Life Care Centers of America To Pay $145M To Settle Fraudulent Billing Allegations

Life Care Centers of America Inc. (Life Care) and its owner, Forrest L. Preston, have agreed to pay $145 million to resolve False Claims Act allegations relating to the provision of medically unnecessary rehabilitation therapy services.

As part of the settlement, Life Care, which owns and operates more than 220 skilled nursing facilities across the country, will enter into a five-year corporate integrity agreement requiring independent annual reviews of its Medicare billings, the U.S. Department of Justice said in a statement.

The settlement resolves the allegations that over a seven year period Life Care submitted false claims to Medicare and Tricare for rehabilitation therapy services that were not reasonable, necessary, or skilled. According to federal prosecutors, Life Care allegedly billed for the highest level of Medicare and Tricare reimbursement for skilled therapy, regardless of patient needs. The agreement also settles allegations that Life Care's owner, Forrest Preston, was unjustly enriched by the Medicare and Tricare fraud scheme.

“Billing federal healthcare programs for medically unnecessary rehabilitation services not only undermines the viability of those programs, it exploits our most vulnerable citizens,” said Nancy Stallard Harr, U.S. Attorney for the Eastern District of Tennessee.

This settlement is based on the lawsuits originally brought by two whistleblowers under the qui tam provisions of the False Claims Act. The act permits private parties to sue on behalf of the government for false claims against the government entities and to receive a share of any recovery.   The Government announced that the whistleblower reward in the Life Care case will be $29 million.

About Faruqi & Faruqi, LLP

Faruqi & Faruqi, LLP focuses on complex civil litigation, including securities, antitrust, consumer class actions, shareholder derivative litigation and whistleblower (Qui Tam) litigation.  The firm is headquartered in New York, and maintains offices in California, Delaware and Pennsylvania.  Since its founding in 1995, Faruqi & Faruqi, LLP has served as lead or co-lead counsel in numerous high-profile cases which ultimately provided significant recoveries to investors, consumers and employees. To schedule a free consultation with our attorneys and to learn more about your legal rights, call our offices today at (877) 247-4292.

About T. Talyana Bromberg

Talyana Bromberg is a partner in Faruqi & Faruqi, LLP’s Pennsylvania office and chair of its False Claims Litigation group.  Ms. Bromberg focuses her practice on representing whistleblowers in Medicare and Medicaid fraud cases, educational, financial, tax, defense contractors’ fraud and matters involving bribery under the Foreign Corrupt Practices Act.

Ms. Bromberg was a lead attorney representing whistleblower Ronald Streck in the lawsuits against pharmaceutical manufacturers AstraZeneca Pharmaceuticals LP, Cephalon, Inc., and Biogen Inc. relating to underpayment of Medicaid rebates, with a settlement totaling $55.5 million. She represented whistleblowers in pharmaceutical lawsuits against Abbott Laboratories related to off-label promotion and payment of kickbacks for anti-seizure drug Depakote that resulted in a $1.6 billion settlement; against GlaxoSmithKline related to unlawful marketing tactics and kickbacks for GSK drug Advair for a $1.04 billion settlement; and against Pfizer for alleged illegal promotion of its kidney transplant drug Rapamune, resulting in $257 million settlement.

The False Claims Act allows whistleblowers to sue those who commit fraud against the government and to receive between 15 and 30 percent of the recovered funds. The law covers fraud involving any government-funded contract or program, including Medicare, Medicaid, military, transportation, housing, educational, agricultural, or other program. Separate IRS, SEC and CFTC whistleblower programs cover federal tax fraud, securities and commodities fraud. Since 1986, whistleblowers have helped the government to recover more than $40 billion by bringing lawsuits under the federal and state False Claims Acts.

Posted by T. Talyana Bromberg

Partner at Faruqi & Faruqi, LLP
Pennsylvania Office
Tel: (215) 277-5770
Fax: (215) 277-5771
Email: tbromberg@faruqilaw.com
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