Justice Department, Tennessee File False Hospice Claims Suit Against Curo Health Services

The U.S. Department of Justice and the State of Tennessee have filed a consolidated complaint against Curo Health Services Holdings, Regency Healthcare Group and TNMO Healthcare, doing business as Avalon Hospice. The complaint alleged that the affiliated companies violated the False Claims Act (FCA) as well as Tennessee state laws.

FCA cases often hinge on the question of patient eligibility for hospice care based on a six-month terminal prognosis. This case centers around a qui tam complaint. This occurs occurs when a whistleblower, called a “relator” by the courts, files a False Claims Act suit in concert with the government and possibly receives a portion of any funds recovered by the government via the lawsuit, typically ranging from 15% to 25%.

“Defendants pressured staff at their local Tennessee hospice agencies to maximize admissions and census through aggressive financial targets and incentives, while simultaneously discouraging the discharge of patients who were no longer eligible,” the complaint alleged. “Defendants also failed to ensure that physicians who provided legally required and material certifications and recertifications of patients’ terminal illnesses received or adequately considered complete and accurate information regarding patients’ conditions.”


The Department of Health and Human Services, Office of Inspector General, and the Tennessee Bureau of Investigation Medicaid Fraud Control Unit investigated the case.

According to the complaint, the agencies are accusing the provider of failing to return Medicare and Medicaid payments they had received despite internal audits showing that some patients were not hospice eligible. The Justice Department and the Tennessee government also allege that the defendants did not adequately train clinical staff to identify and assess terminal illnesses.

Hospice organizations are under increasing legal and regulatory scrutiny related to medical necessity complaints under the False Claims Act and the closely related anti-kickback statute. Documentation errors and omissions, live discharges and lengths of stay beyond six months are the main red flags that could bring regulators to a hospice’s doorstep.


A February report from Bass, Barry, and Sims shows that a leading cause of fraud involves hospices billing Medicare for services for which patients were not eligible. This resulted in several multi-million dollar settlements during 2020, with amounts ranging from $1 million to $5.25 million.

Curo Health Services was acquired by Humana Inc. (NYSE: HUM) and private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe in July 2018 for $1.4 billion. Co-defendant Avalon Hospice is a Curo subsidiary. Humana declined to comment to Hospice News regarding the case.

“Regency and Curo knew or should have known that Avalon was admitting and retaining ineligible patients at its Jackson agency, and submitting claims to Medicare for services provided to these patients, through numerous internal complaints, audits, and investigations that were reported to regional and national managers and executives,” federal and state prosecutors alleged in the complaint.

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