Nursing home giant Life Care Centers of America will pay $145 million to settle False Claims Act (FCA) litigation that alleged it billed Medicare for excess treatment. This is a record FCA settlement for the nursing industry. The deal ends two whistleblower cases as well as an unjust enrichment suit brought by the Department of Justice (DOJ) against Forrest L. Preston, owner of Tennessee-based Life Care, which has more than 200 locations. Whistleblowers Tammie Taylor and Glenda Martin, former employees of Life Care, will share a $29 million cut of the payout.

This settlement is the largest in the Justice Department’s history involving a skilled nursing chain. Its size was said to be based on Life Care’s ability to pay. The government, which joined the FCA cases in 2012, alleged excessive treatment of seniors in order to maximize Medicare reimbursement.

Life Care’s litigation has involved some of the hottest FCA issues, including the use of statistical sampling to prove liability. In 2014, a Tennessee federal judge issued a significant ruling allowing statistical sampling in Life Care’s case. Sampling dramatically streamlines FCA cases by making claim-by-claim review unnecessary. The suits against Life Care have also raised questions about the ability of the government to second-guess the treatment decisions of medical professionals. That’s been a recent area of focus in several FCA cases targeting nursing homes and hospices. Life Care was accused of “jacking up treatment” from 2006 to 2013 in order to qualify for the “Ultra High” reimbursement level that Medicare pays for the neediest patients. That level is reserved for patients who need at least 720 minutes of skilled therapy in two medical disciplines every week. The DOJ, in a statement announcing the settlement, said:

Life Care “instituted corporatewide policies and practices designed to place as many beneficiaries in the Ultra High reimbursement level, irrespective of the clinical needs of the patients.”

The company sometimes maintained treatment “even after the treating therapists felt that therapy should be discontinued,” according to the DOJ. This sort of conduct can’t be justified.

The cases are U.S. ex rel. Martin et al. v. Life Care Centers of America Inc.; U.S. ex rel. Taylor v. Life Care Centers of America Inc. and U.S. v. Preston in the U.S. District Court for the Eastern District of Tennessee.


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