Nation’s Largest Hospice Chain Faces False Claims Act Lawsuit for Medicare Fraud

The U.S. Department of Justice (DOJ) announced a False Claims Act lawsuit earlier this month against the nation’s largest for-profit hospice chain. Vitas Hospice Services LLC and Vitas Healthcare Corporation, both owned and operated by Chemed Corporation, are accused of fraudulently admitting patients for hospice care and then billing Medicare for the medically unnecessary services, which are violations of the federal False Claims Act. The government estimates that Vitas received up to $1 billion or more each year as a result of the Medicare fraud scheme.

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As the largest hospice chain in the country, Vitas has facilities located in 18 states. The company was founded in 1983 by Hugh Westbrook, Esther Colliflower and current Florida Senate President, Don Gaetz. In 2004, Gaetz and his co-founders decided to sell the company to the Cincinnati-based corporation, Chemed.

Earlier this month, Senator Gaetz publicly stated that he has no knowledge of the allegations contained within the False Claims Act lawsuit and is extremely disappointed to “see a company I helped found involved in something like this.”

Chemed and Vitas, no doubt, make for strange bedfellows. Chemed is a corporation best known for providing Roto-Rooter plumbing and drain cleaning services. They have over 500 franchised Roto-Rooter offices located around the country. Chemed, whose mission statement promises “professional dignity in times of transition and sewer line clogs,” made an unusual decision when it chose to branch off into the world of hospice care. The company paid $406 million to acquire Vitas in 2004.

Vistas Hospice Fraud Allegations

According to the government’s official complaint, for a duration of approximately 12 years, Vitas fraudulently billed Medicare for the terminal care of patients who were not dying or diagnosed with a terminal disease. Vitas is charged with knowingly and willfully billing Medicare for the hospice care of ineligible patients and submitting false reimbursement claims for medically unnecessary treatments.

In order to be eligible for Medicare hospice benefits, patients must be diagnosed with a terminal illness and elect to receive palliative treatment exclusively. Palliative treatment consists of medical care focused only on providing pain relief and comfort measures; there are no preventative or curative treatments associated with hospice care. Medicare beneficiaries must also have a life expectancy of six months or less in order to qualify for hospice care.

Vitas allegedly submitted hundreds of fraudulent claims to Medicare, some totaling as much as $170,000 each. In one example, Vitas submitted a $169,821 reimbursement claim to Medicare for a female patient that the hospice provider diagnosed with heart failure. The diagnosis was a red flag, as the patient had no previous or current symptoms to indicate she was suffering from any form of terminal disease, including heart disease. In fact, when the patient was originally admitted to the hospital, she was living independently in her own home and performing daily activities with no assistance. In fact, hidden within Vitas’s own medical documentation, the patient was noted to be “very healthy given her age.”

Allegations in the False Claims Act lawsuit also accuse Vitas of encouraging clinical staff members to admit high numbers of patients for hospice care, despite their diagnosis. The company allegedly paid out bonuses which were based on the number of patients each staff member enrolled.  In addition, bonuses were handed out for those patients who were admitted for longer lengths of time. According to the government, the bonus structure resulted in the admission of patients who were medically ineligible for hospice care.

On an ethical and human level, one of the most disturbing allegations against Vitas is that the company convinced multiple patients that they were dying from a terminal illness when, in fact, they were not. Even family members and friends were led to believe their loved ones were suffering from a terminal condition. The misrepresentation was allegedly necessary for Vitas to submit its false reimbursement claims to Medicare. The revolting scheme was also used as a means to convince patients that their terminal conditions would require Vitas hospice services.