Life Care Centers of America agrees to $145 million settlement

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

Life Care Centers of America, the nation's largest private nursing home company based in Cleveland, Tenn., has agreed to pay $145 million over charges that it overbilled the government for its cost of treating patients, the U.S. Department of Justice announced today in a landmark settlement.

In the works since at least May, the settlement is the "largest with a skilled nursing facility chain in the Department's history," according to Principal Deputy Assistant Attorney General Benjamin Mizer.

The Department of Justice says Life Care and its owner, Forrest L. Preston, knowingly caused skilled nursing facilities to submit false claims to Medicare for therapy services that weren't reasonable or necessary.

Life Care, which operates more than 220 skilled nursing facilities across the country, must also enter into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services in the inspector general's office as part of the settlement.

Nancy Stallard Harr, U.S. Attorney for the Eastern District of Tennessee, praised her federal partners' work in the nearly eight-year case in a statement.

"Billing federal healthcare programs for medically unnecessary rehabilitation services not only undermines the viability of those programs," she said, "it exploits our most vulnerable citizens."

This settlement specifically tackles allegations from Jan. 1, 2006, to Feb. 1, 2013.

During that seven-year window, Life Care instituted corporate-wide policies that placed as many patients as possible in the highest reimbursement category for therapy - regardless of their individual needs, according to federal prosecutors.

Reimbursements are payments that a third party, usually an insurance company, makes for a patient to the medical provider.

Prosecutors says the settlement also resolves a separate lawsuit that claimed Preston was "unjustly enriched" by the fraudulent scheme.

Prosecutors brought the separate action against Preston this year around the same time they announced a possible settlement.