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Opioid Medication Poisoning of Children and Teens “Surge”

The number of children and teens hospitalized for prescription opioid poisonings has more than doubled in recent years, with both accidental overdoses and suicide attempts on the rise, according to a new study published in the JAMA Pediatrics and summarized by Reuters Health.

Annually, the rate of these opioid poisonings among youth up to 19 years old surged from 1.4 per 100,000 children in 1997 to 3.71 per 100,000 kids by 2012, the study found.

“I believe that the two-fold increase in hospitalization rates over time for opioid poisonings in children are a direct consequence of the increasing reliance in the U.S. on opioid analgesics to treat acute and chronic pain,” said lead study author Dr. Julie Gaither, a public health researcher at Yale University in New Haven, Connecticut.

For teens aged 15 to 19, the rate of poisonings surged from 3.69 per 100,000 at the start of the study to 10.17 per 100,000 by the end, fueled in part by overdoses involving heroin and methadone, researchers report in JAMA Pediatrics.

“Trends we see in teens mirror what we’ve seen in adults – an increase in accidental overdoses (poisonings) from either taking an opioid as prescribed or, increasingly, using opioids for purposes other than to treat pain, including to get high or to enhance the effects of alcohol or other drugs,” Gaither noted by email.

With children 4 years old and under, the rate of poisonings climbed from 0.86 per 100,000 kids to 2.62 per 100,000 by the end of the study period.

“The vast majority of opioid poisonings in young children – toddlers and preschoolers – are the result of unsupervised ingestions of medications prescribed for an adult (parent, grandparent) in the household,” Gaither added.

To assess trends in poisonings over time, researchers examined data from 13,052 pediatric hospitalizations due to ingestion of prescription opioids. For teens, they also identified poisonings due to heroin.

Overall, 176 children, or 1.3 percent, died during hospitalizations for opioid poisoning during the study period.

Among teens in the study, poisonings from heroin increased by 161 percent from 0.96 to 2.51 per 100,000 children, while poisonings involving methadone increased by 950 percent from 0.10 to 1.05 per 100,000 children.

When the authors examined intent behind the opioid poisonings, there were 16 poisonings attributed to suicide or self-inflected injury among children younger than 10 from 1997 to 2012.

In children ages 10 to 14, the incidence of poisonings attributed to suicide or self-inflicted injury increased by 37 percent from 0.62 per 100,000 in 1997 to 0.85 per 100,000 in 2012. The incidence of poisonings attributed to accidental intent increased by 82 percent from 0.17 to 0.31.

For teens ages 15 to 19, opioid poisonings attributed to suicide or self-inflicted injury increased by 140 percent, while those attributed to accidental intent roughly tripled in this age group.

“It is a common practice for adults to place leftover opioid medications in the medicine cabinet or in the kitchen, which leaves them completely available to not only children and adolescents in the household but also any friends that come to visit,” said Dr. Constance Houck, a researcher at Harvard Medical School and Boston Children’s Hospital who wasn’t involved in the study.

“It is a well-known technique for adolescents with substance use issues to ask to use the bathroom in a friend’s or relative’s home and rifle through the medicine cabinet while alone in the bathroom,” Houck said. “Many adolescents have described this as a way that they have regularly obtained opioids.”

Chatsworth DME Operatives Guilty of $38 Million Fraud

Geoffrey Ricketts, age 48; his wife, Marla Ricketts, age 38; Samuel Kim, age 41, all of Porter Ranch, California, and his cousin, Sunyup Kim, age 40, of Granada Hills, California pled guilty to conspiracy to commit health care fraud.

The four were indicted on June 11, 2015, for their direction of a $38 million fraud scheme centering around the distribution of “talking glucose meters” that were not medically needed and were often not even requested. The defendants operated Care Concepts, LLC, which was based in Metairie Louisiana and Choice Home Medical Equipment and Supplies, which was based in Chatsworth, California.

According to court documents, the defendants paid kickbacks to workers at call centers in California and South Carolina, from which operators would cold-call Medicare recipients to convince them to accept talking glucose meters and related supplies. From 2007 through 2015, the defendants caused thousands of claims to be submitted to Medicare through Care Concepts and Choice, virtually all of which were fraudulent.

