Lawsuit Claims Amedisys Hid Overbilling to Sell Hospice Business

Amedisys, Inc.—one of the nation’s largest home health and hospice providers—hid that it was overbilling Medicare in order to quickly sell off a part of its hospice business last year, according to allegations in a recently filed lawsuit.

The deal in question is the sale of Amedisys Wyoming, LLC, to Frontier Home Health and Hospice, LLC.

Frontier, a regional provider serving five western states and Alaska, began discussions with Amedisys to buy the Wyoming-based business only about a month before the purchase was finalized, according to the legal complaint filed April 2.

Amedisys, which is based in Louisiana and operates in 37 states, rushed to finish the deal before a Corporate Integrity Agreement (CIA) with the federal government took effect on April 22, 2014, the complaint states.

That CIA was part of a $150 million settlement to resolve charges that Amedisys billed Medicare improperly for home health services.

“Amedisys had obtained the government’s consent that the [Wyoming] business would not be subject to the CIA if Amedisys’s interest was sold before the effective date of the CIA,” the complaint states. “Because of the requirements of the CIA, Amedisys understood that the Wyoming Business would be worth much less, and in fact prospective purchasers might not want to purchase it at all, if the business was subject to the CIA.”

The very short time frame on the deal made customary due diligence impossible, Frontier contends. However, Amedisys guaranteed that the Wyoming business was in compliance with Medicare laws and stated in the purchase agreement that Frontier could rely upon information furnished by Amedisys about its Medicare revenues and program compliance, according to the complaint.

After assuming control of the Wyoming business, Frontier says it discovered that Amedisys was routinely overbilling Medicare for hospice services and had instituted several unlawful practices.

For example, a high percentage of the Amedisys patients were not eligible to receive hospice care because they did not have a life expectancy of six months or less, Frontier claims. Amedysis ignored data compiled by the government about its billing patterns, which showed that its patients’  length-of-stay far exceeded the national average and should have raised red flags, according to the complaint.  

Amedisys also had implemented a bonus structure that incentivized workers to keep patients under the hospice benefit even if they no longer qualified, Frontier alleges.

Based on records in the the Medicare claims processing system, Amedisys has repaid $120,000 to Medicare since the sale to Frontier closed, according to the complaint. The hospice revenues that Amedisys reported prior to the sale were inflated by at least this amount, Frontier contends. 

Frontier is seeking compensatory and punitive damages. The compensation should account for the difference between the actual value of the business and the value that Frontier believed it was negotiating for; the company also is requesting a court declaration that Amedisys is obligated to return overpayments to the government in a timely manner, or indemnify Frontier for the costs in doing so.

An “actual controversy” exists between Amedisys and Frontier as to whether Amedisys has fulfilled its obligation to return all Medicare overpayments related to the Wyoming business to the government, the complaint states. Amedisys had not responded to HHCN’s request for comment as of press time.

The case is before the United States District Court, District of Connecticut. Frontier is based in Connecticut.

Written by Tim Mullaney