Life Care Centers Lawsuit: $145M Settlement and $12.35M Verdict

Life Care Centers of America has faced a long list of lawsuits, the largest being a $145 million False Claims Act settlement in 2016 with the U.S. Department of Justice over allegedly unnecessary Medicare therapy billing. Beyond that, the Tennessee-based nursing home chain has defended COVID-19 wrongful death cases tied to the Kirkland, Washington outbreak, absorbed a $12.35 million Florida pressure sore verdict, lost a Tennessee Supreme Court ruling over an invasion-of-privacy claim, settled a California wage-and-hour class action for $7.5 million, and accumulated hundreds of federal nursing home penalties.

The $145 Million False Claims Act Settlement

On October 24, 2016, Life Care Centers of America and its sole owner, Forrest L. Preston, agreed to pay $145 million to resolve federal allegations that the company systematically billed Medicare and TRICARE for medically unnecessary rehabilitation therapy at its skilled nursing facilities. The settlement resolved allegations only, with no formal determination of liability.¹

The government alleged that between January 2006 and February 2013, Life Care used corporate policies to push as many patients as possible into the highest Medicare reimbursement tier for therapy, known as “Ultra High,” regardless of clinical need. That tier requires at least 720 minutes of skilled therapy per week from at least two disciplines, with one discipline provided five days a week. According to prosecutors, Life Care billed about 68 percent of its Medicare rehabilitation days at the Ultra High rate, roughly double the national average.²

Prosecutors also alleged the company kept patients in its facilities longer than medically necessary to keep billing for therapy, even after treating therapists recommended stopping, and tracked therapy minutes and patient days to maximize reimbursement.³ During the relevant period, Life Care received over $4.2 billion in total Medicare payments.²

The Whistleblowers

The case began with two whistleblower suits filed under the False Claims Act’s qui tam provisions by former Life Care employees Glenda Martin and Tammie Taylor in the U.S. District Court for the Eastern District of Tennessee. Martin’s case was docketed as early as 2008 and Taylor’s followed in 2012. The federal government intervened in both and filed a separate action against Preston personally, alleging he had been unjustly enriched as Life Care’s sole shareholder. Martin and Taylor received a combined $29 million as their whistleblower share.¹

The Statistical Sampling Ruling

A pivotal pretrial ruling shaped the case. In September 2014, Judge Harry S. Mattice Jr. held that the government could use statistical sampling and extrapolation to prove its fraud claims instead of litigating each of more than 154,000 individual claims. The court permitted a random sample of 400 patient admissions drawn from 82 facilities to be used to extrapolate overbilling across all 54,396 admissions at issue.⁴

Judge Mattice reasoned that barring extrapolation would “materially limit the efficacy of the FCA as a tool to combat fraud” and could embolden large-scale fraud by making claim-by-claim litigation impractical. He held that Life Care’s due process rights were preserved by its ability to challenge the statistical evidence at trial.⁴ The decision became an important precedent for large healthcare fraud cases.

Corporate Integrity Agreement

As part of the settlement, Life Care entered a five-year Corporate Integrity Agreement with the HHS Office of Inspector General requiring independent annual assessments of the medical necessity of billed therapy services across the chain.³ The agreement ran from October 2016 through December 2022, and HHS-OIG records indicate it has since closed.⁵

Kirkland COVID-19 Wrongful Death Lawsuits

In late February 2020, the Life Care Center of Kirkland, Washington became the site of the first major COVID-19 outbreak in the United States. A later accounting through March 20, 2020 documented 34 resident deaths, with 29 testing positive for COVID-19.⁶ The outbreak generated both federal enforcement action and civil litigation.

On March 16, 2020, CMS and Washington state health inspectors concluded an investigation identifying three “Immediate Jeopardy” situations at the facility: failure to rapidly identify and manage ill residents, failure to notify the state health department of the surge in respiratory illness, and failure to have a backup plan when the primary clinician fell ill.⁷ CMS imposed a civil money penalty of $421,135, calculated at $13,585 per day during the period of immediate jeopardy. In November 2021, after an April 2021 trial before an administrative law judge, the ALJ upheld the enforcement remedies as reasonable but stated: “I make no findings or determinations that the errors of Petitioner’s staff resulted in the spread of COVID-19 or the death or injury of any resident.”⁶

Wrongful death suits followed. In April 2020, the daughter of deceased resident Twilla June Morin sued in King County Superior Court, alleging “systemic failure,” a lack of clear protocols, and a failure to quarantine or timely notify authorities of suspected cases.⁸ Additional cases followed. In a federal jury trial that concluded on May 19, 2023, Life Care Centers of America and the Kirkland facility’s manager were found not liable for the deaths of two residents. The jury rejected the argument that standard influenza protocols would have prevented the spread of COVID-19, with defense experts pointing to the unprecedented nature of the virus and the limited information available in February 2020.⁹

