$145 Million Settlement: Largest in History by Department of Justice and Finch McCranie, LLP in Any Skilled Nursing Facility Healthcare Fraud Case

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Today the Department of Justice announced the largest settlement in its history with a skilled nursing facility chain–a qui tam whistleblower case under the False Claims Act that our firm and our co-counsel Mark Simpson worked side-by-side with DOJ to prepare for trial.

We applaud the exceptional work of DOJ’s attorneys, as well the outstanding attorneys of the U.S. Attorney’s Office for the Eastern District of Tennessee.  Below is our press release on today’s settlement:

$145 Million Settlement in Groundbreaking Health Care Fraud “Whistleblower” Case by Atlanta’s Finch McCranie LLP and U.S. Department of Justice

Landmark Decision Established “Statistical Sampling” Can Prove Health Care Fraud in Large Cases

CHATTANOOGA, TENN. – In a groundbreaking health care fraud case, the U.S. Department of Justice, working alongside the Atlanta law firm Finch McCranie LLP, has reached a $145 million settlement with Cleveland, Tenn.-based Life Care Centers of America, Inc. and its owner, Forrest Preston.  This landmark case—carefully followed by medical providers nationwide–established that fraud and improper billings involving vast numbers of Medicare claims may be proved by “statistical sampling.”  In this case, rather than evaluate more than 150,000 individual claims from 54,000 patient admissions, experts examined claims from 400 randomly-selected patient admissions, and estimated the total number of false claims by extrapolating the findings.

The settlement ends eight years of litigation in two consolidated False Claims Act lawsuits filed separately by a nurse and a therapist, later joined by the U.S. Justice Department.  The complaints alleged that Life Care systematically defrauded Medicare by pressuring therapists to perform unreasonable, unnecessary, and sometimes harmful therapies on nursing home residents, to cause Medicare to pay Life Care millions more than justified.  Justice Department prosecutors and private attorneys from Finch McCranie worked side by-side to prepare the case for trial, in a “public-private partnership” in which private firms assist the Justice Department in holding wrongdoers accountable for fraud directed at taxpayer funds.  Joining Finch McCranie as co-counsel was Mark Simpson of the Simpson Law Firm.

“In Life Care’s national network of nursing homes, only one nurse and one therapist had the courage to expose these practices, which struck them as improper and even dangerous to the nursing home residents,” said Michael Sullivan, partner with Finch McCranie, which represented Glenda Martin, one of the two whistleblowers.  “There were two keys to the case.  First, thanks to the Justice Department lawyers’ excellent work, the court correctly recognized that statistical sampling can be used to prove a defendant’s violations of the False Claims Act, and rejected Life Care’s attempt to force an endless trial over each of the thousands of Medicare claims involved. This case now paves the way for proving health care fraud in large cases by statistical sampling.

“Second, to remove any possibility that Life Care might believe it could escape paying a judgment, our firm gathered evidence to enable the government to recover the Medicare funds that had been moved from Life Care to companies and individuals affiliated with Life Care.  The case settled shortly after the government, with our assistance, sued Life Care’s owner to reach the assets transferred from Life Care, by using legal theories our firm has used successfully in other fraud cases,” Sullivan added.

Glenda Martin, the former Life Care registered nurse whom Sullivan represented, commented, “I am glad the Justice Department and U.S. Attorney’s Office listened and acted to stop these practices that I and many other professionals found offensive, and even dangerous.”  Martin objected to the practices during her 14 years at various Life Care facilities in Tennessee and North Carolina. “I personally and strongly believe I righted a great wrong in coming forward and speaking out when I did,” Martin added.

The Justice Department intervened and contended that Life Care management pressured employees to keep Medicare and TRICARE patients for the maximum reimbursable time, and pressured patients to undergo treatment “whether or not it was beneficial or even appropriate.”

The government alleged that Life Care set aggressive targets for its therapists to perform skilled rehabilitation therapies, unrelated to the patients’ conditions, diagnoses or needs, and often contrary to its therapists’ recommendations.  According to the government, Life Care “punished those facilities and employees that failed to meet its Ultra High targets or complained about corporate pressure,” and “rewarded and applauded those who met its targets.”   The government’s analysis was that Life Care billed almost 68 percent of its Medicare rehabilitation days at the highest billing level, versus the national average of 35 percent in 2008.

As part of the settlement, Life Care also has entered into a Corporate Integrity Agreement with the Department of Health and Human Services.

Life Care Centers of America is solely owned by 83-year-old Forrest Preston, whose net worth has been estimated by Forbes magazine to be more than $1.3 billion.

About Finch McCranie

Finch McCranie, LLP is one of Atlanta’s longest-established trial practice law firms, with a history of more than 50 years.  Its practice includes representing whistleblowers worldwide in qui tam litigation under the False Claims Act, and in the IRS and SEC Whistleblower Programs. The firm consists of six attorneys, most of whom are former federal prosecutors. Finch McCranie has earned the highest rating from Martindale-Hubbell, which rates law firms nationwide.  https://www.qui-tam-litigation.com, www.finchmccranie.com