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Two whistleblowers split $29 million in nursing home false claims settlement

Two former employees of a company that operates a chain of skilled nursing facilities across the country were awarded $29 million as part of a False Claims Act settlement.

Tammie Taylor and Glenda Martin formerly worked for Life Care Centers of America Inc.

They alleged in qui tam suits that Life Care knowingly caused skilled nursing facilities to submit false claims to Medicare and another government program for rehabilitation therapy services “that were not reasonable, necessary, or skilled,” the DOJ said Monday.

Privately held Life Care is based in Cleveland, Tennessee. It owns and operates more than 220 skilled nursing facilities across the country.

The whistleblowers alleged that between 2006 and 2013, Life Care engaged “in a systematic effort to increase” its Medicare billings. 

Medicare reimburses skilled nursing facilities at a daily rate that reflects the skilled therapy and nursing needs of their qualifying patients. 

The greater the skilled therapy and nursing needs of the patient, the higher the level of Medicare reimbursement. 

The top level of Medicare reimbursement for skilled nursing facilities is for “Ultra High” patients who require a minimum of 720 minutes of skilled therapy from two therapy disciplines (e.g., physical, occupational, speech), one of which has to be provided five days a week.   

The lawsuit alleged that Life Care instituted corporate-wide policies and practices designed to place as many beneficiaries in the Ultra High 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 tried to keep patients longer than necessary to continue billing for rehab therapy, even after the treating therapists thought therapy should be discontinued. 

The settlement also resolved allegations brought in a separate lawsuit by the United States that Forrest L. Preston, as the sole shareholder of Life Care, was unjustly enriched by Life Care’s fraudulent scheme.

The False Claims Act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. 

The government can intervene and file its own complaint in a so-called qui tam lawsuit, as it did in this case. 

Whether or not the government intervenes, the whistlblower can be entitled to an award based on the settlement or amounts awarded to the govenrment at a trial.

The total reward in this case for the whistleblowers was $29 million.

The DOJ said the settlements announced Monday resolved allegations in the lawsuits but didn’t determine liability.


Richard L. Cassin is the publisher and editor of the FCPA Blog. He’ll be the keynote speaker at the FCPA Blog NYC Conference 2016.

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