(Reuters) — Life Care Centers of America Inc. and its owner, Forrest Preston, agreed to pay $145 million to resolve federal lawsuits accusing one of the largest privately held U.S. nursing home chains of Medicare fraud, the U.S. Department of Justice said Monday.

The accord with the Cleveland, Tennessee-based company is the Justice Department's largest with a skilled nursing facility chain, according to Benjamin Mizer, who heads the department's civil division.

As part of the settlement resolving claims under the federal False Claims Act, Life Care also entered a five-year corporate integrity agreement requiring independent annual reviews of its Medicare billings, the department said.
Life Care owns and operates more than 220 skilled nursing facilities nationwide, it added.

A spokesman for Life Care had no immediate comment.

The settlement resolves allegations that from January 2006 to February 2013, Life Care submitted false claims to Medicare and Tricare, which serves military personnel, for rehabilitation therapy services that were not reasonable, necessary or skilled.

Life Care was accused of systematically trying to qualify more patients for "ultra high" reimbursements for the longest possible periods, regardless of their medical needs.

By 2008, for example, Life Care billed Medicare nearly 68% of therapy days at the "ultra high" level, nearly twice the 35% industry average that year, court papers show.

Medicare paid Life Care more than $4.2 billion from 2006 to 2011 for inpatient services at its facilities, the papers show.

The settlement resolves whistleblower lawsuits by two former Life Care employees, nurse Glenda Martin and occupational therapist Tammie Taylor, and a government lawsuit accusing Preston of being unjustly enriched by the fraudulent scheme.

False Claims Act cases let whistleblowers bring claims on behalf of the government and share in any rewards.
The Justice Department said the whistleblower reward in the Life Care case will be $29 million.