On October 24, the U.S. Department of Justice (DOJ) announced a
record-breaking $145 million settlement with Life Care Centers of
America Inc. (Life Care), marking the largest settlement with a
skilled nursing facility chain in the DOJ's history. The deal
resolves two whistleblower cases alleging that Life Care submitted
false claims in violation of the False Claims Act (FCA) by
manipulating the rehabilitation programs of patients to maximize
Medicare and TRICARE billing.
Included in the whistleblowers' allegations were charges that
Life Care kept patients on rehabilitation longer than clinically
necessary and required staff to categorize patients at the highest
level of rehabilitation need, irrespective of medical necessity, in
an effort to secure the highest level of reimbursement over the
longest possible period.
In May 2009, the DOJ and Department of Health and Human Services
created the Health Care Fraud Prevention and Enforcement Action
Team (HEAT) to combat fraud, waste, and abuse in the Medicare and
Medicare programs. Since January 2009, the DOJ has recovered more
than $19.2 billion through FCA cases involving federal healthcare
fraud.
The Life Care case illustrates the DOJ's commitment to
combatting healthcare fraud through aggressive prosecution and also
highlights significant issues that may face defendants seeking to
dispute FCA liability moving forward. Leading up to the settlement,
a federal judge endorsed the government's ability to employ
statistical sampling to establish FCA liability, which allowed the
government to review records for a random sample of 400 patients
and then extrapolate to allege that nearly 155,000 claims were
false. While the government has long focused on aggressively
pursuing potential fraud, the Life Care case has introduced a
powerful new tool for pursuing these cases.
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