The federal government has elected to intervene in a whistleblower suit filed under the False Claims Act against Hospice of the Comforter, a Florida-based hospice care facility. The Department of Justice’s decision to intervene signals that there is substantial evidence of fraud warranting the government’s involvement in the case. The qui tam False Claims Act suit was filed almost one year ago by Douglas Stone, the former VP of finance for the hospice center; Stone alleges that his erstwhile employer terminated his employment in retaliation for his repeated attempts to convince the facility’s founder and CEO to reimburse Medicare for overbilling. According to Stone, Hospice of the Comforter engaged in a systematic practice of billing Medicare for hospice care provided to patients who had not been deemed terminally ill. The federal Medicare program does not reimburse for hospice care unless the patient has been certified as terminally ill by a physician, meaning that the patient has six months or fewer to live. Stone’s complaint alleges $11 million in damages, which could be trebled under the False Claims Act to $33 million. Moreover, Hospice of the Comforter may face additional civil penalties of up to $11,000 per violation of the False Claims Act. Robert Wilson, the facility’s founder and current CEO, is alleged to have had a financial motive to admit patients who were not terminally ill, since his annual salary is supplemented by more than $200,000 a year in bonuses based on the hospice’s daily patient population.
Inflated hospice patient numbers are an increasing, pervasive concern that has attracted the attention of federal investigators. Following the launch of a federal inquiry into the issue of burgeoning hospice numbers, Hospice of the Comforter discharged a large number of Medicare patients, and the government’s investigation indeed revealed that that particular facility had an error rate of 18%, in excess of Medicare’s 15% maximum. Further investigation yielded a 77% denial rate, meaning that Medicare enforcement officers believed Hospice of the Comforter’s billing to be improper in 77% of the cases they reviewed. The hospice’s explanation for the sudden discharge of patients is that the patients were found to be no longer terminally ill, not necessarily wrongly-admitted in the first instance.
The False Claims Act, a federal whistleblower statute dating back to 1863, allows whistleblowers (known as relators) to sue on behalf of the government to recover damages from alleged false claims for payment. The federal government reviews complaints filed under the qui tam provision of the False Claims Act and may elect to intervene in the litigation. Relators may win False Claims Act lawsuits, however, regardless of whether the government intervenes. Since 1986, the Act has undergone a series of important changes; for example, a 2009 amendment to the statute extends the law’s protections against employer retaliation to all agents and contractors of the employer, and protects all individuals who make lawful efforts to stop fraud that is in violation of the FCA. The passage of the Dodd-Frank Wall Street Reform Bill and the Patient Protection and Affordable Care Act (“PPACA”) have added to the types of fraud that may give rise to valid complaints under the False Claims Act. If they prevail, relators such as Stone stand to recover between 15% and 30% of any final judgment or settlement.