San Diego Hospice Company Defrauds Government and Pays $3.5 Million Dollar Settlement to Medicare/Med-Cal and Whistleblower

Our Southern California Whistleblower and False Claims Act attorneys reported another multi-million dollar settlement reached against San Diego Hospice and Palliative Care Corporation (“SDHPC”).  Of note, not all palliative care falls within hospice care.  Rather, palliative care is meant to relieve symptoms of a disease or disorder, whether it can be cured.  On the other hand, hospice is a specific type of palliative care for people who likely have 6 months or less to live.  Some insurers or state Medicaid agencies cover hospice for a full year.  In California, Medi-Cal only allows physicians to certify a patient for hospice care if the patient’s life expectancy is 6 months or less if the illness would run its normal course.  Medicare has the same requirement.

Here, an employee of SDHPC, who was a nurse and on the admissions team, alleged that SDHPC violated state and federal mandated certification laws by falsely certifying and re-certifying beneficiaries for hospice services when they did not have the qualifying illness.  Then, the government reimbursed SDHPC for those fraudulent hospice services.  The whistleblower will receive $625,000 which is almost 20% of the government’s recovery.   Although the allegations were settled, over a number of years, state and federal guidelines were not followed by SDHPC resulting in government health programs paying hundreds of millions of dollars for ineligible patient services.

Interestingly, over this time period, SDHPC had an internal policy that heavily encouraged admitting almost all of the patients who were referred to it even if the patients did not qualify for the terminally ill criteria under Medi-Cal and Medicare.  In addition, when the whistleblower approached the physicians and complained to management about these practices, she was rebuffed by the physicians and later written up by management for her disagreements with SDHPC’s admission criteria.  Now, we learned that the criteria was placing undue pressure to admit patients for hospice care and to falsify the patients’ status reports.

When the federal government heard about these practices, it initiated an investigation.  A False Claims Act (“FCA”) law suit followed which led to this settlement 5 years later.  Under the FCA, the Judge is entitled to order the defendant to pay triple the actual damages that the jury finds.  In addition, the FCA also permits statutory penalties from $5,500 to $11,000 for each false claim submitted by the defendant.  As result, the whistleblower may receive approximately 15 to 25 percent of the total FCA recovery plus attorney’s fees.

As the main enforcement arm of the federal government, the Justice Department reviews all cases filed under the FCA.   Then, once the whistleblower case is assessed, the government decides whether it will prosecute or allow the whistleblower to bring the complaint on the government’s behalf.

The FCA is used to stem out fraud related to billing, staffing, and kickbacks. Examples of these are when financial companies are supposed to abide by state and federal laws and chose to ignore them.  They also bills for services that were not provided or the bill was submitted at an improperly higher rate of reimbursement for the services.  In addition, financial companies are often fount to illegally bill the government for substandard services by fraudulently certifying otherwise. Alternatively, these companies may realize that they have credit from their services that they have to repay to the government, but the companies do not reimburse the government within the 60 day time frame.  See these blogs for more examples of the FCA.

If you witness any potential false claims in California (i.e. requests for reimbursement to the government, not actually rendering work when reimbursement is received, or receiving and knowingly retaining an overpayment) by your company, or you are retaliated against for voicing your concern about potential wrongdoing, immediate action is vital.  Contact the experienced employment law attorneys at Stephen Danz & Associates for a free consultation to discuss your circumstances and legal options.