Consumer Fraud

Whistleblower lawsuit alleges massive hospice and Medicare fraud scheme

whistleblower 5 370x210 Whistleblower lawsuit alleges massive hospice and Medicare fraud schemeThe trial of a whistleblower lawsuit against AseraCare, one of the largest for-profit hospice providers in the U.S., started in Birmingham, Ala. Monday, with plaintiffs’ lawyers expected to give opening arguments in the case that accuses the company of fraudulently billing U.S. taxpayers nearly $70 million for the care of patients who weren’t really dying.

As egregious as those allegations sound, federal prosecutors say the larger issue is that AseraCare “caused hundreds of non-terminally ill patients to prematurely give up seeking a cure so it could bill Medicare for hospice,” reported.

AseraCare operates about 60 hospice facilities in Alabama and 18 other states. It admits about 10,000 new patients every year. Most AseraCre patients are enrolled in Medicare and are not privately ensured.

According to, the False Claims Act case is structured in two phases, with the first phase focusing on whether 123 claims AseraCare submitted to Medicare for reimbursement were valid.

Court records show that a random sample of 233 patient cases was pulled from a larger group of 2,181 AseraCare hospice patients. In each of these cases, AseraCare billed Medicare for continuous hospice care for at least a year between January 2007 and February 2011. Of the 233 random cases analyzed, more than half of them were ineligible for hospice services, the Justice Department asserts.

“A patient can only be considered for the Medicare hospice benefits if they are diagnosed as terminally ill with a life expectancy of six months or less,” reported. “The patients, or their families, also must agree to give up seeking a cure to be eligible for the comfort care hospice provides.”

In the second trial phase, additional allegations will be argued, including claims that AseraCare pressured employees and persuaded doctors to enroll new patients even when those patients were not in need of hospice services.

AseraCare claims its patient admissions were based on valid doctor-issued prognoses, but the Justice Department says it has evidence that the company “marginalized doctors, systematically pressured its own clinical staff to admit and keep ineligible patients, submitted false hospice claims for patients who were not terminally ill, and was put on notice from internal and external audits and employee complaints that this was occurring.”

These fraudulent practices, the Justice Department claims, “caused non-terminally ill patients to prematurely give up curative or rehabilitative care so that the company could bill Medicare for hospice payments.”

The whistleblower complaint alleges AseraCare received $67.5 million in fraudulent Medicare reimbursements. If the case isn’t settled first, the company could ultimately face total fines and penalties of more than $200 million, which would make it the largest False Act Claims case involving a hospice provider in U.S. history.