The New Yorker and ProPublica have published a piercing and comprehensive piece of investigative journalism exposing the fraud, abuse, and patient harm that has sadly become so common in the hospice industry. The attorneys of Frohsin Barger & Walthall (FBW) would like to thank and congratulate author Ava Kofman for her extraordinary efforts. FBW and attorney Jim Barger are honored to have been included in Kofman’s research process and featured in the article. The article, which is available in the December 5, 2022 print edition of the New Yorker, is titled “Endgame: How Hospice Became a For-Profit Hustle” and is available online on the New Yorker’s website. The joint effort between ProPublica and the New Yorker is also available on ProPublica’s website.
Kofman’s Examination of FBW Hospice Fraud Case United States v. AseraCare
Providing a detailed and cutting analysis of the hospice industry, Kofman examines the impact of the shift from a primarily non-profit collection of healthcare providers to an industry dominated by for-profit hospices, private equity investors and venture capital firms. A focal point of this story is the saga of False Claims Act hospice fraud case United States v. AseraCare, which was filed and litigated by Frohsin Barger & Walthall clients Marsha Farmer and Dawn Richardson. Kofman brilliantly profiles Farmer and describes the fraud and patient harm caused by immense pressure for-profit hospice provider AseraCare put on Farmer and her co-workers. Specifically, the article explains how Farmer’s supervisors set impossible hospice admission quotas and paid employees who met admissions quotas cash bonuses and perks; while employees who couldn’t hit their numbers were fired. As explained by Kofman and well-known to the experienced hospice fraud attorneys of FBW, these tactics are ubiquitous in the hospice industry and regularly lead to billing for patients who are not eligible for hospice or do not understand the end-of-life purpose of the Medicare Hospice Benefit.
After years of ever-increasing quotas and recognizing that the vast majority of AseraCare’s patients were not actually terminally ill, and ineligible, Farmer and Richardson discovered the False Claims Act and learned they could file a lawsuit against their employer and receive a share of any monetary recovery. This discovery was made through local news reports of another FBW False Claims Act case against hospice provider SouthernCare–which alleged nearly identical conduct that Richardson and Farmer were witnessing at AseraCare. The SouthernCare case settled for $24.7 million in 2009 and FBW’s clients received $4.9 million. Determined to stand up against the fraud they were witnessing, Farmer and Richardson contacted FBW and filed a False Claims Act complaint, which as Kofman reports “would go on to become the most consequential lawsuit the hospice industry had ever faced.”
Kofman’s article takes the reader through the twists and turns of the AseraCare case, including the how Farmer and Richardson worked with FBW attorneys to gather facts and file the Complaint, government intervention, jury trial, appeal and ultimate settlement. Through this process, FBW attorneys Jim Barger and Elliott Walthall were honored to be the first private attorneys general to join a Department of Justice trial team in a False Claims Act trial. In what Kofman describes as “one of the most bizarre trials in the history of the False Claims Act,” the prosecution won an overwhelmingly favorable jury verdict in phase one of the trial. Yet, days after the jury verdict, the District Court overturned the jury’s verdict and ruled for AseraCare.
Three years later the Eleventh Circuit Court of Appeals ruled that the District Court improperly excluded evidence during the trial and sent the case back to District Court for a new trial. The Government and FBW’s clients ultimately settled with AseraCare. However, in the meantime, the attorneys of FBW have continued to vigilantly pursue credible allegations of hospice fraud, including securing a $75 million settlement against Vitas–the largest hospice provider in the United States.
Examination of Patient Harm and Developing Hospice Fraud Schemes
In addition to the piercing portrayal of the AseraCare case and the critical role that whistleblowers play in policing the hospice industry, Kofman details the tragic patient harm that often occurs in for-profit hospices. From over-medicated patients who narrowly escape death to identity theft victims who are unaware that they have even been signed up for hospice, Kofman highlights the wide-reaching impacts of for-profit hospice and drives home the need for hospice reform.
Reforms may be best directed at a fast growing hospice fraud scheme known as “churn and burn.” As Kofman describes the scheme, “providers open up a hospice and bill, bill, bill and once that hospice is audited or reaches the Medicare-reimbursement limit, it shuts down, keeps the money and buys a [new] pristine hospice license that comes with a new Medicare billing number, transfers its patients over and rakes in the dollars again.” This scheme has spawned the creation a new frontier of hospice fraud where individuals establish hospice companies that are nothing more than shell companies that hold licenses and accompanying Medicare billing numbers. Then, when a “churn and burn” hospice operator runs into trouble and needs a new Medicare billing number, they simply purchase a new license. Such “turn-key” hospice companies are openly advertised for as much as $500,000. Obviously, patient care is not a priority at “churn and burn” hospices. As Kofman reports, patients are fleeing these “startup hospices” because “they hadn’t seen a nurse in two weeks, and no one was answering the phone.”
Kofman’s Article Initiates Bipartisan Congressional Action
Kofman’s dedicated and effective reporting is already effecting change in the maligned hospice industry. Based on Kofman’s article, a bipartisan group of United States Senators have called on the Department of Health and Human Services to “immediately investigate this situation.” In a December 16 letter, to the Centers of Medicare and Medicare Services and the Office of Inspector General, the bipartisan members of Congress wrote: “Medicare fraud cannot be tolerated, especially when it is being perpetrated on our nation’s most vulnerable patients.” The letter went on to decry the “troubling trend” spotlighted by Kofman’s article and requested a briefing from the agencies within two weeks about plans to “address the proliferation of fraudulent hospice providers.”
As attorneys dedicated to representing whistleblowers under the False Claims Act, and having spent nearly two decades focusing on hospice fraud cases, FBW is immensely grateful to Kofman, the New Yorker and ProPublica for exposing the story of hospice fraud and initiating much-needed reform.
For more information on hospice fraud and the False Claims Act, contact Frohsin Barger & Walthall.
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