Court Denied Dismissal for Old Vineyard Behavioral Health
A federal judge allowed a False Claims Act lawsuit against the North Carolina facility to proceed to trial.
Updated on Sept. 28, 2026 in Healthcare
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The US District Court for the Middle District of North Carolina denied a motion to dismiss a whistleblower lawsuit against Old Vineyard Behavioral Health Services. The facility faces allegations that it billed Medicare for therapy sessions longer than those actually provided to patients.
Why it matters
The case highlights the federal government's ongoing enforcement of the False Claims Act to prevent healthcare providers from overbilling Medicare for services. It also clarifies the legal liability boundaries between parent companies and their individual medical facilities.
The litigation centers on allegations of fraudulent billing practices impacting Medicare claims, with the parent company Universal Health Services Inc. successfully exiting the suit.
The players
Old Vineyard Behavioral Health Services
This is a North Carolina-based facility currently facing a False Claims Act lawsuit regarding its billing practices.
Thomas D. Schroeder
He is the judge in the US District Court for the Middle District of North Carolina who issued the recent ruling.
Universal Health Services Inc.
This is the parent company of the behavioral health facility that was dismissed from the ongoing litigation.
The details
A former outpatient manager initiated the whistleblower suit, claiming the behavioral health facility routinely used incorrect billing codes to inflate session durations. While the court allowed the claims against Old Vineyard Behavioral Health Services to continue, it dismissed all charges against the parent firm, Universal Health Services Inc.
Timeline
September 25, 2026: Judge Thomas D. Schroeder issued the opinion on the motion to dismiss.
Market Landscape
The ruling follows a pattern set by the False Claims Act in allowing whistleblower suits to proceed against medical providers. This case underscores the legal risks for behavioral health facilities when internal billing practices do not align with federal Medicare requirements.
The ongoing litigation could result in increased scrutiny of billing practices at behavioral health facilities across North Carolina. Patients and stakeholders should watch for potential changes in how these facilities document and charge for therapy services in the future.
The takeaway
Healthcare providers must ensure their billing codes strictly reflect the actual duration of services provided to avoid federal legal action. Whistleblower suits remain a primary tool for government agencies to identify and prosecute potential Medicare fraud within the industry.
Further reading
For more on industry oversight, visit our Healthcare section.
Source note: This article includes information reported by Bloomberglaw.
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