Each defendant faces a maximum term of ten years’ imprisonment, a fine of $250,000, and a term of three years supervised release. In addition, Geoffrey Ricketts owes restitution in the amount of $1,338,210; Marla Ricketts in the amount of $39,880; Samuel Kim in the amount of $988,593 and Sunyup Kim in the amount of $93,927.

U.S. District Judge Eldon E. Fallon set sentencing for January 5, 2017.

National Comp Pharmacy Costs Continue to Decrease

CompPharma’s 13th Annual Survey of Prescription Drug Management in Workers’ Compensation analyzed the 2015 pharmacy cost data of 30 workers’ compensation insurance carriers, third-party administrators, self-insured employers, and state funds.

Total workers’ comp annual pharmacy spend is approximately $5.5 billion, but it is not possible to more precisely calculate workers’ compensation drug spend.

After a one-year bump up in inflation, work comp drug costs declined again, this time by 8.7%. The 30 payers saw a decline in spend, which they attributed to tighter clinical management, better integration with their PBMs on a variety of services, and specific efforts to reduce initial opioid scripts and decrease the level of morphine equivalents across as many patients as medically appropriate.

Over the last four years, drug costs for payers surveyed by CompPharma have dropped by 11%. This year, seven respondents’ drug costs dropped by 17 points or more. Claim volume changes were only involved for a handful of payers. Respondents attributed the steep decline to more active and assertive clinical management, especially focused on opioids and other potentially problematic drugs.

Over the 13 years the survey has been conducted, the pharmacy cost inflation rate decreased by 26.5 points.

Compounds were named as the emerging issue of most concern to payers, while opioids remained the “biggest problem” in workers’ comp pharmacy management.

Payers credited tighter clinical management, better integration with their pharmacy benefit managers, and prescriber interventions for the decrease. All have opioid management programs to limit the number of initial opioid prescriptions and/or decrease morphine equivalents across as many claims as medically appropriate.

“Twenty percent of the respondents also had assertive settlement initiatives and have been closing older claims,” said Joseph Paduda, president of CompPharma, LLC. “Overall, payers have seen drug costs go down by 11 percent in the past six years despite the 2014 increase.”

PBM consolidations received mixed reactions from the payer community. Some respondents hoped mergers would bring better pricing and more clinical capabilities while others expressed concern that the lack of competition would breed complacency.

The survey’s final question asks respondents to identify the single biggest problem in workers’ compensation pharmacy. This year the answers were diverse indeed. Prescriber behavior and variations thereof garnered a quarter of the responses; opioids were named by four respondents and compounds by three. If anything the most insightful answers involved the need to work with other stakeholders to address prescribing patterns, implement evidence-based guidelines and influence regulatory authority. Respondents would also like to receive more complete data (not just on pharmacy, but other medical cost data) and have better communication of the right information among stakeholders.

Central Valley Injury Outcomes Better than State Average

A new California Workers’ Compensation Institute (CWCI) Regional Score Card finds that workers in California’s Central Valley have a distinctly different workers’ comp claims experience than those from other regions in terms of notification and treatment lag times, mix of injuries, types of care, types of drugs used, levels of attorney involvement, incidence of permanent disability, average claim duration and average benefits paid.

CWCI’s latest “Regional Scorecard,” provides detailed data on claims filed by injured workers living in California’s Central Valley farm belt, stretching through 18 counties from Kern in the south to Butte and Glenn in the north.

The Scorecard analyzed nearly 344,000 Central Valley claims for 2005 – 2015 injuries that resulted in more than $4.4 billion in medical and indemnity payments. During the 11-year study period, the Central Valley accounted for 18% of California work injury claims and 15% of total workers’ comp benefit payments. Agriculture clearly played a huge role in the area’s workers’ comp claims experience, representing 17.5% of all claims in the study — four times the proportion noted for the rest of the state — yet the diversity of the Central Valley economy also was evident, as more than 8 out of 10 job injury claims from the region involved non-agricultural workers.  

As in the rest of California, strains were the top “nature of injury” category for Central Valley claims, though the proportion of claims involving back strains and sprains or cumulative injuries was slightly less than in other regions as specific injuries such as fractures, foreign bodies in the eye, and punctures were more common. With the different mix of injuries and a different work force, average first-year medical payments on Central Valley claims were relatively high compared to the rest of the state, but relatively low as the claims developed, suggesting that in many claims the workers were treated and returned to work quickly.

