Nursing home chain Life Care to pay largest settlement of its kind in DOJ history

Nursing home chain Life Care to pay largest settlement of its kind in DOJ history

DOJ says $145 million overbilling settlement is "largest settlement with a skilled nursing facility chain in the department's history."

October 25th, 2016 by Steve Johnson in Local Regional News

Staff File Photo by Angela Lewis Foster / Life Care Centers of America have agreed to pay the U.S. Department of Justice $145 million to settle claims they overcharged Medicare and TRICARE for services provided to elderly patients.

Photo by Angela Lewis Foster /Times Free Press.

Forrest Preston

Forrest Preston

Photo by Contributed Photo /Times Free Press.

Life Care Centers of America, the Cleveland-based skilled nursing home chain, and its sole owner, Forrest L. Preston, have agreed to pay the U.S. Department of Justice $145 million to settle claims they overcharged Medicare and TRICARE for services provided to elderly patients.

Document: Life Care DOJ Settlement

The U.S. Department of Justice announced on Oct. 24 that Life Care Centers of America had agreed to pay $145 million to resolve false claims act allegations.

The government alleged Life Care staffers were ordered to provide therapy to nursing home residents even if it was not needed, and kept patients in the facility unnecessarily in order to bill extra days to Medicare or TRICARE.

Document: Life Care lawsuit

Federal prosecutors allege that billionaire Forrest Preston, founder and owner of Life Care Centers of America, knowingly overbilled Medicare over a number of years and directly benefitted from the false reimbursement claims his company filed.

Medicare is the U.S. government program to provide medical insurance for those 65 and older, while TRICARE provides civilian health benefits for U.S military personnel, including retirees and their dependents.

"Billing federal health care programs for medically unnecessary rehabilitation services not only undermines the viability of those programs, it exploits our most vulnerable citizens," said Nancy Stallard Harr, U.S. attorney for the Eastern District of Tennessee.

In a statement Monday, Life Care denied any wrongdoing.

"We deny in the strongest possible terms that Life Care engaged in any illegal or improper conduct," said Preston, Life Care president, founder and sole owner. "We are, however, pleased to finally put this matter behind us, without any admission of wrongdoing, and we look forward to continuing our efforts to deliver quality care and services to our patients, residents, and their families."

Under the agreement, Life Care will pay $45 million immediately and then the additional $100 million over a period of three years, according to the company.

The company also agreed to participate in a five-year "corporate integrity agreement," to ensure its procedures comply with federal regulations.

The agreement announced Monday settles both the DOJ's claim against the company and a separate complaint against Preston alleging he had been "unjustly enriched by Life Care's fraudulent scheme."

"This resolution is the largest settlement with a skilled nursing facility chain in the department's history," Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the DOJ's Civil Division, said Monday. "It is critically important that we protect the integrity of government health care programs by ensuring that services are provided based on clinical rather than financial considerations."

The legal action was spurred by two whistleblowers who worked for the nursing home company.

The DOJ complaint stated that, 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.

The complaint alleged top Life Care officials set targets for patient billing that were not related to a patient's actual needs, gave out bonuses based on how well employees or facilities met those goals, and overruled or ignored the recommendations of its therapists.

In its response to the government, Life Care denied all of those allegations.

"Life Care has strongly disagreed with the allegations, and believes that it was entitled to payment for services rendered," the company said in Monday's statement. "Specifically, Life Care provided skilled, reasonable, and necessary rehabilitation therapy services, consistent with applicable standards of care and physicians' orders, to ensure that its residents were afforded the opportunity to attain the highest practicable physical, mental and psychosocial well-being."

According to the DOJ, Medicare paid Life Care more than $4.2 billion between January 2010 and February 2016.

The company owns some 200 skilled nursing, rehabilitation, Alzheimer's and senior living campuses in 28 states — 20 of them in Tennessee, including facilities in Hixson, Red Bank, East Ridge and Ooltewah in the Chattanooga area.

Life Care is solely owned by the 83-year-old Preston, whose net worth has been estimated at nearly $2 billion, according to Forbes magazine, making him one of the wealthiest people in East Tennessee.

Contact staff writer Steve Johnson at 423-757-6673, sjohnson@timesfree press.com, on Twitter @stevejohnsonTFP, and on Facebook, www.face book.com/noogahealth.


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