Nursing Home Facility Agrees to Largest False Claims Act Settlement
November 2, 2016
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The United States Department of Justice (DOJ) announced last week that Life Care Centers of America, a nursing home chain, has agreed to pay $145 million to settle allegations that it violated the False Claims Act (FCA). This settlement announcement comes just a week after DOJ publically announced the settlement of an FCA case involving fraudulent kickbacks involving a nursing home pharmacy, which resolved for $28.5 million.

The settlement with Life Care Centers of America was prompted by complaints filed by two whistleblowers who were former employees of Life Care Centers of America. DOJ filed its own complaint in intervention in the matter as well, which it has the option to do under the FCA. According to DOJ, the settlement amount is the largest ever settlement with a skilled nursing facility chain.

The complaints against Life Care alleged that false claims were submitted for rehabilitation therapy in a corporate wide scheme to place as many patients in the highest level of skilled therapy and nursing needs, in order to receive the highest rate of reimbursement from Medicare possible. Under Medicare reimbursement rules, the higher the needs of the patient with higher levels of care, the higher level of reimbursement. It is alleged that Life Care patients who were not in need of the highest level of care were billed to Medicare at the highest rate, resulting in unreasonable and unnecessary therapy, which is prohibited by Medicare and therefore can create liability under the FCA.


These recently announced settlements demonstrate, if there remained any doubt, that fraud in the nursing home and skilled nursing facilities context continue to be a focus of DOJ. But also, that despite whistleblowers coming forward, and government and private lawyers filing fraud lawsuits, that there remains a corporate desire to maximize billing for health services at all costs by nursing home facilities. Nursing home fraud and hospice care fraud is of particular interest because of the vulnerable patient population the industry treats and the sometimes inability of the patients to be aware of their own treatment needs and how the treatments are being billed.

Whistleblowers and their attorneys are vital to combating health care fraud. The DOJ estimates that since 2009, $31.9 billion has been recovered through the False Claims Act.