[Updated] $75 Million FCA Settlement is Largest-Ever for a Hospice

The largest for-profit hospice chain in the nation and its parent company have agreed to pay $75 million to resolve false claims allegations for hospice services, the Department of Justice announced. The resolution is the largest amount recovered from a provider of hospice services under the False Claims Act, according to the DOJ.

Chemed Corporation (NYSE: CHE) and wholly owned subsidiaries, including Vitas Hospice Services and Vitas Healthcare—the nation’s largest for-profit hospice chain—settled with the Justice Department. Cincinati-based Chemed acquired Vitas in 2004.

“This litigation and settlement demonstrate the commitment of the U.S. Attorney’s Office to investigate and pursue hospice providers engaging in practices that abuse the Medicare hospice benefit,” Acting U.S. Attorney Thomas M. Larson of the Western District of Missouri said in a DOJ release.

Between 2002 and 2013, Vitas allegedly submitted false claims to Medicare for services to hospice patients who were not terminally ill and thus did not qualify for the hospice benefit. 

Vitas also settled allegations it submitted false claims to Medicare for continuous home care services that were not necessary, not actually provided or not performed in compliance with Medicare requirements. Continuous home care services can be provided under certain circumstances for hospice patients, and the care is the highest daily rate reimbursement that Medicare pays, according to the DOJ.

Vitas and Chemed dispute the DOJ’s allegations, and stated no admission or determination of wrongdoing in the settlement, Chemed stated in a press release. In addition to $75.5 million plus interest paid to the United States and the state of Illinois, Chemed will pay  certain attorney fees and expenses of whistleblowers, or qui tam relators. The total settlement is estimated at $85 million pre-tax.

“The litigation brought by the DOJ largely focused on professional disagreement between qualified physicians in determining if a patient has a terminal prognosis and the appropriate level of care,” the release read.

In its second-quarter conference call, Chemed recorded an after-tax charge of $55.8 million for this settlement, Chemed CFO David Williams confirmed to Home Health Care News. He noted that the settlement turned out to be less, as it came to $53 million after tax.

“The fact that you take reasonable disagreement and make a fraud allegation out of it is outrageous,” Williams told HHCN.

He noted the case of AseraCare, where a lawsuit that could have resulted in a $200 million FCA penalty against the Texas-based hospice provider was thrown out by a federal judge. Reasonable disagreement among physicians over patient eligibility for hospice care does not prove fraud, the judge said in that case, which is awaiting ruling from the 11th Circuit Court of Appeals.

“The government ask wasn’t onerous to us financially, so we thought it was more prudent for our shareholders to settle this rather than gambling on the Court of Appeals in the Asera case,” Williams said.

To settle the Department of Health and Human Services’ (HHS) administrative claims, Vitas also entered a five-year Corporate Integrity Agreement (CIA) with the HHS Office of Inspector General (HHS-OIG).

The settlement also resolves three lawsuits filed under the FCA’s whistleblower provision, which lets private parties file suit for the U.S. for false claims and share in a portion of the government’s recovery. The amount the private whistleblowers will recover has not yet been determined, the DOJ indicated.

*Editor’s note: This article has been updated to include comments from Chemed.

Written by Maggie Flynn

Maggie Flynn
Business reporter
When she's not working, Maggie enjoys running, reading, writing and sports, in no particular order. Favorite things include murder mysteries, Lake Michigan and the Pittsburgh Penguins.