The U.S. Department of Justice announced on October 24, 2016 that a Tennessee-based corporation that owns and operates more than 220 nursing homes (skilled nursing facilities) throughout the United States, and it owner, have agreed to pay $145 million to settle the government’s claims that they engaged in wrongful activities that resulted in false claims being submitted to federal health care programs (Medicare and TRICARE) for rehabilitation therapy services that were not reasonable, necessary, or skilled.
The United States alleged that Life Care Centers of America Inc. (“Life Care”) instituted corporate-wide policies and practices designed to place as many beneficiaries in the “Ultra High” reimbursement level irrespective of the clinical needs of the patients, resulting in the provision of unreasonable and unnecessary therapy to many beneficiaries.
The “Ultra High” level is the highest level of Medicare reimbursement for skilled nursing facilities for residents who require a minimum of 720 minutes of skilled therapy from two therapy disciplines (e.g., physical, occupational, speech), one of which has to be provided five days a week. The greater the skilled therapy and nursing needs of the patient, the higher the level of Medicare reimbursement.
The United States further alleged that Life Care also sought to keep patients longer than was necessary in order to continue billing for rehabilitation therapy, even after the treating therapists felt that therapy should be discontinued (Life Care carefully tracked the minutes of therapy provided to each patient and the number of days in therapy to ensure that as many patients as possible were at the highest level of reimbursement for the longest possible period, according to the government’s allegations).
In a separate lawsuit, the United States alleged that Life Care’s owner, who is the sole shareholder of Life Care, was unjustly enriched by Life Care’s fraudulent scheme. That lawsuit was also part of the settlement.
In addition to the $145 million payment, Life Care entered into a five-year, chain-wide Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General that requires an independent review organization to annually assess the medical necessity and appropriateness of therapy services billed to Medicare.
The settlement covers the period from January 1, 2006 through February 28, 2013.
The settlement was the result of lawsuits filed under the qui tam provisions of the False Claims Act by two former Life Care employees. The whistleblowers will receive $29 million from the settlement, as provided by the False Claim Act.
In announcing the settlement, the U.S. Department of Justice stated that the claims resolved by the settlement are allegations only and there has been no determination of liability.
The two qui tam cases are docketed as United States ex rel. Taylor v. Life Care Centers of America, Inc., No. 1:12-cv-64 (E.D. Tenn) and United States ex rel. Martin v. Life Care Centers of America, Inc., No. 1:08-cv-251 (E.D. Tenn). The case against the owner is captioned United States v. Preston, No. 1:16-cv-113 (E.D. Tenn).
If you have information regarding false claims having been submitted to Medicare, Medicaid, TRICARE, other federal health care programs, or to other federal agencies/programs, and the information is not publically known and no actions have been taken by the government with regard to recovering the false claims, you should promptly consult with a False Claims Act attorney (also known as qui tam attorneys) in your U.S. state who may investigate the basis of your False Claims Act allegations and who may assist you in bringing a qui tam lawsuit on behalf of the United States, if appropriate, for which you may be entitled to receive a portion of the recovery received by the U.S. government.
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