DOJ Announces $145 Million False Claims Settlement with Life Care Centers of America.

Date posted: November 1, 2016

The United States Department of Justice (DOJ) recently announced that Life Care Centers of America, Inc. (Life Care) will pay $145 million to settle alleged False Claims Act violations.  The settlement also resolves allegations that Life Care’s owner and sole shareholder was unjustly enriched as a result of the fraudulent claims.  Life Care owns and operates over 200 skilled nursing facilities (SNFs) in the United States.

Medicare reimburses SNFs at a daily rate, paying higher amounts for patients requiring greater levels of therapy and nursing care.  Patients in the “Ultra High” category, the highest level of reimbursement, require at least 720 minutes of skilled therapy from two disciplines, such as physical, occupational, or speech.  The government alleged that Life Care knowingly billed Medicare for rehabilitation services that were not skilled, reasonable, or necessary.  Life Care’s settlement with the government is the largest with a SNF chain in DOJ history.

The government’s complaint further alleged that Life Care:

  • Instituted organization-wide policies and procedures to provide unnecessary therapy to patients;
  • Systematically placed as many beneficiaries as possible in the “Ultra High” reimbursement levels, regardless of clinical need;
  • Kept patients longer than necessary to continue billing for rehabilitation therapy, even when treating therapists recommended discontinuing therapy;  and
  • Tracked minutes and days of therapy to maximize reimbursement at the highest billing levels.

Life Care will enter into a five-year Corporate Integrity Agreement requiring the chain to engage an Independent Review Organization to evaluate therapy services billed to Medicare.  Two whistleblowers, both former Life Care employees, filed qui tam lawsuits prompting the investigation and settlement.  The whistleblowers will receive $29 million in connection with the settlements.

The DOJ Justice News article is available at:

United States Department of Justice.  “Life Care Centers of America Inc. Agrees to Pay $145 Million to Resolve False Claims Act Allegations Relating to the Provision of Medically Unnecessary Rehabilitation Therapy Services.”  Justice News.  24 Oct. 2016.

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