Life Care Centers of America Inc. and its owner, Forrest Preston, have agreed to pay a $145 million settlement in order to resolve a lawsuit brought by the United States government, the State of Tennessee and two whistleblowers alleging Life Care submitted false claims to Medicare and TRICARE regarding rehabilitation therapy services provided to patients.
The settlement was announced on Monday by officials with the U.S. Department of Justice. Life Care, which is based in Cleveland, Tenn., owns and operates more than 220 skilled nursing facilities across the country, including one in Elizabethton.
The United States alleged in its complaints against Life Care that between Jan. 1, 2006, and Feb. 28, 2013, the company submitted false claims for rehabilitation therapy by “engaging in systematic effort to increase its Medicare and TRICARE billings.” Skilled nursing facilities providing rehabilitation therapy services to patients are reimbursed by Medicare at a daily rate that reflects the skilled therapy and nursing needs of qualifying patients — the greater the need for skilled therapy and nursing a patient has, the higher the level of Medicare reimbursement. According to court documents, the highest level of Medicare reimbursement for skilled nursing facilities is for patients classified with an “Ultra High” need, which requires a minimum of 720 minutes — or 12 hours — of skilled therapy each week from two of the three therapy disciplines (which are physical, occupational and speech), one of which has to be provided to the patient five days per week.
In the lawsuit, the United States alleged that 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 lawsuit further alleges that Life Care sought to keep patients longer than was necessary in order to continue billing for rehabilitation therapy, even after the therapists treating the patients felt that therapy should be discontinued.
“Billing federal healthcare programs for medically unnecessary rehabilitation services not only undermines the viability of those programs, it exploits our most vulnerable citizens,” said U.S. Attorney Nancy Stallard Harr for the Eastern District of Tennessee. “We are committed to working with our federal partners to protect both.”
The settlement resolves allegations originally brought in lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act by Tammie Taylor and Glenda Martin, former Life Care employees. The act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. The government may intervene and file its own complaint in such a lawsuit, which is what was done in this case. According to information from the U.S. Department of Justice, the whistleblower reward in the case against Life Care will be $29 million.
One of the whistleblowers, Martin, worked at several Life Care facilities. While she primarily worked at the company’s Heritage Center in Morristown, Martin also served for a time as the Interim Director of Nursing at various other Life Care facilities including Elizabethton, Chattanooga, and Banner Elk, N.C.
Martin filed her whistleblower lawsuit in 2008. In her complaint she lists specific instances where she alleges that Life Care participated in fraudulent practices regarding patient rehabilitation therapy. Martin also alleges that she is aware of several Life Care employees, including therapists and the rehab manager, who resigned because of Life Care’s practices and pressure to commit fraud.
The specific instances listed in Martin’s complaint deal with the Heritage Center in Morristown. None of the specific allegations in the lawsuit refer to anything that occurred at the company’s Elizabethton facility, but Martin does make a reference in the lawsuit to the time she spent working at other Life Care facilities.
“Based on her observations while working at other Life Care facilities, the practices described above are not limited to the Heritage Center facility, but represent corporate policy throughout Life Care’s skilled nursing facilities,” the lawsuit states. “As a result of these practices, Life Care has received enormous amounts of money from Medicare Part A, Medicare Part B, and Medicaid for services it knows or should know to be medically unnecessary, and often detrimental to the patient.”
The other whistleblower in the case, Taylor, filed her lawsuit complaint in 2012 and also cited specific instances of what she alleged were fraudulent practices on the part of Life Care at several of its facilities. No specific allegations were made against the Life Care of Elizabethton facility.
One of the specific complaints in the lawsuit refers to a 92-year-old patient at Life Care’s Collegedale facility in Tennessee, who is referred to in the lawsuit as “Patient F”. In that case, facility staff documented that the patient was reportedly in therapy for more than 300 minutes, or 5 hours, in a single day.
“Someone in Patient F’s physical condition would be unable to participate in or would be harmed by such an excessive amount of therapy in a single day,” the lawsuit said. “In the previous four days combined, only 205 minutes of therapy had been recorded for Patient F. There was no clinical support for the increased minutes.”
In her complaint, Taylor alleges that corporate officials pressured therapists and facilities to meet certain goals as to the number of “Ultra High” patients and the lengths of patient stays and would punish facilities or therapists who did not meet those goals.
“Life Care’s corporate strategy and pressure succeeded in significantly increasing the number of days it billed at the Ultra High level and therefore inflating the money it received from Medicare and TRICARE,” the lawsuit states. “By 2008, for example, Life Care billed nearly 68 percent of its Medicare rehabilitation days at the Ultra High level — a level far in excess of the nationwide Ultra High average of 35 percent among all skilled nursing facilities during that same year.”
The settlement also covers a separate lawsuit brought by the United States against Forrest Preston which alleges that he, as the sole shareholder of Life Care, “was unjustly enriched by Life Care’s fraudulent scheme.”
In its announcement regarding the settlement, Department of Justice officials noted the claims resolved by the settlement are allegations only and there has been no determination of liability regarding the specific claims.