Rehab company and owner agree to pay $145 million to settle whistleblowers’ allegations of claims for medically unnecessary services

by Ben Vernia | October 31st, 2016

On October 24, the Department of Justice announced that nursing home company Life Care Centers of America and its owner have agreed to pay $145 million to settle civil allegations, initially brought by two whistleblowers, that the company submitted false claims for rehabilitation services that were medically unnecessary. According to DOJ’s press release:

Life Care Centers of America Inc. (Life Care) and its owner, Forrest L. Preston, have agreed to pay $145 million to resolve a government lawsuit alleging that Life Care violated the False Claims Act by knowingly causing skilled nursing facilities (SNFs) to submit false claims to Medicare and TRICARE for rehabilitation therapy services that were not reasonable, necessary or skilled, the Department of Justice announced today.  Life Care, based in Cleveland, Tennessee, owns and operates more than 220 skilled nursing facilities across the country.

*   *   *

This settlement resolves allegations that between Jan. 1, 2006 and Feb. 28, 2013, Life Care submitted false claims for rehabilitation therapy by engaging in a systematic effort to increase its Medicare and TRICARE billings.  Medicare reimburses skilled nursing facilities at a daily rate that reflects the skilled therapy and nursing needs of their qualifying patients.  The greater the skilled therapy and nursing needs of the patient, the higher the level of Medicare reimbursement.  The highest level of Medicare reimbursement for skilled nursing facilities is for “Ultra High” patients who require a minimum of 720 minutes of skilled therapy from two therapy disciplines (e.g., physical, occupational, speech), one of which has to be provided five days a week.

The United States alleged in its complaint that Life Care instituted corporate-wide policies and practices designed to place as many beneficiaries in the Ultra High reimbursement level irrespective of the clinical needs of the patients, resulting in the provision of unreasonable and unnecessary therapy to many beneficiaries.  Life Care also sought to keep patients longer than was necessary in order to continue billing for rehabilitation therapy, even after the treating therapists felt that therapy should be discontinued.  Life Care carefully tracked the minutes of therapy provided to each patient and number of days in therapy to ensure that 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 lawsuit by the United States that Forrest L. Preston, as the sole shareholder of Life Care, was unjustly enriched by Life Care’s fraudulent scheme.

*   *   *

The Government announced that the whistleblowers, two former Life Care employees, will receive $29 million (a 20% relators’ share).

Leave a Reply

Recent Posts

Recent Comments