The Department of Justice (DOJ) recently announced the settlement of a consolidated False Claims Act (FCA) lawsuit that was filed against private nursing home company Life Care Centers of America, Inc. (“Life Care”). The lawsuit alleges that, between January 2006 and February 2013, Life Care engaged in health care fraud by submitting false claims to Medicare and TRICARE (the government health care program for U.S Armed Forces military personnel, military retirees, and their dependents) for payment for therapy services that were administered to patients who were not qualified to receive them. Life Care has agreed to settle the lawsuit for $145 million. A separate lawsuit was also filed against Life Care’s sole-owner, Forrest L. Preston, alleging that he unjustly received millions of dollars as the primary financial beneficiary of the scheme.

Headquartered in Cleveland, Tennessee, Life Care was founded by Preston in 1970. The for-profit company has expanded to include more than 260 retirement communities, assisted-living facilities, and nursing homes within 28 states. According to the company’s website, Life Care’s facilities offer a variety of services, including inpatient and outpatient short-term and post-acute short-term rehabilitation, post-operative recovery, and Alzheimer’s and dementia care. In 2015, the company’s annual revenue was reported to be more than $3 billion.

The consolidated lawsuit is the result of two qui tam lawsuits that were filed by a former Life Care therapist and a registered nurse. The DOJ decided to intervene in the case in 2012. Within their Complaint, the DOJ alleges that Life Care committed government programs fraud by improperly billing Medicare and TRICARE for medical services that were provided to beneficiaries who were ineligible to receive them. Medicare reimburses nursing facilities at a daily rate for the health care services that they provide to Medicare patients. This daily rate is based on the level of care that is provided to a beneficiary, as well as the amount of time that a patient spends receiving that care.

The Complaint contends that Life Care facilities pressured their employees to administer the highest level of care to their Medicare and TRICARE beneficiaries, despite many of these patients not needing these medical services, in an effort to increase the daily rate that they billed to the government. The DOJ argues that this excessive level of medical attention, and increased length of stay, was injurious for these patients, and that Life Care’s financial interests were prioritized over the quality of care that was being provided to their patients. Furthermore, the lawsuit alleges that Life Care punished the employees who complained about the unnecessary treatment that was being administered. Within the Complaint, the DOJ highlights an informal study that found that 57 percent of Life Care’s employees who included their name within the complaint that they filed with the compliance office were fired within three weeks.

The Health Care Fraud Prevention & Enforcement Action Team (HEAT) was established in 2009 by former Attorney General Eric Holder and former Secretary of Health and Human Services Kathleen Sebelius. One of HEAT’s objectives is to prevent and prosecute health care fraud that takes advantage of government-sponsored health care programs such as Medicare and Medicaid. Since HEAT’s inception, the Justice Department has successfully recovered more than $19.2 billion from federal health care fraud lawsuits