The $12.35 Million Pressure Sore Verdict

In March 2022, a Florida jury awarded $12.35 million to Carol Reed, a 72-year-old woman with spina bifida who developed a severe, bone-deep pressure sore during a month-long stay at the Life Care Center of Orlando in 2017. Reed alleged the facility failed to properly reposition her while she was recovering from a broken leg. The jury apportioned 87 percent of the fault to Life Care and 13 percent to Reed, reducing the effective award to about $10.74 million. Life Care announced plans to appeal, citing what it described as legal errors at trial.¹⁰

Tennessee Supreme Court Invasion of Privacy Ruling

In April 2025, the Tennessee Supreme Court ruled against Life Care in a case arising from the company’s Tullahoma facility. In 2019, an employee there initiated a video call with her incarcerated boyfriend and positioned her phone to show the nude body of Annie Jones, an elderly resident with severe cognitive impairment, who was being assisted in the shower. The resident’s conservator sued for invasion of privacy, among other claims.¹¹

Jones died during the litigation, and Life Care argued the privacy claim died with her under Tennessee’s survival statute. The trial court agreed and dismissed the case, but the Court of Appeals reversed, and the state Supreme Court affirmed that reversal. Chief Justice Holly Kirby, writing for the court, held that an invasion-of-privacy claim based on intrusion upon seclusion is not a “wrong affecting the character of the plaintiff” and therefore survives the plaintiff’s death. The court also stated that Jones “nevertheless had the right not to involuntarily have her nude body put on display,” regardless of her cognitive impairment.¹²

Pregnancy Discrimination Settlement

In December 2019, Life Care settled a pregnancy discrimination case brought by the U.S. Equal Employment Opportunity Commission on behalf of Nair Parsons, a certified nursing assistant at the company’s Puyallup, Washington facility. The EEOC alleged Life Care refused to accommodate Parsons’s pregnancy-related lifting restrictions while granting similar light-duty accommodations to non-pregnant employees with work-related injuries. Under a consent decree signed by U.S. District Judge Richard A. Jones, Life Care agreed to pay $170,000 and to implement pregnancy discrimination training and accommodation policies at its Washington state facilities.¹³

California Wage-and-Hour Class Action

Former employees sued Life Care in Los Angeles County Superior Court, alleging the company failed to provide timely meal periods, prohibited workers from leaving the premises during rest breaks, failed to pay required premiums for those violations, and issued inaccurate wage statements. The court certified four classes of non-exempt employees, including nurses, certified nursing assistants, and other hourly workers, at California facilities for the period between July 2015 and November 2020.¹⁴ The case settled for $7.5 million, with final approval granted on June 1, 2023.¹⁵

Pattern of CMS Nursing Home Penalties

Beyond individual lawsuits, Life Care facilities have accumulated 328 individual CMS nursing home violation records totaling nearly $14 million in civil money penalties since 2000. Larger individual facility penalties include $623,580 against the Life Care Center of Copper Basin in 2020, the $611,325 penalty tied to Kirkland, and $495,900 against the Life Care Center of St. Louis in 2020. CMS enforcement has continued through 2024 and 2025, with penalties assessed against facilities in Merrimack Valley, Farmington, Kennewick, and elsewhere.¹⁶

1
U.S. Department of Justice. Life Care Centers of America Inc Agrees To Pay $145 Million To Resolve False Claims Act
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Keller Grover. Court Embraces Use of Statistics To Hold Massive Healthcare Providers Accountable
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U.S. Department of Justice. Life Care Centers of America Inc Agrees To Pay $145 Million To Resolve False Claims Act Allegations
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Harvard Law Review. United States Ex Rel Martin v Life Care Centers of America Inc
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HHS Office of Inspector General. Life Care Centers of America Inc and Forrest Preston
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HHS Departmental Appeals Board. Life Care Center of Kirkland ALJ Decision CR5975
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CMS. CMS Announces Findings at Kirkland Nursing Home and New Targeted Plan for Healthcare Facility Inspections
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ABC News. Family Files First Wrongful Death Lawsuit Against Life Care
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McKnight’s Long-Term Care News. Life Care Centers Vindicated in Early Covid Wrongful Death Case
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McKnight’s Long-Term Care News. $12 Million Verdict Levied Against Operator for Womans Pressure Sore
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Tennessee Courts. Tennessee Supreme Court Holds Lawsuit for Invasion of Privacy Does Not End if Plaintiff
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Tennessee Courts. Annie J Jones v Life Care Centers of America
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Ocala Employment Lawyer. Pregnancy Discrimination Case Resolved by EEOC
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ILYM Group. Barbara Bowlin-Burdick et al v Life Care Centers of America Inc
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ILYM Group. Life Care Settlement
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Good Jobs First Violation Tracker. Life Care Centers of America