Vencor operates 216 nursing homes, eight group homes and 45 hospitals, including Northern Virginia Community Hospital in Arlington. Vencor filed for bankruptcy protection in September 1999. This settlement is part of Vencor's plan of reorganization. The company is expected to emerge from bankruptcy within the next six weeks.

The Louisville, Kentucky-based health care provider and Ventas will pay the government $25 million to resolve non-fraud based Medicare claims. Vencor will separately reimburse Medicare for other overpayments of approximately $90 million, about one-third of which has been paid to date.

"This settlement with the Department of Justice represents an excellent outcome for Ventas,'' says company president and CEO Debra A. Cafaro, who says it releases the company from all Medicare-related matters. "It requires the dismissal of all 'whistleblower' lawsuits filed against the company and joined in by the Department of Justice. This settlement was also a necessary predicate for achieving our singular objective of a successful restructuring of Vencor.''

Ventas did not admit any wrongdoing in the agreement. Its portion of the settlement--$103.6 million--includes a $34 million payment that will be made out of existing cash reserves on the effective date of Vencor's reorganization plan. The rest will be paid in quarterly installments over five years, at 6% interest. Ventas will also pay $400,000 in legal fees to the justice department.

According to the justice department, more than $20 million of the settlement comes from "failure of care" claims, which include false claims relating to inadequate staffing, improper care of bedsores and failure to meet resident's dietary needs. The remaining portions of the $104.5 million settlement include more than $54 million for improper claims made on Vencor's hospital Medicare cost reports and more than $24 million for over-billing for respiratory care services and supplies.