Federal prosecutors take aim at Life Care founder and sole shareholder

Federal prosecutors are again going after Forrest Preston, owner, founder and chairman at Cleveland, Tenn.-based Life Care Centers of America, making the same claims they did in August 2015 - that Preston unjustly benefitted from Life Care's alleged overbilling of federal health care programs.

The new complaint, filed by federal prosecutors in U.S. District Court this week in Chattanooga, comes only six months after the government dropped its attempt to add Preston personally to an ongoing, eight-year False Claims Act suit against Life Care.

Prosecutors said when they dropped Preston from the False Claims Act suit last fall they would later pursue separate action against him.

The government is now seeking an unquantified amount in damages in its suit against Preston, saying only it seeks to "recover millions of dollars that Preston unjustly received from Jan. 2010 through the present as a result of his ownership and control of Life Care Centers of America, Inc."

Preston is sole shareholder at Life Care, which operates or manages more than 200 skilled nursing, rehabilitation, Alzheimer's and senior living campuses in 28 states, including more than 20 facilities in Tennessee. Life Care is valued at $3 billion by Forbes.

The government levies at least partial responsibility on Preston for alleged institutional overbilling of federal Medicare and Medicaid programs by Life Care going back to at least early 2009. The government claims in court documents that Preston was aware of the alleged over treatment of Life Care patients and residents which resulted in the overbilling.

Medicare reportedly paid Life Care more than $4.6 billion between January 2010 and February 2016, according to the government's complaint.

Government prosecutors accuse Life Care of "setting aggressive targets at the corporate level that were completely unrelated to its beneficiaries' actual conditions, diagnoses or needs," and of reinforcing "those targets at corporate meetings and presentations, through regular emails from or visits by corporate personnel."

The complaint also claims some Life Care personnel quit over pressure to collect federal money, and some personnel were terminated after complaining about the "pressure tactics and inappropriate billing for therapy services." The government claims other facilities and personnel were rewarded for collecting federal health care money.

No response to the government's complaint had been filed in court Thursday.

But Life Care officials blasted the government's attempt to add Preston to the False Claims Act suit against the senior living company last fall.

Life Care attorneys said naming Preston personally in the False Claims Act suit was "a tactical maneuver, designed to pressure Life Care through its founder and CEO."

The company's legal team has also expressed frustration with the government's timing. The government's complaints against Preston have arisen eight years into the pre-trial process of the False Claims Act suit, which is currently in U.S. District Court.

Contact staff writer Alex Green at agreen@timesfreepress.com or 423-757-6480.