On October 21, 2016, a $145 million settlement was announced between the U.S. Department of Justice and Life Care Centers of America for billing Medicare for false claims.
Two former employees of Life Care filed a lawsuit under the whistleblower provisions of the False Claims Act. The Act allows individuals to sue a provider on behalf of the government for making false claims for federal funds. The Department of Justice (DOJ) can then file its own claim, which it did in this case. The False Claims Act also allows for a reward for whistleblowers. In this case, the DOJ did file a claim, and the whistleblowers will be rewarded. In this case the whistleblower reward was $29 million.
The $145 million settlement is the largest settlement amount with a skilled nursing chain is the largest in the DOJs history. Benjamin Mizer, head of the DOJs civil division, said “It is critically important that we protect the integrity of government health care programs by ensuring that services are provided based on clinical rather than financial considerations.”
The lawsuit claimed that Life Care filed false claims from 2006 to 2013 in a “systematic effort to increase its billing to Medicare and Tricare (the insurance program for military service members and their families). Medicare and Tricare, like other state and private insurance, pays for skilled nursing care on several levels, each at a specific levels of reimbursement. The charges against Life Care was that it created “corporate-wide policies and practices” that would put patients in the highest level of skilled care, whether or not it was necessary in order to increase reimbursement amounts. The lawsuit also claimed that Life Care continued patients in the centers longer than necessary – contrary to the recommendations of the treating therapists that therapy be discontinued.
The settlement in this suit also requires of Life Care participation in an integrity agreement with the Inspector General of the Department of Health and Human Services. Under this agreement, there will be an annual review that will monitor the appropriateness of services billed to Medicare and Tricare.
Leaders of Life Care Centers of America posted a statement regarding the lawsuit on their website. The statement included a denial of the allegations, claiming “Specifically, Life Care provided skilled, reasonable, and necessary rehabilitation therapy services consistent with applicable standards of care and physicians’ orders, to ensure that its residents were afforded the opportunity to attain the highest practicable physical, mental and psychosocial well-being.”
Forrest L. Preston, owner of Life Care, said, “We deny in the strongest possible terms that Life Care engaged in any illegal or improper conduct. We are, however, pleased to finally put this matter behind us, without any admission of wrongdoing, and we look forward to continuing our efforts to deliver quality care and services to our patients, residents, and their families.”
Life Care Centers of America operates one Center in Virginia, located in New Market.
Insurance Fraud is typically a matter of financial abuse of insurance companies. In this case, the focus was on fraud committed against two Federal Government programs. It did not address possible fraud against Medicaid, which is operated by State agencies, or fraud against private insurance companies. Insurance fraud harms everyone. We pay the taxes that support Medicare, Medicaid, and more. These fraudulent practices continue to drive up the cost of care and the cost of insurance for everyone.
These practices rarely result in physical harm to patients or residents. However, the impact on private insurance or private payment of these charges could be considered abusive if they significantly reduce the total coverage allowed by an individual’s health or long-term care insurance. Insurance policies typically cover a predetermined number of days of care and therapy.
If you witness insurance fraud, please report it.