Court Dismisses Fraud Case Against Heartland Hospice

A federal judge has dismissed with prejudice a False Claims Act case filed against Heartland Hospice, a subsidiary of post-acute care, skilled nursing and long term care provider HCR Manorcare.

A qui tam complaint occurs when a whistleblower, called a “relator” by the courts, files a False Claims Act suit on behalf of the government and possibly receives a portion of any funds recovered by the government via the lawsuit, typically ranging from 15% to 25%.

The case began in 2010 with a qui tam complaint against Heartland, brought by a former employee who alleged that the hospice provider had knowingly filed Medicare hospice claims for patients who were not eligible for the Medicare Hospice Benefit.

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The legal system has been inundated with such cases in recent years. According to a 2018 Department of Justice memo offering guidance on qui tam cases, known as the Granston memo, the department received 12 such cases every day during 2017.

“Overall, qui tam cases continue to be filed in increasingly high numbers year over year,” said Jeff Gibson, member of the Law Firm of Bass, Berry, and Sims. “We continue to see an increase in both civil and criminal investigations involving hospice providers.  Hospice fraud continues to feature prominently in [U.S. Department of Health and Human Services Office of the Inspector General’s] Work Plan.”

The False Claims Act imposes penalties on entities who submit fraudulent financial claims to government programs; many cases involving the False Claims Act are related to health care.

The U.S. Centers for Medicare & Medicaid Services and the U.S. Department of Justice in recent years have increasingly scrutinized hospice providers because of live discharges and re-certifications. These issues have resulted in an increasing number of CMS audits, Health and Human Services Inspector General investigations, and False Claims Act litigation. An Optima Health survey earlier this year found that fewer than 50 percent of hospice providers felt prepared to respond to such scrutiny.

Earlier this year, report from Bass, Barry, and Sims indicated that a leading cause of hospice involvement in fraud cases result from allegations that the organization in question billed Medicare for services for which patients were not eligible. This resulted in several multi-million dollar settlements during 2018, with amounts ranging from $1.24 million to $8.5 million.

In the Heartland Case, the relator alleged that the hospice engaged in improper, company-wide practices to encourage enrollment and recertification of patients who had a life expectancy of greater than six months. To certify a patient for the Medicare Hospice Benefit, CMS requires a six-month terminal prognosis.

“This was part of an industry-wide investigation, where every major provider was investigated based on similar allegations,” said Eric Dubelier, a lawyer with Reed Smith, the law firm representing Heartland in the case. “The government investigated this for eight years under seal and decided not to intervene.”

In the order dismissing the case, U.S. District Judge James Carr indicated that the evidence the relator submitted was insufficient to establish fraud.

“[The relator] alleges no facts showing overpayment. She identifies no claims Heartland submitted for care it provided to the identified patients, much less facts (beyond her own bald conclusions) showing that the patients did not qualify for hospice care,” Carr wrote.

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