Settlement may be brewing in government's longtime case against Life Care

Federal judge approves motion to halt lawsuit against Cleveland-based medical company until June 24

Life Care Centers of America, headquartered in Cleveland, Tenn.

A settlement may be on the horizon for the federal government's case against the Cleveland, Tenn., based long-term elderly care company for allegedly overbilling patients for up to a decade.

U.S. District Judge Harry "Sandy" Mattice approved a motion, filed Monday in Chattanooga's federal courthouse, asking to halt the nearly eight-year case against Life Care Centers of America until June 24.

"The parties anticipate that a settlement of this action may be possible and seek the stay to further explore settlement," the motion reads. Federal prosecutors declined to comment further Monday.

The latest development offers a glimpse of reconciliation in the government's massive false claims suit, which stems back to 2008. At that time, two former Life Care employees - one in Tennessee, the other in Florida - filed separate complaints claiming Life Care had overbilled for rehab services by keeping patients longer than necessary. The company is composed of more than 200 skilled nursing, rehabilitation, Alzheimer's and senior living campuses in 28 states, and valued at $3 billion by Forbes.

photo Forrest Preston, 83-year-old founder, single shareholder and chairman of Life Care Centers of America, was named the sole defendant in a complaint for unjust enrichment, filed by federal prosecutors in U.S. District Court on May 3, 2016.

In 2012, the U.S. government consolidated both cases. Then, in fall 2015, prosecutors said they uncovered reams of information through discovery that tied Forrest Preston, the company's owner and sole shareholder, to the day-to-day operations. They ultimately withdrew his name, but brought a separate suit against Preston earlier this month, claiming "he benefitted unjustly from Life Care's unlawful conduct, its submission of false claims and the undercapitalization of the company."

According to prosecutors' filings, in 2008 Life Care billed almost 68 percent of its Medicare rehab days at the most expensive level, while the national average hovered around 35 percent. It's unclear how many violations prosecutors are alleging against Life Care, but past records show they've asked for between $5,500 and $11,000 for each one.

Beecher Hunter, president of Life Care Centers of America, said he saw Monday's motion but had no comment.

He also declined to comment on Preston's separate suit.

Preston filed a motion Monday - an agreement between prosecutors and his defense - that extends the length of time he has to respond to the lawsuit. Now, according to the motion, Preston has until June 15 to reply.

Contact staff writer Zack Peterson at 423-757-6347 or