​​Care Alternatives Returning to Court in FCA Case

The U.S. Department of Justice (DOJ) is pursuing a qui tam lawsuit against Care Alternatives Inc., doing business as Ascend Health, for alleged False Claims Act (FCA) violations.

Four former employees of Care Alternatives have alleged that the New Jersey-based company billed Medicare for hospice services when patients were not eligible to receive them.

The lawsuit was filed in the third circuit U.S. Court of Appeals by the DOJ, Taxpayers Against Fraud Education Fund and the U.S. Chamber of Commerce.


“Care Alternatives’ violations were not just isolated incidents, but were part of a pattern of significant noncompliance,” according to court documents.

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

“Realtors have put forward ample evidence that Care Alternatives’ actual violations … were not ‘minor or insubstantial,” according to language in the court documents. “Beginning with the scope of Care Alternatives’ alleged violations, this is not a case about occasional noncompliance. Care Alternatives’ documentation deficiencies were pervasive; Care Alternatives was aware of the gravity of its noncompliance; and Care Alternatives’ patients were potentially ineligible, as a medical matter, for hospice care.”


The case has been winding through the courts since 2008.

Additional allegations of hospice fraud came the following year in November 2009, when the U.S. Department of Health & Human Services (HHS) Office of the Inspector General (OIG) subpoenaed Care Alternatives for allegedly altering the medical records of 112 patients, along with allegations of violating the anti-kickback statute. OIG raised questions around a variety of its corporate policies, internal documents, physician-based hospice certifications and employee emails.

Federal courts in 2021 sided with Care Alternatives in the whistleblower lawsuit. New Jersey U.S. District Judge Juan Sanchez concluded that plaintiffs did not establish materiality. “Materiality” generally means a misstatement or misrepresentation could have influenced Medicare’s decision to pay or deny the claim.

The decision followed several years of various courts overturning each other’s rulings, and the U.S. Supreme Court’s refusal to hear the case.

The current suit appeals the 2021 ruling, claiming that it was “based solely on failure to show falsity,” plaintiff attorneys stated in the court documents. Now federal courts are being urged to reverse the previous decision

According to the plaintiff’s attorneys, the District Court should have considered evidence that was relevant to whether Care Alternatives complied with regulatory requirements, such as a terminal diagnosis from a certifying physician.

“[The District Court] viewed the mere ‘difference of opinion’ between experts regarding the accuracy of a patient’s prognosis as insufficient to create a triable dispute of fact as to the element of falsity,” the court documents indicated. “Notwithstanding the government’s prolonged inaction in the wake of Relators’ fraud allegations, it was erroneous to treat this factor as determinative of immateriality. For the foregoing reasons, we will reverse the District Court’s grant of summary judgment and remand for further proceedings consistent with this opinion.”

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