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Hospice Pays $6.1 Million for Allegedly Enrolling Non-Terminal Patients

June 25, 2012

Nurse whistleblower Beverly Landis will receive more than $1.3 million for reporting her former employer — Hospice Care of Kansas LLC and its parent company, Ft. Worth, Texas-based Voyager HospiceCare Inc. — for allegedly enrolling and billing for non-terminal hospice patients, the Justice Department announced last week.  The settlement sends a signal that abuse of the Medicare Hospice Benefit will not be tolerated, according to statements by Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division:

“The Medicare hospice benefit is intended to provide comfort and care to terminally ill persons in the final stages of their disease,” said Delery. “This settlement shows that the Department of Justice will not tolerate hospice providers that attempt to maximize their profits at the expense of their legal and ethical obligations to the Medicare program, taxpayers, and beneficiaries.”

Under the Medicare Hospice Benefit, patients who have been diagnosed with six months or less to live may receive government-funded palliative care. Qualifying patients who elect the Medicare Hospice Benefit must agree to forego curative care.

The most common type of Medicare Hospice Fraud involves marketing hospice services to non-terminal patients and admitting and re-certifying them for payment under the Medicare Hospice Benefit.  Such fraud is particularly disturbing, because it not only defrauds taxpayers and skims the already overextended healthcare budget but more importantly it coerces non-terminal patients to forego vital curative treatment.  Potential fraud and abuse in the hospice setting has recently been exposed by the media as a potential nationwide problem.

The whistleblower complaint against Hospice Care of Kansas and Voyager alleged that the hospice companies:

“engaged in certain practices that resulted in the submission of false claims, including the provision of compensation to clinical employees based on patient census and admissions, delaying discharges of patients determined not to have a six month or less prognosis, instructions to staff to document patient conditions in a misleading manner, and implementation of an inadequate compliance program.”

Landis, a hospice nurse, blew the whistle on the company after witnessing what she believed to be abuses of the Medicare system first-hand.  Initially, the company argued that it was immune to the nurse’s allegations, because it had procured doctor’s signatures on the certificates of terminal illness for the patients.  The presiding judge disagreed, however, stating:

“FCA liability must be based on an objectively verifiable fact; however, facts that rely upon clinical medical judgments are not automatically excluded from liability under the FCA.”

The court also noted:

“Additionally, plaintiffs do not allege that the physicians made false certifications independently, but that the physicians could not legitimately exercise their medical judgment because defendants provided false information on which the physicians relied.”

Shortly, before the case was to be heard by a jury, Hospice Care of Kansas and Voyager agreed to settle the allegations, admitting no wrongdoing.

The notion that a physician’s signature can shield a company from False Claims Act liability has been trotted out repeatedly by defendants and rejected repeatedly by courts and the DoJ.  Recently, DoJ filed a statement of interest in another hospice fraud case in Texas, U.S. ex rel. Wall v. Vista Hospice Care, Inc., Case No. 3-07-cv-0604 (N.D. Tex.), arguing:

“A defendant cannot defeat FCA [False Claims Act] allegations simply due to the existence of a physician certification of terminal illness when there is evidence that the provider knew or should have known such a patient was not terminally ill.”

DoJ’s stance in the whistleblower suit against Hospice Care of Kansas appears to be part of a wider effort by the government to crack down on companies that it believes are abusing the Medicare hospice benefit. Earlier this year, DoJ intervened in yet another case against nursing home giant, Golden Living (formerly Beverly Enterprises) brought by Frohsin & Barger, with similar allegations regarding the company’s hospice business. See U.S. ex rel. Richardson and Brown v. Golden Gate National Senior Care LLC dba Golden Living et al., No. 2:09-cv-00627 (N.D. Ala.).  After previously filing a notice of nondecision, DoJ now has also moved to intervene in another suit against the company’s hospice arm, U.S. ex rel. Paradies v. AseraCare, 2:12-CV-245 (N.D. Ala.).  Like Hospice Care of Kansas, Golden Living and AseraCare vigorously deny any wrongdoing. Frohsin & Barger represents the nurse whistleblowers in the pending cases against Golden Living and AseraCare.

More in-depth reports by investigative journalist Peter Waldman of Bloomberg regarding potential fraud and abuse in hospice can be read: here, here, and here.

To report fraud or abuse of the Medicare hospice benefit, contact Frohsin & Barger.

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