Life Care Centers of America To Pay $145M To Settle Fraudulent Billing Allegations

Life Care Centers of America Inc. (Life Care) and its owner, Forrest L. Preston, have agreed to pay $145 million to resolve False Claims Act allegations relating to the provision of medically unnecessary rehabilitation therapy services.

As part of the settlement, Life Care, which owns and operates more than 220 skilled nursing facilities across the country, will enter into a five-year corporate integrity agreement requiring independent annual reviews of its Medicare billings, the U.S. Department of Justice said in a statement.

The settlement resolves the allegations that over a seven year period Life Care submitted false claims to Medicare and Tricare for rehabilitation therapy services that were not reasonable, necessary, or skilled. According to federal prosecutors, Life Care allegedly billed for the highest level of Medicare and Tricare reimbursement for skilled therapy, regardless of patient needs. The agreement also settles allegations that Life Care’s owner, Forrest Preston, was unjustly enriched by the Medicare and Tricare fraud scheme.

“Billing federal healthcare 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.

This settlement is based on the lawsuits originally brought by two whistleblowers under the qui tam provisions of the False Claims Act. The act permits private parties to sue on behalf of the government for false claims against the government entities and to receive a share of any recovery.   The Government announced that the whistleblower reward in the Life Care case will be $29 million.