - - .
According to the U.S. Department of Justice, Cavanaugh and Lanford will receive 15 percent of the settlement of $54.68 million, splitting more than $ 8.2 million.

Press Release May 25, 2001

COMMENT:- The timely splitting off of Vencor's assets into Vantas soon after Medicare funding was changed and some time before Vencor's bankruptcy clearly raised many questions about the legality and intention of this. A number of shareholders believe that this was all a scam to save the company at their expense. The press release speaks for itself and I include it in full.

LOUISVILLE, Ky. May 25, 2001. James M. Morris, of Morris & Morris, P.S.C., 217 North Upper St., Lexington, KY 40507, (859) 281-6981, filed a class-action law suit earlier today in the U.S. District Court, Western District of Kentucky in Louisville, No. 3:01CV-317-H, on behalf of Plaintiffs asserting claims under the Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. § 1962) and/or Bankruptcy Fraud (11 U.S.C. § 362 and 18 U.S.C. 157) against Ventas, Inc., a Delaware corporation having its principal place of business in Louisville, Kentucky.

The suit is brought by five named Plaintiffs seeking to recover damages which they sustained as a result of fraud perpetrated by Ventas f/k/a Vencor, Inc. in connection with the 1998 reorganization of the original Vencor, Inc. and its subsequent intentional misuse of the bankruptcy of a newly-created subsidiary, Vencor, Inc. to attempt to defraud Ventas's creditors and claimants.

From 1987 until April 30, 1998, Vencor, Inc. was engaged in the business of owning, operating, and acquiring health care facilities and companies engaged in providing health care services. It grew to be one of the largest providers of long-term health care services in the United States, owning dozens of acute-care hospitals, hundreds of skilled nursing facilities, and numerous nursing centers throughout the United States. On April 30, 1998, Vencor, Inc. underwent a total reorganization in which many of its former subsidiaries and affiliated corporations were merged into Vencor, Inc. and the corporation changed its name to Ventas, Inc. The company also transferred the operating portion of its hospitals, nursing facilities, and nursing centers to newly-created entities, including a new corporation which it named Vencor, Inc. -- a corporation that first began operations on May 1, 1998, but which perpetuated the image of old Vencor by using the same address, the same logo, and the same corporate structure. As set forth in the Complaint, the change of name from Vencor, Inc. to Ventas, Inc. was done secretively and with the intent to deceive the general public into believing that old Vencor still existed and that Ventas was the new company, created as a spin-off real estate investment trust.

On September 13, 1999, Vencor, Inc. filed for protection under the Bankruptcy Code after being in operation for only 16 months. Among its list of creditors, new Vencor, Inc. included a number of claimants whose claim arose against the original Vencor Inc. prior to May 1, 1998. In addition, Ventas allowed the new Vencor, Inc. to step into its shoes in pending litigation throughout the United States instead of letting it be known that the real party's name had changed to Ventas, Inc. As part of its scheme to defraud the Plaintiffs and others having claims against the original Vencor, Inc. prior to May 1, 1998, Ventas, Inc. used the bankruptcy of the newly-created Vencor, Inc. to reduce or eliminate its own liability by allowing Notices of Automatic Stay to be filed in pending litigation where Ventas was the real party in interest. As a result of the filing of new Vencor's Notices of Stay, Ventas, inter alia, improperly obstructed justice, caused needless delays, increased the cost of litigation, and fraudulently induced settlements. Based on the extent of the alleged fraud and the number of individuals involved, Plaintiffs seek $250,000,000 in damages and certification as a class.

Lawsuit accuses Ventas Inc. of fraud
The Associated Press State & Local Wire May 26, 2001

A class-action lawsuit filed in federal court accuses Ventas Inc. and several individuals, including chairman Bruce Lunsford, of fraud.

The suit filed Friday in U.S. District Court alleges that the defendants led people to think that a sister company, Vencor Inc., was responsible for claims that should have been held against Ventas.-
In May 1998, Vencor, a hospital and nursing home company founded by Lunsford, changed its name to Ventas. A new company, also called Vencor Inc., became the management partner. It assumed Ventas' debt.-
The plaintiffs in the suit are people who had claims against the original Vencor. The cases proceeded against the new Vencor rather than Ventas. -
"Simply put, there was absolutely nothing about 'new' Vencor that would put anyone on notice of the crucial fact that 'old' Vencor was now Ventas and that 'new' Vencor was a start-up operation," the suit states.

Kindred Healthcare Prepays $55.8 Million Obligation Owed to the Health Care Financing Administration
Business Wire May 30, 2001

Kindred Healthcare, Inc. (the "Company") (OTCBB: KIND) today announced that it has prepaid the $55.8 million outstanding balance in full satisfaction of its obligation owed to the Health Care Financing Administration ("HCFA"). The payment was made from the Company's available cash.

