A chain of skilled-nursing facilities and its owner will pay $145 million to settle allegations that it billed Medicare and Tricare for medically unnecessary rehabilitation services over a seven-year period.
The U.S. Justice Department said Monday that this is the largest-ever False Claims Act settlement with a skilled-nursing facility chain. According to the enforcement agency, Cleveland, Tenn.-based Life Care Centers of America allegedly requested the highest level of Medicare and Tricare reimbursement for skilled therapy regardless of patient needs.
The federal healthcare programs give higher reimbursement rates for “ultra high” patients that require a minimum of 720 minutes of skilled therapy from two disciplines. Between January 2006 and February 2013, Life Care allegedly categorized as many of their patients as possible in the “ultra high” category and also tried to keep patients longer than necessary to keep billing Medicare and Tricare.
“It is imperative that providers make healthcare decisions based upon a patient's need for services rather than a self-serving desire to maximize financial profit,” said U.S. Attorney Wifredo Ferrer of the Southern District of Florida.
Life Care owns and operates more than 220 skilled-nursing facilities across the country, according to federal prosecutors. The company will also be under a five-year corporate integrity agreement with HHS' Office of Inspector General as part of the settlement.
The agreement settles allegations that Life Care's owner, Forrest Preston, was unjustly enriched by the Medicare and Tricare fraud scheme.
The alleged false claims first came to light via whistle-blower lawsuits from two former Life Care employees unsealed in 2012. At the time, HHS' Office of Inspector General also pushed Medicare administrative contractors to watch out for potential upcoding for therapy services at skilled-nursing facilities. The watchdog determined that the CMS may have paid $1.5 billion in 2009 for upcoded claims such as those at issue in the Life Care suits.
The Life Care whistle-blowers will receive $29 million as their share of the settlement.