Allstate Hospice Founders Settle Fraud Case for $1.8 Million

The founders of Texas-based Allstate Hospice and Verge Home Health Care have paid more nearly $1.85 million following a fraud investigation pertaining to the Stark Law. Onder Ari and Sedat Necipoglu have been accused of engaging in improper payments to physicians for hospice referrals.

The Physician Self‑Referral Law, commonly known as the Stark Law, forbids health care providers from billing Medicare for certain services referred by physicians with whom the entity has a financial relationship, unless that relationship satisfies one of the law’s statutory or regulatory exceptions. Also at issue in the case is a law known as the Anti‑Kickback Statute, which prohibits offering or paying remuneration to induce the referral for services covered by Medicare, Medicaid and other federally-funded programs.

“Paying physicians to steer patients to one provider over another unacceptably subverts patient choice,” said Special Agent in Charge Miranda Bennett of the U.S. Department of Health and Human Services – Office of Inspector General (OIG). “We will continue to work with our law enforcement partners to investigate improper payments to physicians to protect patients and the integrity of the programs from unscrupulous acts.”

Advertisement

OIG conducted the fraud investigation in conjunction with the FBI and the U.S. Attorney’s Office.

The U.S. Centers for Medicare & Medicaid Services and the U.S. Department of Justice in recent years have increasingly scrutinized hospice providers for compliance with anti-fraud measures such as the Stark Law and the False Claims Act. because of live discharges and re-certifications. These issues have resulted in an increasing number of CMS audits, OIG investigations and litigation. A 2019 Optima Health survey found that fewer than 50% of hospice providers felt prepared to respond to such scrutiny.

A 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.

Advertisement

The Allstate/Verge investigation began in 2016 and determined that Ari and Necipoglu had compensated physicians who had issued most referrals for those companies, according to the Justice Department. They allegedly made monthly payments to physicians pursuant to medical directorship agreements with Allstate and Verge. Those payments were in excess of fair market value for the services the physicians actually provided, the Justice Department indicated.

“The FBI is committed, along with its partners, to taking action to eliminate improper relationships and inducements that can corrupt the integrity of physician decision-making and increase health care costs,” said Special Agent in Charge Christopher Combs, FBI San Antonio Division. “Along with criminal prosecution, the FBI will also pursue administrative and civil remedies.”

Companies featured in this article:

,