Nursing Home Chain Reaches Record High False Claims Act Settlement With DOJ

indest1By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

On October 24, 2016, the U.S. Department of Justice (DOJ) announced that Life Care Centers of America will be paying $145 million to end False Claims Act (FCA) litigation that alleged the company submitted false claims to Medicare for rehabilitation therapy services that were not necessary.  This settlement is a FCA record for the nursing industry and DOJ claims it is the largest in the Department’s history.

Who Blew The Whistle?

Tammie Taylor and Glenda Martin, the two whistle blowers and former employees of Life Care, will be splitting the $29 million cut of the payout that they receive as the persons who blew the whistle and filed the initial law suit.  The deal marks the end of two whistle blower cases and a wrongful enrichment suit brought by the DOJ against Forrest L. Preston. Preston is the owner of the Tennessee-based Life Care Center that has over 200 skilled nursing facilities.

$29 million may not be very much money to you, but it is to me.  The False Claims Act and the monetary rewards it authorizes to those who come forward and report fraudulent activities, has now become the primary tool the government has to help stamp out fraud in government programs, in my opinion.

Unnecessary Treatment Alleged.

The government joined the FCA case filed by the whistle blowers in 2012, suspecting that the company was performing excessive treatment of senior patients in order to maximize their Medicare reimbursement.  The company was accused of excessive and unreasonable treatment between January 1, 2006, and February 28, 2013, so that they would qualify for the “Ultra High” reimbursement level Medicare pays.  U.S. Attorney Nancy Stallard Harr stated on Monday that the company’s actions “exploits our most vulnerable citizens.”

According to reports, Preston announced made a statement in connection with the settlement that denied that Life Care engaged in any illegal or improper conduct but was pleased to put the matter behind it.

Big Rewards for Whistle Blowers.

This cause helps show the big monetary rewards that employees and former employees of health care businesses can obtain by coming forward and reporting it when their employer is engaged in submitting false claims to the government.  If managers and supervisors condone or turn a blind eye toward its employees submitting false claims, then this is the same as knowingly committing such violations.  The business is profiting from the false claims.

What is usually missing when an employee or former employee tries to file a whistle blowers law suit is documentation of the companies submission of claims taht are actually false.  Therefore, before an employee or former employee files such a suit, he or she must have copies of the claims that were actually submitted (such as CMS forms 1500, superbills, explanation of benefits (EOBs), etc.) and other documentation.  Without such documentation that shows that false claims were actually submitted for payment, many FCA whistle blower suits are dismissed.

Also, any claims that are paid by state or federally funded healthcare programs can be the subject of such an action.  Most states have a state false claims act that is based on the federal law.  Usually this applies to the state Medicaid program,, but it can also apply to state provided employer health clinics that some cities, counties and agencies provide or to other state funded activities.  Federally funded health care programs that can result in FCA suits include not just Medicare, but also TRICARE, Veterans Administration (VA) funding, Public Health Service (PHS) funding, Indian Health Service (IHS) funding and other government health care programs.  When in doubt, call your friendly whistle blower attorney.

Contact Health Law Attorneys Experienced with Qui Tam, Whistleblower and False Claims Act Cases.

Attorneys with The Health Law Firm also represent health care professionals and health facilities in qui tam or whistleblower cases both in defending such claims and in bringing such claims. We have developed relationships with recognized experts in health care accounting, health care financing, utilization review, medical review, filling, coding, and other services that assist us in such matters. We have represented doctors, nurses and others as relators in bringing qui tam or whistleblower cases, as well.

To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at

Overly, Jeff. “Nursing Home Chain Inks Record $145M FCA Deal With DOJ.” Law360.(October 24, 2016).Web.

“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.” Department of Justice. (October 24, 2016). Web.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law is an attorney with The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area.  The Health Law Firm, 1101 Douglas Avenue, Altamonte Springs, Florida 32714, Phone: (407) 331-6620.

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