This week’s Department of Justice “Catch of the Week” goes to Life Care Centers of America Inc. On Monday, the Tennessee-based operator of more than 220 skilled nursing facilities, and its owner Forrest L. Preston, agreed to pay $145 million to resolve charges that Life Care violated the False Claims Act by submitting claims to Medicare and TRICARE for rehabilitation therapy services that were not reasonable, necessary or skilled. It is the largest settlement with a skilled nursing facility chain in DOJ’s history. See DOJ Press Release.
According to the government, Life Care instituted corporate-wide policies and practices designed to place as many of its patients in the “Ultra High” government reimbursement category. This is the highest level of Medicare reimbursement for skilled nursing facilities and is supposed to be limited to those patients who have the highest skilled therapy and nursing needs. But Life Care placed its patients in this category irrespective of their clinical needs resulting in the provision of unreasonable and unnecessary therapy to many Medicare beneficiaries. The government claimed that Life Care also sought to keep patients longer than necessary to continue billing for rehabilitation therapy, even after the treating therapists felt the therapy should be discontinued. Life Care allegedly did this by closely tracking the minutes and days of therapy provided to each patient to ensure that as many patients as possible were at the highest level of reimbursement for the longest possible period.
In announcing the settlement, the government stressed the critical importance of providing healthcare services based on clinical rather than financial considerations. According to U.S. Attorney Nancy Stallard Harr for the Eastern District of Tennessee, “[b]illing federal healthcare programs for medically unnecessary rehabilitation services not only undermines the viability of those programs, it exploits our most vulnerable citizens.” U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida echoed this sentiment, highlighting the “imperative that providers make healthcare decisions based upon a patient’s need for services rather than a self-serving desire to maximize financial profit.”
The allegations originated in a whistleblower lawsuit filed by former Life Care employees Tammie Taylor and Glenda Martin under the qui tam provisions of the False Claims Act. They will receive a whistleblower award of $29 million from the proceeds of the government’s recovery.
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