Skilled Nursing Company to Pay $145 Million to Resolve False Claims Act Case

Whistleblower CaseOn October 24, 2016, the Department of Justice announced a settlement with Life Care Centers of America Inc. (Life Care) and its owner, Forrest L. Preston. The defendants agreed to pay $145 million to resolve a lawsuit alleging that Life Care violated the False Claims Act (FCA) 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. Life Care, which is based in Cleveland, Tennessee, owns and operates more than 220 skilled nursing facilities across the United States.

“This resolution is the largest settlement with a skilled nursing facility chain in the department’s history,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “It is critically important that we protect the integrity of government health care programs by ensuring that services are provided based on clinical rather than financial considerations.”

The settlement resolves allegations that, between January 1, 2006 and February 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 SNFs at a daily rate that reflects the skilled therapy and nursing needs of 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 SNFs is for “Ultra High” patients who require a minimum of 720 minutes of skilled therapy from two therapy disciplines (e.g., physical, occupational, or speech), one of which must be provided five days per week.

In the complaint, the United States alleged that Life Care instituted corporate-wide policies and practices designed to place as many beneficiaries in the Ultra High reimbursement level regardless 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.

“The resolution announced today demonstrates the commitment of the U.S. Attorney’s Office to aggressively pursue providers who utilize fraudulent practices to knowingly put their own financial self-interest over a duty to patients,” said U.S. Attorney Wilfredo A. Ferrer of the Southern District of Florida. “It is imperative that providers make healthcare decisions based upon a patient’s need for services rather than a self-serving desire to maximize financial profit. Our office will continue to investigate fraud allegations, in order to ensure that providers do not compromise the integrity of our public health care programs.”

The settlement, which was based on the company’s ability to pay, is a great reminder that employees are given tremendous power under the FCA to rectify fiscal wrongdoing that they observe in the workplace. In this case, the whistleblower reward for filing their qui tam whistleblower lawsuit will be $29 million for relators Tammie Taylor and Glenda Martin.

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