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Medicare and Tricare Fraud Results in $29 Million Settlement

Posted by Kashif Haque | Aug 15, 2019 | 0 Comments

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Two whistleblowers will be reaping a big reward – a $29 million dollar reward to be exact. This is because settlement has been reached in the case of United States v. Life Care Centers of America. The defendants will be paying a record breaking $145 million dollar settlement for allegedly violating the False Claims Act between January 2003 and February 2013. The False Claims Act (31 U.S.C. §§ 3729–3733, also called the “Lincoln Law”) is an American federal law that imposes liability on persons and companies (typically federal contractors) who defraud governmental programs. It is sometimes called the Lincoln Law because it was initially passed under President Abraham Lincoln during the Civil War.

Whistleblowing Medicare and Tricare Fraud

Life Care Centers of America is a chain of private nursing homes with more than 200 locations across the country. The lawsuit against them was initiated because former employees turned whistleblowers Glenda Martin and Tammie Taylor tipped the government off to the possible fraud, leading to what is called a Qui Tam case. This type of case is when whistleblowers alert the Government that they are being defrauded.

The Justice Department alleged that the company purposely entered patients into the highest level of care even when it wasn't necessary, in order to bill Medicare and TRICARE at the highest rates. The complaint states that “while Life Care punished those facilities and employees that failed to meet its Ultra High targets or that complained about corporate pressure, it rewarded and applauded those that met its targets.

As part of its goal to maximize Medicare and TRICARE payments, Life Care also frequently overrode or ignored the recommendations of its own therapists and unnecessarily delayed discharging beneficiaries from its facilities…. As a direct result of Life Care's corporate pressure to maximize its Ultra High billings, Life Care therapists provided Medicare and TRICARE beneficiaries with excessive amounts of therapy that was not medically reasonable and necessary, and sometimes even 2 harmful. Moreover, instead of providing skilled rehabilitation therapy that was tailored to beneficiaries' particular needs, Life Care therapists routinely provided generic, non-individualized services that did not (and could not) benefit the beneficiaries and that served primarily to inflate what Life Care billed Medicare and TRICARE for those beneficiaries.”

A statement released by the company vehemently denies any wrongdoing, stating, “Life Care has strongly disagreed with the allegations, and believes that it was entitled to payment for services rendered”. Legal action was also taken against the owner and sole shareholder of the chain, Forrest L. Preston, as the Justice Department claimed he was “unjustly enriched” by the practices. The statement continues, “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”.

Not Their First Lawsuit

This lawsuit is hardly the first legal issue the company has come across. In recent years, several other lawsuits have been initiated. The first lawsuit arose in 1998, alleging that the company negligently allowed a patient to fatally beaten by another patient with a history of violent outbursts. Two years later, an eerily similar case was initiated, alleging that a female patient was also attacked by a violent patient, resulting in her death. In 2003, a $12 million lawsuit claimed that the facilities failed to provide basic care such as proper bedding and ulcer prevention after a patient's leg had to be amputated due to infection. From 2004 to 2008, three more bed sore cases were initiated which claimed that the facility neglected to provide basic care, nutrients, and medical attention to patients that were suffering from dehydration, thrush, and staph infections. As if all of that wasn't enough, all patient admissions were suspended for a time in 2011 due to allegations of cooking malfunctions, patient abuse and sexual assault.

Paying The Price

Not only will the company be paying the hefty settlement amount, they have also agreed to their therapy services being monitored for five years, entering into a Corporate Integrity Agreement with the US Department of Health and Human Services. A $45 million down payment will be made this year, with the remainder of the settlement amount to be paid out over the course of the next three years. 

Wrongfully terminated as a result of whistleblowing on your employer? View our wrongful termination settlements guide or speak with a wrongful termination lawyer near you that dedicates their time to assisting wrongfully terminated employees.

About the Author

Kashif Haque

Kashif Haque is a trial attorney and one of the founding attorneys of Aegis Law Firm. He served as the 2015 Chairman of the Orange County Bar Association—Labor and Employment Section. Mr. Haque has obtained millions of dollars on behalf of his clients through trial, arbitration and settlement. A...


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