What You Need to Know about Life Care Centers of America, Inc.


Dave Kingsley

Media, Image, & Distortion of Reality

The first known outbreak of COVID in the United States occurred at the Kirkland, Washington long-term care facility owned by Life Care Centers of America, Inc.  Consequently, the company has gained some fame in the mainstream media and has been treated sympathetically as a victim.  Coincidentally, the Kirkland facility also had a CMS Nursing Home Compare quality rating of 5 – the highest – which added credibility to the image of victimhood.  Here is how CBS 60 Minutes Correspondent Bill Whittaker introduced the company on the November 1, 2020 60 Minutes program:

“On the morning of February 29 the world turned its attention from news of the coronavirus in China and Europe, to the Seattle suburb of Kirkland. What was predicted by public health experts had arrived: the first COVID-19 outbreak in the United States. And it was spreading in the most vulnerable of places — transforming a 5-star, skilled nursing facility into the first hot-zone in the country.”


The gist of an interview by Whittaker during the program with Nancy Butner, a Life Care Centers VP, was this: the federal government was at fault. When the company called the federal government and asked them to send nurses and other personnel, instead a team of inspectors was sent.  The feds didn’t ride to the rescue.  Given that Life Care Centers, Inc. is one of the largest long-term care chains in the U.S. and funded through Medicaid and Medicare to staff and manage its facilities, this is an odd defense.

Is Life Care Centers, Inc. a Five-Star Company?

Life Care Centers owns and operates 230 long-term care facilities and is typically listed by trade publications as one of the four or five largest chains in the United States.  The company is owned by one man – billionaire Forrest J. Preston – which is an anomaly among the biggest chains. Furthermore, it is the company’s responsibility to properly staff its facilities, implement infectious disease control protocols, and train employees.  It was well known in early January that a rapidly spreading novel virus was spreading in Asia and would most likely make its way to the United States.

A 5-Star rating in one or a few facilities should be considered in context of the Life Care Centers track record.  Out of seven Life Care Centers facilities in Kansas, four are rated 1 – the lowest rating.  However, the Andover facility is a “special focus facility,” which means it is worse than the lowest rating and is so bad that no one should be referred there.  The Overland Park facility has a 2 rating but a “red hand,” which means that patient had suffered abuse.  The Atchison facility has a 5 rating.  So, out seven facilities in one state, all but one has been rated 2 or below, with most being a 1or special focus facility. 

At this time, the Andover, special focus facility, still has half of its beds occupied, which makes one wonder why the state allows it to continue to operate.  Reading the inspection report will literally make you sick (Find Healthcare Providers: Compare Care Near You | Medicare). Furthermore, two of the largest COVID outbreaks attracting media attention in Kansas occurred at Burlington and Kansas City, Kansas Life Care Centers facilities.

Perhaps there is a modicum of validity to the CMS 5-Star rating system, but it is possible on a good day, with the right inspector, to luck out and receive a 5.  Perhaps the highest rating is deserved in one facility while most of the others are rated low.  However, treatment and prevention of infectious diseases should be a corporate-wide policy.  I would, therefore, take the 5 at Kirkland with a grain of salt.

A Huge Case of Fraud by Life Care Centers:  Settled by the Department of Justice for $145 Million

The best way to rob a long-term care facility is to own one.*  On Monday, October 24, 2016, the U.S. Department of Justice announced that it had “resolved allegations” that Life Care had “violated the False Claims Act by knowingly causing skilled nursing facilities to submit false claims to Medicare and TRICARE for rehabilitation therapy (https://www.justice.gov/opa/pr/life-care-centers-america-inc-agrees-pay-145-million-resolve-false-claims-act-allegations). It is impossible to know how many $millions Forrest L. Preston was able to pocket above and beyond the $145 million.

Nor do we know how widespread this type of fraud is in the long-term care industry.  The DOJ brought this action against Life Care Centers because of two whistle blower employees (the whistle blower reward was $29 million).

Given that white collar crime is not usually punished (see Professor Jennifer Traub, Big Dirty Money), it is likely that large amounts of fraudulent billing is robbing patients of funds for care and employees’ of pay. The message from these types of settlements is that there is not much risk or hazard in committing fraud. 

Dirty money flowing into the pockets of owners/investors expands pressure on federal and state budgets.  Consequently, it is more difficult in the legislative process to increase expenditures for actual care. So, a billionaire owning a chain of long-term care facilities and submitting fraudulent claims is not only robbing the government but is also robbing patients and employees.  That simple truth didn’t make it into the 60 Minutes idealized view of Life Care Centers of America, Inc.

*Expropriated from University of Missouri, Kansas City economics professor Bill Black who published a book entitled “The Best Way to Rob a Bank, is to Own One.”