Biggest U.S. Hospice Co Defrauded Medicare, Feds Charge

May 7, 2013 -- The Department of Justice is accusing the country's biggest provider of for-profit hospice services of fraud.

Vitas Hospice Services and its parent company, Chemed Corp. of Cincinnati, are accused of having "misspent tens of millions of taxpayer dollars from the Medicare program," according to a statement released by the Justice Department on May 2.

In a complaint filed the same day in the District Court for the western district of Missouri, the government contends that since 2001 Vitas has defrauded Medicare two ways: It has accepted for hospice care patients not eligible to receive it, billing Medicare for their treatment; and it has charged Medicare for "crisis care" given to patients who didn't need it and/or never got it.

Only dying patients with six or fewer months to live are eligible to receive Medicare-reimbursed hospice care.

Of those patients, only ones "experiencing an acute crisis that requires the immediate and short-term provision of skilled nursing services" are eligible to receive so-called crisis care, which is, according to the complaint, the most costly form of hospice care provided to persons dying at home: In 2013, it says, Medicare's daily reimbursement rate for crisis care overall was $742 more per patient than the daily rate for routine home care.

The lawsuit cites as an example of fraud a California patient identified only as "MC."

At the same time that Vitas was representing MC to Medicare as eligible for hospice, Vitas' own records, cited in the complaint, state that MC did not have a terminal illness whose prognosis was six months or less. Rather, it says, MC was "living independently and performing daily activities without assistance."

For example, "during the time that Vitas billed Medicare for crisis care for MC, Vitas's nursing notes state that MC was doing her own laundry."

For this one patient alone, Medicare paid close to $170,000 in claims between 2009 and 2012, according to the complaint.

An analysis by Justice found that Vitas' billings for crisis care in general were "almost six times what would be expected if its crisis care figures were in line with the national average."

A Vitas nurse, cited in the complaint, reported that on more than one occasion she had arrived at the home of some patient described by Vitas as needing crisis care, only to find the patient out—"at church, at the beauty parlor, or playing bingo." Despite the fact that these patients did not need or receive crisis care, says DOJ, Vitas nonetheless billed Medicare for the services.

The crux of the government's charge is "that Vitas focused on maximizing Medicare reimbursements for as many patents as possible while disregarding patients' medical needs and Medicare guidelines. Vitas regularly ignored concerns expressed by its own physicians and nurses regarding whether its hospice patients were receiving appropriate care."

A request by ABC News for further comment from the U.S. Attorney's Office got no response. A request for comment from Chemed and Vitas was answered by a repetition of a statement Chemed released May 3rd, which says in part that Chemed and Vitas intend to defend themselves vigorously. It confirms that the government is seeking treble damages, statutory penalties, court costs and interest.

"Chemed and Vitas have made significant investments in controls, systems and procedures to uphold the highest industry standards and to maintain compliance with all regulatory requirements," says the May 3 statement. "Our compliance efforts are designed to ensure our services are provided only to eligible patients."