Across all claim types, the average claim duration in the Central Valley was 325 days, or 2-1/2 months less than in other parts of California. That result is consistent with several other findings quantified by the Score Card, including significantly shorter notification and treatment time lags, fewer claims with permanent disability payments, lower levels of attorney involvement, fewer claims with lien payments, and a higher claim closure rates at two years post injury.  

The Regional Score Card features two dozen exhibits with data and commentary on a wide range of metrics including distributions of claims by industry; premium size; claim type; nature and cause of injury; and diagnosis. Several exhibits compare results for the region against those for all other regions, and many also show statewide results, offering a wealth of detailed data on workers’ comp experience both for the region and for the entire state.

CWCI Regional Score Cards are available to Institute members and subscribers who log on to www.cwci.org. Anyone wishing to subscribe or to purchase individual Score Cards may do so on CWCI’s online Store. The next Score Card in the series will look at claims from the San Francisco Bay Area.

Nose Cells Used in Knee Cartilage Transplant

In a small trial of 10 patients with damaged knee joints, doctors harvested cells from their noses to engineer new cartilage tissue and transplant it into their damaged knees. In a paper published in The Lancet, the Swiss team describes how 2 years after transplant, most of the patients had developed new tissue similar to normal cartilage and reported improvements in knee function, pain, and quality of life.

However, the authors point out that while the results of their phase I study are promising and show the approach is feasible and safe, there is still a long way to go before such a procedure can be approved for routine use with patients. There now needs to be randomized trials – with longer follow-up – that compare the promising treatment with conventional alternatives.

About 2 million people in Europe and the United States are diagnosed with damage to knee joint cartilage every year, caused by injury or accident. Joint or articular cartilage is the layer of smooth tissue at the ends of bones that eases movement, and protects and cushions the surfaces of the joint where the bones meet.

As this tissue has no blood supply, if it gets damaged it cannot regenerate. Eventually, as the cartilage wears away, the bones become exposed and inflamed from rubbing against each other, leading to painful joint conditions like osteoarthritis.

There are medical techniques – such as microfracture surgery – that can prevent or delay the onset of cartilage degeneration following injury or accident, but they do not regenerate healthy cartilage to protect the joints.

There have also been attempts to use cartilage cells or chondrocytes from the patients’ own joints to make new cartilage in the joint, but these have not been very successful at creating the right structure and function of the cushioning tissue.

One of the unique features of the new study is that Prof. Martin and colleagues used chondrocytes harvested from a site far away from the damaged joint – from the patients’ nasal septum. These cells have a unique ability to grow new cartilage tissue.

For the study, the team enrolled 10 patients (age 18-55) with full-thickness cartilage damage to the knee and took a biopsy from their nasal septum under local anesthetic. They grew chondrocytes harvested from the biopsy tissue by stimulating them with growth factor for 2 weeks.

The team then took the cultured new cells and seeded them onto “scaffolding” made of collagen and grew them for another 2 weeks. The result was a 2-millimeter thick graft of new cartilage measuring about 30-40 millimeters.

Each patient then underwent surgery where the damaged knee cartilage was removed and replaced with their own cultured graft cut into the appropriate shape. After 2 years, scans showed new tissue of similar composition to cartilage had grown at the affected sites.

Nine of the 10 patients – one was excluded because of sports injuries not related to the trial – also reported significant improvements in the use and function of their knee and reduction in pain, compared with pre-surgery.

The authors note there were no reports of adverse reactions to the surgery, although there were two reports of injuries not related to the procedure. Patient age does not appear to affect success They also mention the promising result that patient age does not appear to affect the success of the procedure.

Blood Test Detects Early State Osteoarthritis

There is currently no blood test for early-stage osteoarthritis, a degenerative joint disease where the cartilage that eases and cushions movement breaks down, causing pain, swelling, and problems moving the joint.

Now, researchers at Warwick University in the United Kingdom have developed a blood test that can provide an early diagnosis of osteoarthritis and distinguish it from rheumatoid arthritis and other inflammatory joint diseases.

The researchers, led by Dr. Naila Rabbani of Warwick Medical School, report how they developed the new blood test in the journal Arthritis Research & Therapy.

The test could be available within 2 years, say the researchers. The earlier that arthritis is diagnosed – before physical and irreversible symptoms set in – the better the chances that treatment can focus on how to prevent the problem, for instance with lifestyle changes.

