Feds name Life Care Centers CEO in False Claims Act suit

Life Care Centers founder and CEO Forrest Preston has been named by federal prosecutors in an amended False Claims Act lawsuit against the company, claiming he benefitted from alleged Medicare overbilling.

Prosecutors added a count of “unjust enrichment” against Preston, saying that he profited from the alleged Medicare fraud at the core of two whistleblower suits filed against the company in 2008. The suits weren't made public until late 2012.

Court documents also claim Preston, who founded Life Care Centers in 1970 and remains its sole shareholder, exerted “authoritarian control” over the company, and used its funds to give himself loans worth up to $50 million. Life Care operates 260 senior housing and skilled nursing facilities in 28 states.

When reached for comment, Life Care officials referenced a statement released to employees regarding the situation, which said the motion “adds no new claims whatsoever.”

“It is puzzling that the government would seek to include Mr. Preston as a party at this late date when it made a conscious choice not to do so at the outset,” the statement reads. “Life Care will not bow to government pressure by way of including Mr. Preston in the case or otherwise, and will continue to vigorously defend the lawsuit and stand up for the rights of its patients to obtain full rehabilitation therapy.”

Government prosecutors say the amendment came about due to the discovery of information that shows Preston had more direct ties to the operations of the company, the Chattanooga Times Free Press reported.

“It was not until discovery that the United States learned of the extent of Mr. Preston's involvement in the management of Life Care, the degree to which he was aware of complaints from his own employees regarding the conduct at issue in this litigation, the degree to which he ignored corporate formalities, and the degree to which he benefited unjustly from Life Care's unlawful conduct,” prosecutors wrote in an Aug. 6 filing cited by the Chattanooga Times Free Press.