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Life Care's founder, chairman and CEO, Forrest Preston, personally named in government False Claims Act suit
In a strongly worded new court entry, Life Care Centers of America partly scolds the government and partly makes a case to have Forrest Preston dropped from an ongoing False Claims Act suit against the Cleveland, Tenn.-based senior living corporation.
Preston, the 82-year-old sole shareholder, CEO and chairman of Life Care, was named as a defendant in the ongoing suit earlier this month when prosecutors motioned to add a single charge of unjust enrichment against him for the alleged benefit he has reaped from the overbilling of government care programs by Life Care.
Life Care attorneys say the unjust enrichment charge is too late to be entered against Preston, and that it doesn't have the merit of good cause behind it.
Life Care's legal team alleges in court documents that the U.S. government is coming after Preston directly in "a tactical maneuver, designed to pressure Life Care through its founder and CEO" following Life Care producing "expert reports setting out in detail what proper and necessary care it has and continues to give its residents."
Forrest PrestonThe False Claims Act suit filed against Life Care Centers of America originated in 2008 when two former employees filed separate complaints against the company over alleged institutional overbilling of government care programs like Medicare and Tricare.
The suit claims that Life Care intentionally overtreated residents and made a habit of keeping residents longer than necessary in order to collect more federal money, and that top company brass knew and encouraged the behavior.
In their motion to charge Preston with unjust enrichment, federal prosecutors said the company's founder has been personally involved in the overbilling of the government care programs through his complete ownership and control of Life Care.
But the extent of Preston's involvement in company policy and workings - as well as his status as sole shareholder - shouldn't have been a seven-year question, say Life Care lawyers in a new rebuttal.
They say in court documents that Preston's ownership and authority as CEO and chairman have been known by prosecutors since November 2012 when the two 2008 False Claims Acts suits filed against Life Care were consolidated.
Life Care also claims the alleged new information cited by prosecutors in the unjust enrichment charge motion has actually been in the government's hands for years. Even the latest cited information was handed over to prosecutors more than a year ago, Life Care attorneys say.
"Given its extraordinary delay, the government should not be permitted to derail this case by adding a new party under only a catch-all 'unjust enrichment' claim, thereby necessitating a wholesale redo of over five years of pretrial work by the court and Life Care - especially because the proposed new claim is not based on any newly-discovered facts," Life Care said in court documents.
The defendant's legal team says Life Care handed over "at least 50 separate productions" to the government during the course of discovery, including "more than 131,000 paper documents, close to 78,000 emails/attachments, approximately 22,000 electronic documents and over one terabyte of electronic medical records."
Life Care says "the government's purported new facts are directed to piercing the corporate veil, but even if Mr. Preston were the alter ego of Life Care, that alone would not make him liable for unjust enrichment."
Life Care also accuses the government of racking up testimonies against Preston through deposition hearings on the False Claims Act suit against Life Care without Preston's knowledge so he might wind up a defendant in the suit under an unjust enrichment charge.
Life Care lawyers also accuse the government of "acting in bad faith" after choosing not to intervene against Preston (who was named by one of the 2008 plaintiffs) back in 2012, then doing so anyway five years later.
The corporation says considering the lateness of the added charge, the alleged lack of actual new evidence, the alleged lack of good cause, the alleged dilatory nature of the addition and the alleged prejudice to Preston and Life Care, the motion to name Preston personally should be dismissed.
Both parties appeared in U.S. District Court in Chattanooga last week.
Prosecutors were unavailable for comment on Thursday.
Contact staff writer Alex Green at agreen@timesfreepress.com or 423-757-6480.