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Life Care Centers of America Inc. Agrees to Pay $145 Million to Resolve False Claims Act Allegations

In the largest settlement with a skilled nursing facility (SNF) chain in the Department of Justice’s (DOJ’s) history, Life Care Centers of America Inc. agreed to resolve a lawsuit against it for $145 million. The government claimed that Life Care violated the False Claims Act by knowingly causing its SNFs to submit false claims to Medicare and TRICARE for rehabilitation therapy services that were not reasonable, necessary, or skilled. Life Care owns and operates more than 220 SNFs across the country.

Life Care submitted false claims for rehabilitation therapy by engaging in a systematic effort to increase its Medicare and TRICARE billings, according to the lawsuit. The government claimed that Life Care did this in part by instituting corporate wide policies and practices designed to place as many beneficiaries in the highest reimbursement level irrespective of the clinical needs of the patients, resulting in the provision of unreasonable and unnecessary therapy to many beneficiaries. Life Care also sought to keep patients longer than was necessary in order to continue billing for rehabilitation therapy, even after the treating therapists felt that therapy should be discontinued, the lawsuit alleged.

As part of the settlement, Life Care also entered into a five-year chain-wide Corporate Integrity Agreement with the HHS-OIG that requires an independent review organization to annually assess the medical necessity and appropriateness of therapy services billed to Medicare.

The settlement, which was based on Life Care’s ability to pay, resolves allegations originally brought in lawsuits filed under the qui tam provisions of the False Claims Act by two former Life Care employees. The whistleblowers’ reward in this case will be $29 million.


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