Now seven years removed from the genesis of a federal False Claims Act lawsuit against Cleveland, Tenn.-based Life Care Centers of America, the federal government is withdrawing its motion to add Life Care Chairman and sole shareholder Forrest Preston as a defendant.
In August, federal prosecutors asked for permission to name Preston personally in the False Claims lawsuit, which originated in 2008 out of complaints against Life Care by two former employees who accused Life Care of intentionally overbilling the government for health care services.
Forrest PrestonThe government sought to add a count of unjust enrichment against Preston, saying he knew and encouraged the behavior that led to the alleged Medicare and Medicaid fraud, and that he, as sole shareholder, was the ultimate beneficiary of the company's overbilling.
Life Care officials condemned the move and said the government was attempting "a tactical maneuver, designed to pressure Life Care through its founder and CEO" by going after Preston personally. Attorneys representing the company said the government was trying to drag out and derail the case, and that no new evidence was available to spur the motion.
Life Care also questioned why the government would wait seven years to go after Preston, when prosecutors had already opted out of pursuing action against Preston earlier in the proceedings.
Life Care took its challenges to court.
After swapping licks in court documents and hearings, federal prosecutors asked last week to drop the motion to add Preston, though they stand by the belief that they have enough evidence to pursue a case against him.
In the motion to amend, prosecutors said at an October hearing, "the Court observed that the United States could have filed the proposed claim against Mr. Preston in a separate civil action."
Prosecutors said they will pursue a separate civil case against Preston.
Life Care began in 1970, when Preston opened the doors of Garden Terrace Convalescent Center, now Life Care Center of Cleveland.
Over the next 40 years, Preston expanded his company to include more than 200 skilled nursing, assisted living, retirement living and Alzheimer's care facilities in 28 states. Preston, in the process, grew to become a titan and godfather of the American senior living industry.
Life Care today is one of the largest privately owned senior living corporations in America, with an estimated annual income of more than $2 billion, according to Forbes.
Contact staff writer Alex Green at agreen@timesfreepress.com or 423-757-6480.