The new blood test looks for chemical signatures in fragments of joint proteins (amino acids) that have been damaged, as Dr. Rabbani explains: “The combination of changes in oxidized, nitrated and sugar-modified amino acids in blood enabled early stage detection and classification of arthritis – osteoarthritis, rheumatoid arthritis or other self-resolving inflammatory joint disease.”

Dr. Rabbani notes that scientists have known for a while that proteins in the arthritic joint get damaged, but this is the first time they have looked at them from the point of view of early disease diagnosis. “For the first time we measured small fragments from damaged proteins that leak from the joint into blood,” she adds.

For the study, the team recruited 225 participants. These included patients with knee joint early-stage and advanced osteoarthritis and rheumatoid arthritis or other inflammatory joint disease, and healthy volunteers with no joint problems.

Using mass spectrometry, the researchers analyzed samples of blood and synovial fluid (from the affected knee joints) for oxidized, nitrated, and sugar-modified proteins and amino acids.

They found some patterns of damaged amino acids in samples from patients with early and advanced osteoarthritis and rheumatoid arthritis that were markedly lower in samples from the healthy volunteers.

Using sophisticated bioinformatic computer methods, they developed algorithms – based on 10 damaged amino acids – that can diagnose early-stage osteoarthritis, rheumatoid arthritis, and non-rheumatoid arthritis. The researchers note the new blood test has a “relatively high sensitivity and specificity for early-stage diagnosis and typing of arthritic disease.” Sensitivity is the extent to which a negative result is able to rule the disease out, and specificity is the extent to which a positive result can rule the disease in. In the case of early-stage osteoarthritis, the study found the blood test had a sensitivity of 92 percent and a specificity of 90 percent.

These compare favorably with current techniques. For instance, in their background information, the researchers note that current magnetic resonance imaging techniques for evaluating cartilage damage in early-stage osteoarthritis have sensitivities around 70 percent and specificities around 90 percent.

Risk Manager Goes to Prison for Work Comp Embezzlement

The Santa Barbara Independent reports that Freddy Pachon, a former vice president of risk management for Select Staffing, was sentenced Monday to eight years and eight months in prison for embezzling more than $700,000 from the Santa Barbara-based temp agency.

Between January 2008 and December 2012, Pachon funneled money from reimbursement checks related to workers’ compensation claims into a personal account he created under the fictitious business entity “Select Consulting Services.” At a previous court hearing, it was revealed that Pachon had placed his sister-in-law, Paula Orozco, in a job at AG Employment Services, the company contracted by Select Staffing to handle medical claims. Orozco testified she altered the checks then mailed them to an address provided by Pachon, on some occasions even hand-delivering them to him in the Select Staffing parking lot or at his house. Orozco was later fired from her job but avoided criminal charges.

According to prosecutors, Pachon spent the stolen funds on a lavish home and backyard renovations. At the time of his arrest, he was earning approximately $250,000 a year from Select Staffing, where he’d been working since 2001.

At the Monday hearing, Pachon’s attorney Steven Andrade admitted his client “made a horrible exercise in judgment” but deserved leniency and probation, not the 20-year prison sentence prosecutor Brian Cota had asked the judge to impose. Andrade said as soon as Select Staffing discovered Pachon’s theft, he immediately sold his home and transferred the funds to the company. He had hoped to make full restitution and not involve law enforcement, Andrade said. “Mr. Pachon was like the most cooperative suspect in the world,” he stated. Since his arrest, Pachon has been volunteering and cleaning offices part-time, and still works in risk management. “He’s really fighting for his family,” Andrade said of Pachon’s wife and young children.

Pachon’s wife, Julia Orozco, also pleaded with Judge Michael Carrozzo to show her husband compassion. “I know he did something wrong,” she said, “but he’s not a bad guy. He’s a good father.” Attorney and real estate broker John J. Thyne III, who helped Pachon sell his home, said he found him honest and well-meaning.

In arguing for a lengthy prison term, Cota stressed the depth and repetition of Pachon’s deception. “And using a family member is way beyond a typical embezzlement case,” he said. Cota said Pachon meticulously planned his scheme and deserved no credit for selling his home, as it was going to be foreclosed upon anyway. “He was just trying to save his own skin,” Cota said, noting that since his arrest Pachon has still not paid Select Staffing any of the the $250,000 or so he still owes. Instead, that money has been used to pay four different private attorneys. In addition, Cota went on, all the embezzled funds previously went toward “vanity projects” so Pachon, who has multiple ex-wives and as many as 10 children, would “look like the big guy in the office.” None of it went to his family.

