Vitas Settlement

Vitas Settlement

By Christopher Parrella J.D.

Last week, the U.S. Department of Justice announced that Chemed Corp., the parent company of VITAS Healthcare Corp., agreed to pay $75 million to resolve a government lawsuit alleging that the hospice provider violated the False Claims Act (FCA) by submitting false claims for services to Medicare. 

The settlement resolves allegations that between 2002 and 2013 VITASs knowingly submitted, or caused to be submitted, false claims to Medicare for services to hospice patients who were not terminally ill.

Under the Medicare hospice benefit, providers may be reimbursed for four different levels of care, including continuous home care services. Continuous home care services are only for patients who are experiencing acute medical symptoms causing a brief period of crisis. The reimbursement rate for continuous home care services is the highest daily rate that Medicare pays, and hospices are paid hundreds of dollars more on a daily basis for each patient they certify as having received continuous home care services, rather than routine hospice services. 

According to the complaint, the defendants set goals for the number of continuous home care days billed to Medicare and used aggressive marketing tactics and pressured staff to increase the volume of continuous home care claims, without regard to whether the patients actually required this level of crisis care.

Medicare pays for hospice care for certain terminally ill patients, but is subject to certain conditions. Among them: A physician or medical director of the hospice must certify in writing that the individual is terminally ill. Terminally ill means that the patient’s life expectancy is six months or less if the illness runs its normal course. The patient must elect hospice care and agree to forego Medicare coverage for curative treatment. An individual written plan of care (POC) must be established and periodically reviewed by the attending physician or medical director.

VITAS, in a statement, said it was settling the case without admitting wrongdoing in an effort to avoid the cost of protracted litigation. The company also entered into a five-year Corporate Integrity Agreement with the HHS Office of Inspector General to settle the claims. Under such an agreement, providers or entities agree to certain obligations, and in exchange, OIG agrees not to seek their exclusion from participation in Medicare, Medicaid, or other Federal health care programs.

These obligations generally include:

  • Hire a compliance officer/appoint a compliance committee
  • Develop written standards and policies
  • Implement a comprehensive employee training program
  • Retain an independent review organization to conduct annual reviews
  • Establish a confidential disclosure program
  • Restrict employment of ineligible persons
  • Report overpayments, reportable events, and ongoing investigations/legal proceedings
  • Provide an implementation report and annual reports to OIG on the status of the entity’s compliance activities.

Medicare began offering hospice in 1983 and its use among Medicare beneficiaries has grown substantially in recent years.  In 2015, more than 1.38 million Medicare beneficiaries (including nearly 49 percent of decedents) received hospice services from about 4,200 providers, and Medicare hospice expenditures totaled about $15.9 billion, according to a report to Congress by the Medicare Payment Advisory Commission (MedPAC).

With that growth has come an increase in the amount of fraud perpetrated by those in the healthcare industry.

Although deemed by the DOJ as “the largest amount ever recovered under the False Claims Act from a provider of hospice services,” the VITAS settlement is by no means the only such recent case involving violations of the FCA by a hospice provider.

Late last month, the former owner and an administrator of an Arkansas hospice provider were arrested and charged with billing the Medicaid program out of nearly $290,000 for services to patients who were not terminally ill. One of the patients allegedly was listed as receiving services for six years.

In August, a Cleveland physician was sentenced to 39 months in federal prison and ordered to pay nearly $2 million in restitution to the Medicare program for his participation in what the DOJ said was a hospice scam “to exploit patients and their families.”

Dr. Nathaniel Brown pleaded guilty to conspiracy to commit healthcare fraud for referring patients who were not hospice appropriate to two hospices in exchange for receiving more than $47,750 in payments from the hospice owner.

July saw a slew of hospice-related False Claims Act cases filed or settled. Among them:

On July 17, Ohio-based Foundations Health Solutions, Olympia Therapy Inc., Tridia Hospice Care and two executives agreed to pay approximately $19.5 million to resolve allegations relating to the submission of false claims to Medicare for medically unnecessary rehabilitation therapy and hospice services.

That settlement resolved allegation made in two whistleblower suits filed by former employees. Under the whistleblower provisions of the False Claims Act, private individuals are allowed to sue on behalf of the government for false claims and to share in any recovery.

On July 6, Florida-based Compassionate Care Hospice Group and its subsidiary Compassionate Care Hospice of Atlanta, agreed to pay $2.4 million to resolve allegations that it, and its subsidiary, submitted false claims to Medicare and Medicaid by paying five physicians to refer patients to CCH Atlanta for hospice services and to certify them as eligible for such services.

The settlement resolved allegations filed by former CCH Atlanta employees in a whistleblower lawsuit.

Also on July 6, a hospice company in Bensalem, Pa., agreed to pay $2 million to resolve allegations that it provided unnecessary hospice services. A subsidiary of Florida-based Compassionate Care Hospice Group Inc., it was alleged that from Jan. 1, 2005, through Nov. 15, 2011, Compassionate Care of Gwynedd admitted patients who did not need hospice care and billed Medicare for these medically unnecessary services.

And, again on July 6, the owners of the now-defunct Home Care Hospice in Philadelphia, Pa., agreed to pay more than $8 million to settle False Claims Act allegations that they filed false claims and records to Medicare for hospice care for patients who either were not terminally ill or for services not provided.

The initial case was brought by two former employees turned whistleblowers.

On July 5, a former California doctor and his business partner were indicted for taking part in a $7.1 million Medicare fraud scheme that occurred at three Las Vegas hospices. According to the DOJ, between 2012 and 2017, Camilo Q. Primero, a former medical doctor and hospice owner, along with his business partner, Aurora S. Beltran, allegedly submitted hospice care claims for people who were not terminally ill and did not require hospice care.

These recent cases and others like it underscore the importance of having a compliance program in place that addresses those areas that create risk for providers of hospice services and those who refer patients to them. Many of these cases grow out of whistleblowers who report fraudulent activity to investigators.

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