Published on:

Tennessee-Based Nursing Home Company Agrees to Pay Record Fine to Department of Justice

Nearly all nursing home residents depend on health insurance coverage to provide essential services including medical care, nutrition, and hygiene. Typical insurers that provide such coverage include Medicare, Medicaid, and Tricare, if the patient is a former member of the military. These entities can end up paying large sums of money to big nursing home companies providing services to residents. With third party entities picking up the tab for their insured’s health and well being, those doing the billing can be tempted to abuse the process, especially if their goal is to place profits over the needs of patients.

Placing profits over patients is precisely what Life Care Centers of America, Inc. (“Life Care”) was recently accused of doing by the United States Department of Justice. Life Care eventually agreed to pay a fine of $145 million, a record for the Department of Justice. Life Care, based in Cleveland, Tennessee, operates over 220 skilled nursing home facilities across 28 states. It is owned by Forrest Preston, who has a net worth of over $1 billion. As part of the Department of Justice settlement, Life Care also agreed to participate in a “corporate integrity agreement” for five years. This program is designed to make sure Life Care’s procedures and actions comply with federal standards.

The Department of Justice accused Life Care of violating the False Claims Act over a seven year period by intentionally submitting false claims to Medicare and Tricare for millions of dollars for patient rehabilitation services that were not reasonable, necessary, or skilled. The company was accused of giving unnecessary treatments that brought in the most money to the company, regardless of whether the patient actually needed the service provided. Patients were also allegedly kept in therapy regimens for long after they needed to be. Instead of releasing patients once recovery goals were met, therapists continued to treat the patients for as long as reasonably possible. Life Care was accused of creating corporate policies designed to maximize profits accordingly. Per the investigation, Life Care set targets for how much to bill certain patients, provided bonuses for employees who met those goals, and discarded medical recommendations made by therapists regarding the necessity of care being given.

Allegations of the nursing home’s improper practices were originally brought by Life Care employees under a whistleblower provision of the False Claims Act. This is also known as a qui tam action. Special protection under federal law and Tennessee law is given to employees who refuse to participate in their company’s misconduct and are willing to report it to the authorities. Under Tennessee law, for example, an employee shall not be discharged from employment solely for refusing to participate in or remain silent about the company’s unlawful practices.

Allegations of fraudulent billing and providing unnecessary services are serious. When a nursing home commits these acts, the patient is not receiving the best possible medical care. The procedures being administered may not even be beneficial to the patient’s health. While the patient receives suboptimal care, the facility continues to rake in profits. If you suspect a loved one is not receiving proper care in a nursing home, it is important to bring that to the attention of the nursing home and potentially the authorities in your area. It is important to ask questions about what kind of medical care your loved one needs, what kind of treatment is being given, and what kind of treatment will be given in the future.