Curo Subsidiary SouthernCare Settles Whistleblower Lawsuit for $5.9 Million

A subsidiary of one of the nation’s largest hospice companies — Curo Health Services — has agreed to pay millions of dollars to settle a federal whistleblower lawsuit claiming that the company submitted Medicare claims that were medically unnecessary or lacked documentation.

Curo Health Services was acquired by Humana Inc. (NYSE: HUM) and private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe in July for $1.4 billion. Its subsidiary, SouthernCare Inc., a hospice provider with operations across nine states, settled the allegations for $5.9 million, the U.S. Department of Justice (DOJ) announced Thursday.

The settlement is yet another example of the increased scrutiny facing the hospice industry, especially from the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG).


“Unnecessarily admitting people into hospice is particularly dangerous, as it can cause patients who are not terminally ill to stop seeking treatments for recovery,” Maureen R. Dixon, HHS-OIG special agent in charge, said in a statement. “HHS-OIG will continue to work with the U.S. Attorney’s Office to ensure federally funded health care resources are used appropriately.”

As part of the lawsuit, two whistleblowers that were former employees alleged that SouthernCare provided hospice care to patients who were not eligible under the Medicare program, with some patients being treated for several years. To be eligible for end-of-life treatment, Medicare requires patients be diagnosed with a medical condition that, under normal circumstances, results in a life expectancy of six months or fewer.

The settlement agreement specifically resolves allegations arising from SouthernCare’s facilities in Pennsylvania from January 2009 through December 2014. Curo Health Services acquired SouthernCare Inc. in June 2014, a spokesperson told Home Health Care News via email, meaning allegations largely preceded Curo’s ownership.


“At SouthernCare Hospice, our clinicians remain dedicated to providing appropriate and compassionate hospice care,” the spokesperson said. “We are pleased to put this issue behind us and focus on providing quality patient care.”

The whistleblowers, Dawn Hamrock and Patricia Beegle, will share approximately $1.1 million of the recovery between them, according to DOJ. Hamrock resigned in 2012 as clinical director of a SouthernCare hospice in New Castle, Pennsylvania, after questioning the company’s practices.

Documents shared with HHCN from The Employment Law Group show that, at the time of the alleged fraud, SouthernCare was operating under a five-year corporate integrity agreement required by the settlement of a previous whistleblower case in 2009, which had claimed similar fraud.

The Employment Law Group, based in Washington, D.C., is a nationwide law firm that represents whistleblowers and other employees claiming wrongdoing in the workplace. The firm represented Hamrock in her case against SouthernCare.

“This case shows the importance of watching out for the recurrence of Medicare fraud, which can become a habit for certain corporations,” R. Scott Oswald, managing principal of The Employment Law Group, said in a statement sent to HHCN.

Overall, OIG helped recover $2.91 billion in fiscal year 2018 as part of cases involving Medicare fraud.

Other prominent hospice settlement cases from the past few years include Genesis HealthCare’s $53.6 million settlement in 2017, Evercare Hospice and Palliative Care’s $18 million settlement in 2016 and Guardian Hospice of Georgia’s $3 million settlement in 2015.

Written by Robert Holly

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