CBS Investigates Life Care Centers’ Alleged Medicare Fraud

Former Life Care Centers of America employees are speaking out against the company, which is currently under federal scrutiny amid allegations it has been overbilling Medicare millions of dollars each year for unnecessary or excessive therapy, reports CBS This Morning (CTM).

With more than 30,000 beds, Life Care Centers is the nation’s third-largest nursing home chain and was paid $4.2 billion in Medicare reimbursements between 2006 and 2011. 

A CTM investigator spoke with a few former employees who claim the company is giving patients rehab they don’t need, and billing the government for money they’re not entitled to receive.


Helen Toomey, a former assistant manager and speech therapist at one of Life Care’s Massachusetts facilities, estimates that around 40% of the therapy she was ordered to provide toward the end of her tenure at the company was unnecessary or “not reasonable” under Medicare guidelines. 

Toomey ultimately resigned—but took with her a communications notebook with patient notes that she has shared with the FBI. 

Entries in the notebook show how Life Care Centers wouldn’t let patients get discharged, according to Toomey, so Medicare billing could continue. 


The Justice Department is suing the company, which billed nearly 68% of its Medicare patient days at the highest rate possible—almost double the national average of 35% of patient days—according to a report from the Office of the Inspector General. 

That report also revealed that nearly a quarter of all Medicare payments made to nursing homes are made in error, costing taxpayers $1.5 billion a year.

The problem, says CBS This Morning, is that Medicare rarely checks to make sure care is necessary.

Regional inspector general Jody Nudelman described this practice of unchecked fraudulent billing a “growing problem,” as Medicare has yet to take significant action.

“It’s all of us that are paying the cost,” she told CBS. “Until you create incentives to bill for the right care and not for the most care, the problem will continue.” 

For its part, Life Care denies the allegations. 

“Life Care strongly disagrees with the allegations and will vigorously defend its therapy programs…[Our own analysis] indicates that Life Care’s practices have resulted in significant savings to the Medicare program…This lawsuit’s allegations second guess, after-the-fact, the trained medical professionals who prescribed the level of care provided to Medicare beneficiaries.”

View the segment.

Written by Alyssa Gerace

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