Why the Looming AseraCare Decision Could Decimate Hospice Fraud Prosecution

Trends in hospice fraud have authorities on high alert and providers feeling the heat.

But a looming, potentially precedent-setting legal case currently in the hands of the 11th Circuit Court of Appeals may soon make the prosecution of hospice providers much more difficult to pursue under the False Claims Act (FCA).

“[The case] could decimate all prosecution of hospice cases,” Mike Bothwell, attorney and founder of Georgia-based Bothwell Law Group, told Home Health Care News.


In 2008, 2009 and 2010, former employees of AseraCare—a subsidiary of Plano, Texas-based Golden Living—began to separately target the for-profit, multi-state hospice and palliative care chain, accusing it of engaging in fraudulent activities to illegally boost profits. Among their accusations under the FCA, the former employees claimed AseraCare had knowingly submitted false claims to Medicare for hospice care for patients who were not terminally ill, while pressuring employees to enroll as many individuals as possible through questionable recruitment tactics.

The hospice was also accused of encouraging staff to aggressively target imminent-death patients to keep length of stay numbers down and, by doing so, evade detection of fraudulent billing practices.

In 2012, the Department of Justice announced it would intervene, and separate cases against AseraCare were eventually consolidated and transferred to U.S. District Court for the Northern District of Alabama.


“Medicare benefits, including the hospice benefits, are intended only for those individuals who are appropriately qualified,” U.S. Attorney Joyce White Vance said at the time. “We must protect the public welfare and tax-funded benefits programs.”

The DOJ sought more than $200 million from AseraCare in fines and penalties.

“Consistent with hospice providers nationwide, AseraCare Hospice has evolved in recent years to treat more terminally ill patients with unpredictable disease progressions,” AseraCare Hospice President and Chief Medical Officer David Friend said in a statement following the Justice Department intervening. “It is simply not possible to precisely predict how patients will respond to challenging illnesses such as end-stage heart, lung and kidney disease, AIDS, and Alzheimer’s.”

The ensuing trial proved to be anything but straightforward.

In 2015, Judge Karon Owen Bowdre split the trial into two phases: one to focus specifically on the falsity requirement under the FCA and one to focus on all other remaining issues. As part of the first phase, a jury examined medical records of 121 patients and found that AseraCare submitted false or unsupported claims for 104 of them.

Despite the jury’s findings, the court never moved on to the second phase, as Bowdre issued an order effectively overturning the jury’s findings—and granting a new trial to AseraCare—on the grounds that she had provided “incomplete” instructions prior to their deliberations. Specifically, the Alabama judge said she did not include essential statements of FCA law in her instructions, including the notion that claims cannot be false when reasonable people can disagree on whether hospice care was properly billed.

To the dismay of health care advocates and FCA attorneys, Bowdre ended up tossing out the lawsuit months later in the spring of 2016, noting in her opinion that “when hospice certifying physicians and medical experts look at the very same medical records and disagree about whether the medical records support hospice eligibility, the opinion of one medical expert alone cannot prove falsity without further evidence of an objective falsehood.”

“There are millions of cases every year where juries decide based on disputed opinions,” Bothwell said. “It would be absurd to say that having a dispute of opinions was enough to prevent you form prosecuting false claims.”

The Justice Department is appealing the case, which, once resolved, could ultimately change the way prosecutors approach health care fraud at large.

Its fate now lies with the 11th Circuit Court of Appeals; it is unknown when an opinion will be announced.

“That decision, when it comes down, is going to have a significant impact on the ability of the government to effectively police hospice fraud,” Mark Schlein, an attorney with Los Angeles-based law firm Baum, Hedlund, Aristei & Goldman, told HHCN. “It would require more compelling evidence beyond dueling doctors’ opinions.”

Written by Robert Holly