SNF Provider to Pay Record $145 Million False Claims Settlement

Life Care Centers of America, Inc. has agreed to pay a record-high settlement to the U.S. Department of Justice (DOJ) for violating the False Claims Act, the department announced Monday. 

The Cleveland, Tennessee-based skilled nursing provider owns and operates more than 220 skilled nursing facilities nationwide.

Life Care Centers of America and its owner, Forrest L. Preston, have agreed to pay $145 million to settle a government lawsuit that challenged the provider’s activities between 2006 and 2013. The lawsuit claimed that Life Care violated the False Claims Act by knowingly having skilled nursing facilities submit false claims to Medicare and TRICARE for rehabilitation therapy services that were not necessary, reasonable and/or skilled, according to a DOJ press release.


“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 in the press release.

The $145 million settlement, which was based on Life Care Centers of America’s ability to pay, resolves claims that the provider made a systematic effort to increase its TRICARE and Medicare billings by submitting false claims for rehabilitation therapy between Jan. 1, 2006, and Feb. 1, 2013.

Specifically, the company implemented corporate-wide policies and practices intended to put as many beneficiaries as possible in the highest reimbursement category for therapy, regardless of their medical needs, according to the investigation. This led to many beneficiaries receiving therapy that was unnecessary or unreasonable, according to the DOJ.


Additionally, the company tried to keep patients longer than necessary in order to continue billing for their rehabilitation therapy, even after treating therapists believed that therapy should be suspended. Life Care Centers of America carefully tracked the minutes of therapy provided to each patient, as well as patients’ number of days in therapy, to guarantee that as many patients as possible were at the highest level of reimbursement for the longest possible amount of time, the DOJ said.

The settlement also resolves allegations, brought in a different lawsuit by the United States, that Forrest L. Preston was unjustly enriched by Life Care’s fraudulent scheme as the only shareholder of the company.

As part of the settlement, Life Care Centers of America also must now enter into a five-year, chain-wide Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General.

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“The resolution announced today demonstrates the commitment of the U.S. Attorney’s Office to aggressively pursue providers who utilize fraudulent practices to knowingly put their own financial self-interest over a duty to patients,” U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida said in the press release. “It is imperative that providers make healthcare decisions based upon a patient’s need for services rather than a self-serving desire to maximize financial profit. Our office will continue to investigate fraud allegations, in order to ensure that providers do not compromise the integrity of our public health care programs.”

Written by Mary Kate Nelson

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