More than a dozen of Pachon’s family members were present in the courtroom Monday. During a short break in the proceedings, a woman who identified herself as one of Pachon’s cousins offered to pay Independent staff photographer Paul Wellman to not publish photographs of Pachon. Wellman declined. The cousin persisted, offering to double his hourly rate and insisting he could take the money without the Independent finding out. Wellman again declined.

In handing down his sentence, Judge Carrozzo said while Pachon’s case certainly didn’t warrant probation, he also didn’t deserve 20 years behind bars. “I think the defendant is a good person who made a mistake,” Carrozzo said. He noted multiple letters of support from friends and family influenced his decision. He said he hoped Pachon, from Colombia on a work visa, would get his life back on track after prison. “I hope Mr. Pachon is still able to become an American success story,” he said.

Though Pachon was technically sentenced to eight years and eight months in prison, the credit he receives for good behavior – along with new incarceration rules guided by current and pending legislation aimed at reducing prison overcrowding – may make him eligible for parole in as little as eight months.

Court Affirms $180K Administrative Penalty for Uninsured Employer

The Department of Industrial Relations, Division of Labor Standards Enforcement (DLSE) imposed a $179,329.60 penalty, pursuant to Labor Code section 3722, subdivision (b) against Aron’s Automotive for failure to maintain workers’ compensation insurance as required by section 3700. The employer unsuccessfully pursued an administrative appeal and later court appeals of this penalty.

Aaron’s Automotive has been in operation since 2007. On January 22, 2015, DLSE inspected and discovered the business had employees but had never acquired workers’ compensation insurance coverage. On February 9, 2015, Taylor obtained coverage through the State Compensation Insurance Fund, which was effective as of January 29, 2015.

At the administrative hearing, Taylor argued: (1) the term calendar year, as used in section 3722(b), means January 1 to December 31; (2) section 3722(b) violates the equal protection clause of the Fourteenth Amendment; (3) the penalty violates substantive due process; and (4) the penalty is an excessive fine imposed in violation of the Eighth Amendment.

On April 8, 2015, the hearing officer issued written findings and affirmed the penalty assessment. The hearing officer found: “[Taylor] did not have workers’ compensation insurance for the period of February 27, 2012 through January 29, 2015 and had 11 employees during that time period.” The hearing officer concluded Taylor’s constitutional arguments provided no basis for defense in an administrative hearing and also determined the term calendar year, as used in section 3722(b), means “one year back from the date that the director determines an employer has been uninsured on the date the citation is issued.”

Taylor filed a petition for writ of administrative mandamus. A demurrer to the petition was granted without leave to amend. The Court of Appeal affirmed the dismissal in the partially published case of Aaron Taylor v Department of Industrial Relations.

The parties frame this case as primarily a dispute regarding the meaning of “calendar year” in section 3722(b).

It is undisputed that the date of “the determination” is the date the penalty assessment citation issued – in this case, February 27, 2015. Taylor maintains the term calendar year necessarily means January 1, 2014, through December 31, 2014, and that “this is the required statutory interpretation of this term no matter how absurd the result of that interpretation . . . .”

DLSE, on the other hand, insists calendar year means “the one-year period immediately before the date that the director determines that an employer is uninsured” – or, in this case, February 27, 2014, to February 27, 2015. DLSE analogize section 3722(b) to “a one year statute of limitations on issuing a citation.” (See Code. Civ. Proc., §340, subds. (a), (b).) In other words, section 3722(b) allows a citation to be issued “if the DLSE determines that an employer was uninsured [in excess of one week] during the past year, whether or not the employer subsequently obtains insurance.”

The interpretation of section 3722(b) is a question of first impression. The Court of Appeal concluded that “calendar year”, as used in section 3722(b), means the 12-month period immediately preceding the determination. In this case, a triggering event of uninsurance did occur between February 27, 2014, and February 27, 2015. Therefore, this construction of the statute does not in any way invalidate the penalty imposed.

LA Occupational Therapist Guilty in $2.6 Million Fraud Case

A licensed occupational therapist pleaded guilty in Los Angeles for his role in a $2.6 million Medicare fraud scheme that involved billing for occupational therapy services that were not provided.

