Life Care Centers to Pay $145M in FCA Settlement

HealthLeaders Media News, October 25, 2016


In the largest settlement with a skilled nursing facility chain in DOJ history, federal prosecutors say Life Care Centers of America billed Medicare and TRICARE for unnecessary rehab therapy.


Life Care Centers of America, Inc. and its owner Forrest L. Preston will pay $145 million to resolve whistleblower False Claims Act allegations, the Department of Justice said Monday. The settlement is the largest FCA settlement with a skilled nursing facility chain in DOJ history.

The federal lawsuit against Cleveland, TN-based Life Care Centers alleged the SNF chain charged TRICARE and Medicare "for rehabilitation therapy services that were not reasonable, necessary, and/or skilled," DOJ stated.

Under the terms of the settlement, Life Care and its more than 220 SNFs in 28 states will enter into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General, DOJ said.

"Billing federal healthcare programs for medically unnecessary rehabilitation services not only undermines the viability of those programs, it exploits our most vulnerable citizens," said Nancy Stallard Harr, U.S. Attorney for the Eastern District of Tennessee, in remarks accompanying the announcement.

Based on the company's ability to pay, the settlement will be paid over the next three years, and includes a $45 million initial payment. The payback resolves allegations that between January 1, 2006 and February 1, 2013, Life Care submitted false claims for rehabilitation therapy in a systematic effort to increase its Medicare and TRICARE billings.

Life Care used corporatewide policies designed to place as many beneficiaries in the highest reimbursement category for therapy irrespective of the clinical needs of the patients, DOJ said.

Life Care also kept patients longer than was necessary to continue billing for rehab, even after therapists felt that therapy should be stopped. Life Care tracked the minutes of therapy provided to each patient and number of days in therapy to ensure as many patients as possible were at the highest level of reimbursement for the longest possible period.

The settlement also resolves allegations brought in a separate federal lawsuit that Preston—the sole shareholder of Life Care—was unjustly enriched by the scheme.

The federal lawsuit was initiated on whistleblower allegations made by former Life Care employees Tammie Taylor and Glenda Martin, who will share $29 million of the settlement.

Life Care quoted Preston in a media release on Monday that acknowledged the settlement but denied wrongdoing. "We deny in the strongest possible terms that Life Care engaged in any illegal or improper conduct," Preston said.

"We are, however, pleased to finally put this matter behind us, without any admission of wrongdoing, and we look forward to continuing our efforts to deliver quality care and services to our patients, residents, and their families."

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