CASE: False Claims Act: U.S. ex. rel. Mitchell v. Vencor Inc. -- Attorneys, Relators Get $30 Million in Kindred's Settlement
Health Care Fraud Litigation Reporter June 2001

As part of Kindred Healthcare Inc.'s (formerly Vencor Inc.) multimillion-dollar settlement with the government, an Ohio federal district court has approved more than $30 million in attorneys' fees and relators' shares in 10 qui tam actions filed against the company and its related entities. United States ex rel. Mitchell et al. v. Vencor Inc. et al., No. Civ. C2-00-0015 (S.D. Ohio, May 22, 2001).-
The qui tam actions were resolved as part of Kindred's $219 million global settlement with the government that was approved in March as part of the company's bankruptcy reorganization plan. -
The actions alleged violations of the False Claims Act, including overbilling Medicare for respiratory care services and failing to provide adequate care to the residents at Kindred's nursing homes.

Court Reverses Fraud Suit Decision; Case against Kentucky Firms Revived
Lexington Herald-Leader June 1, 2001
By Karla Dooley

COMMENT;- This is another court action alleging fraud in Vencor's split into Ventas and Vencor in 1998. It is along the same lines.

Plaintiffs in a class-action lawsuit against Vencor Inc. and Ventas Inc. gained a victory yesterday, when the Sixth Circuit U.S. Court of Appeals reversed an earlier decision.-
In an opinion handed down yesterday, the court sent the case, which alleges "insider trading, fraudulent omissions and stock prices punctured by bad news in the health care industry," back to the U.S. District Court in Louisville.-
The suit alleges that Vencor officials knew the Balanced Budget Act of 1997 would cut federal reimbursements to Vencor, hurting the company's bottom line. The plaintiffs claim that company insiders began selling Vencor stock at the same time they told the public they were comfortable with analysts' earnings estimates.

They never varied from that mantra," Vianale said. "They knew internally what was coming."-
Vencor split into two companies in 1998. Ventas holds the real estate, which consists of hospitals and nursing homes, and a new company named Vencor was created to operate them. Vencor filed for bankruptcy protection in 1999 and re-emerged this spring as Kindred Healthcare Inc.

Another class-action suit filed in federal court last week accuses Ventas Inc. and several individuals of fraud. It alleges that the defendants led people to think that the sister company, Vencor, was responsible for claims that should have been held against Ventas.

Court sides with Vencor plaintiffs
The Associated Press State & Local Wire June 1, 2001,

(Much the same content as the above article)

Court reinstates Vencor lawsuit, Stockholders get chance to show they were misled
The Courier-Journal (Louisville, KY.) June 7, 2001
HAROLD J. ADAMS, The Courier-Journal

A federal appeals court has reinstated a class-action lawsuit on behalf of shareholders of the former Vencor Inc. The suit had been tossed out by a federal judge in Louisville.

The 1997 suit accuses the long-term-care company of misleading stockholders by projecting upbeat financial prospects for months, allowing company officers to sell their stock at a profit before revealing that earnings were really headed for a downturn.

In a 7-6 ruling, the 6th U.S. Circuit Court of Appeals in Cincinnati concluded that the points outlined by the plaintiffs ''permit a strong inference that defendants engaged in securities fraud.''
That's because Ventas, a real-estate investment trust that owns the nursing homes and other buildings operated by Vencor, is technically the continuation of Vencor - while the second company, which continued to operate nursing homes and hospitals, kept the Vencor name but technically was a new company.
The suit claims that Vencor executives knew as early as April 1997 that the funding changes would hurt the company, but didn't tell investors until late October. In the interim, six executives sold stock for nearly $ 9.5 million between July 1997 and the end of that September.

Ex-Vencor leaders want investor suit dismissed; CEO Lunsford, others accused of concealing dire outlook in 1997
The Courier-Journal November 23, 2002

Former executives of Vencor Inc. have renewed their effort to dismiss a 1998 suit claiming they concealed the company's deteriorating prospects from investors.
Its claims are similar to those in an earlier suit filed by shareholder A. Carl Helwig, which was settled this summer after getting to the door of the U.S. Supreme Court.

Kindred began life owing millions in taxes, Vencor successor has made payments since reorganization
The Courier-Journal (Louisville, KY.) June 10, 2001
HAROLD J. ADAMS, The Courier-Journal

COMMENT:- In spite of all the encouraging hype in the marketplace the new Kindred healthcare still has a lot of Vencor debts it has to pay back before it allocates profits. Extracts are on Vencor's market page.

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