Keith Canlapan, 38, of West Covina, California, pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge George H. Wu of the Central District of California.

Sentencing is scheduled for Feb. 16, 2017, before Judge Wu.

As part of his guilty plea, Canlapan admitted that he was a licensed occupational therapist employed with JH Physical Therapy, an occupational therapy clinic located in Walnut, California. Canlapan further admitted that through JH Physical Therapy, he billed Medicare for occupational therapy services when no such services were provided to the Medicare beneficiaries. Instead, the Medicare beneficiaries received massage and acupuncture services, which are not reimbursable under Medicare rules, he admitted. In fact, on dates that Canlapan purportedly provided occupational services to Medicare beneficiaries at JH Physical Therapy, Canlapan was admittedly not present at JH Physical and instead was either out of the country or at his other places of employment on some of those dates.

Between approximately October 2009 and approximately December 2012, Canlapan, through JH Physical Therapy, billed Medicare $2,669,618 in false and fraudulent claims, of which Medicare paid $1,860,786, he admitted.

Canlapan was charged in an indictment returned on June 16, 2016, along with co-defendants Simon Hong, 54, and Grace Hong, 50, husband and wife, both of Brea, California. Simon Hong is the owner and Grace Hong is the co-operator of JH Physical Therapy, and they are charged with one count of conspiracy to commit health care fraud and three counts of health care fraud. Both are pending trial, which is scheduled for Jan. 17, 2017. An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Co-conspirator Roderick Belmonte Concepcion, a licensed occupational therapist, was also previously indicted in a separate related case and pleaded guilty in April 2016. His sentencing is scheduled for Jan. 23, 2017.

The case was investigated by the Los Angeles Region of HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The case is being prosecuted by Trial Attorney Blanca Quintero of the Fraud Section.

Skilled Nursing Company Pays Back $145 Million in False Claims

Life Care Centers of America Inc. and its owner, Forrest L. Preston, have agreed to pay $145 million to resolve a lawsuit alleging that Life Care violated the False Claims Act by knowingly causing skilled nursing facilities (SNFs) to submit false claims to Medicare and TRICARE for rehabilitation therapy services that were not reasonable, necessary or skilled;

Life Care, based in Cleveland, Tennessee, owns and operates more than 220 skilled nursing facilities across the country including ten in California. The California facilities include Bel Tooren Villa Convalescent Hospital in Bellflower, Life Care Center of Escondido, La Habra Convalescent Hospital, Lake Forest Nursing Center, Life Care Center of Menifee, Mirada Hills Rehabilitation and Convalescent Hospital, North Walk Villa Convalescent Hospital in Norwalk, Orangegrove Rehabilitation Hospital, Rimrock Villa Convalescent Hospital in Barstow, and Life Care Center of Vista.

“This resolution is the largest settlement with a skilled nursing facility chain in the department’s history,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “It is critically important that we protect the integrity of government health care programs by ensuring that services are provided based on clinical rather than financial considerations.”

This settlement resolves allegations that between Jan. 1, 2006 and Feb. 28, 2013, Life Care submitted false claims for rehabilitation therapy by engaging in a systematic effort to increase its Medicare and TRICARE 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 highest 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 United States alleged in its complaint 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 sought to keep patients longer than was necessary in order to continue billing for rehabilitation therapy, even after the treating therapists felt that therapy should be discontinued. Life Care carefully tracked the minutes of therapy provided to each patient and number of days in therapy to ensure that as many patients as possible were at the highest level of reimbursement for the longest possible period. The settlement also resolves 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.

As part of this settlement, Life Care has also entered into a five-year chain-wide Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG) that requires an independent review organization to annually assess the medical necessity and appropriateness of therapy services billed to Medicare.

The settlement, which was based on the company’s ability to pay, resolves allegations originally brought in lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act by Tammie Taylor and Glenda Martin, former Life Care employees. The 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 may intervene and file its own complaint in such a lawsuit, as it has done in this case. The whistleblower reward in this case will be $29 million.

This matter was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorneys’ Offices for the Eastern District of Tennessee and the Southern District of Florida, and the HHS-OIG, with assistance from the U.S. Attorneys’ Offices for the District of Colorado, the Middle District of Florida, the Northern District of Georgia, the District of Massachusetts and the District of South Carolina and NCI/AdvanceMed, a Medicare Zone Program Integrity Contractor.