On October 30, 2017, the Department of Justice announced that Chemed Corporation and its subsidiaries Vitas Hospice Services LLC and Vitas Healthcare Corporation have agreed to pay $75 million to resolve allegations that defendants violated the False Claims Act (FCA) by submitting false claims for hospice services to Medicare.
Whistleblowers Resolve Case Against Major Corporation
The allegations leading to this settlement originated when three separate whistleblowers independently filed lawsuits against Vitas under the qui tam or whistleblower provisions of the False Claims Act. Frohsin Barger & Walthall is proud to have the honor of representing one of those whistleblowers, Ms. Barbara Urick. Under the qui tam provisions, Ms. Urick and her fellow co-relators are entitled to split between 15-30% of the $75 million settlement. The amount to be recovered by Ms. Urick and her fellow co-relators has not yet been determined.
Defendant Chemed is a publicly traded company based in Cincinnati, Ohio. Chemed exclusively operates two wholly-owned subsidiaries — Vitas Hospice, the largest provider of palliative end-of-life care in the country and Roto-Rooter, the plumbing and drain cleaning service. Between Chemed’s two businesses, Vitas is by far the larger revenue producer — earning $1.12 billion in 2016 (of which approximately 97% was derived from taxpayer funded Medicare and Medicaid programs) as compared to Roto-Rooter which brought in $453.5 million during the same time.
Allegations Resolved in the Settlement
The settlement resolves allegations that between 2002 and 2013 Vitas knowingly submitted or caused to be submitted false claims to Medicare for services to hospice patients who were not terminally ill. Medicare’s hospice benefit is available for patients who elect palliative treatment (medical care focused on the patient’s relief from pain and stress) for a terminal illness and qualify as “terminally ill,” defined as the patient has a life expectancy of six months or less if their disease runs its normal course. Patients who elect the hospice benefit also choose to forgo the right to curative care (medical care focused on treating the patient’s illness). The settlement resolved allegations that Vitas billed for patients who were not terminally ill and thus did not qualify for the hospice benefit. To accomplish this scheme, it was alleged that Vitas rewarded employees with bonuses for the number of patients receiving hospice services, without regard to whether they were actually terminally ill and whether they would have benefited from continuing curative care.
The settlement also resolves allegations that between 2002 and 2013, Vitas knowingly submitted or caused to be submitted false claims to Medicare for continuous home care services that were not necessary, not actually provided, or not performed in accordance with Medicare requirements. The reimbursement rate for continuous home care services is the highest daily rate that Medicare pays, and hospice companies are paid hundreds of dollars more on a daily basis for each patient they certify as having received continuous home care services rather than routine hospice services. In 2013, hospice companies such as Vitas received up to $895.56 per day for providing one patient with continuous home care. According to the allegations, the defendants set goals for the number of continuous home care days billed to Medicare and used aggressive marketing tactics and pressured staff to increase the volume of continuous home care claims, without regard to whether the patients actually required this level of crisis care.
Frohsin Barger & Walthall Achieves Another Record-Breaking Hospice Fraud Settlement
The attorneys at Frohsin Barger & Walthall have dedicated the majority of their careers to prosecuting hospice fraud and this $75 million Vitas settlement marks another major victory. The firm’s first record setting settlement was a $24.7 million settlement with SouthernCare in 2009. Since that time, the attorneys of Frohsin Barger & Walthall have been involved in nearly every major False Claims Act hospice fraud case, represented dozens of whistleblowers in hospice fraud cases and achieved numerous favorable settlements. Through this experience, Frohsin Barger & Walthall has garnered a reputation as the preeminent hospice fraud False Claims Act attorneys. For a detailed review of hospice fraud under the False Claims Act, read Jim Barger’s seminal law review article, which also details Frohsin Barger & Walthall’s major hospice fraud cases.
Frohsin Barger & Walthall would like to thank and congratulate all entities that help achieve this record-breaking settlement including the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of Missouri, the U.S. Attorneys’ Offices for the Central District of California and the Northern District of Texas and the Department of Health and Human Services Office of Inspector General. Frohsin Barger & Walthall would also like to thank and congratulate our co-counsel and our client Ms. Urick’s fellow relators, Laura Spottiswood and Charles Gonzales, for their years of bravery and hard work which has resulted in this settlement.