Aseracare hospice in a federal lawsuit brought forth by whistleblowers

By Dr. Ananya Mandal, MDJan 4 2012

According to a federal lawsuit, AseraCare Hospice submitted “false and fraudulent” claims for payment to the U.S. and misspent millions of dollars in Medicare money meant for the care of terminally ill patients. AseraCare, based in Fort Smith, Arkansas, runs 65 hospice centers in 19 states, according to the lawsuit.

The Justice Department said it has intervened in a whistle-blower case against AseraCare in federal court in Birmingham, Alabama, accusing the closely held company of seeking to cheat Medicare for the hospice care of patients who weren’t terminally ill. The U.S. is seeking three times the damages and a penalty of $5,500 to $11,000 per claim.

U.S. Attorney Joyce White Vance of Birmingham said in an e-mailed statement, “Medicare benefits, including the hospice benefits, are intended only for those individuals who are appropriately qualified… We must protect the public welfare and tax-funded benefits programs.”

David Beck, AseraCare’s general counsel, said in an e- mailed statement that the company was “disappointed” by the Justice Department’s decision to intervene in the case and that the allegations have no merit. The president of AseraCare Hospice, David Friend, said in the statement, “Each one of our hospice patients is in our care because two independent physicians have certified his or her eligibility and because the individual has made a decision to focus on care and comfort when a cure is not possible.”

Although elderly patients may qualify for a variety of Medicare-paid services, hospice care is supposed to be limited to terminally ill patients receiving palliative care. To be eligible for Medicare hospice benefits, a patient must have a medical prognosis of six months or less to live.

“AseraCare, through its reckless business practices, admitted and retained individuals who were not eligible to receive Medicare hospice benefits, because it was financially lucrative - and did so even after AseraCare’s auditor alerted AseraCare to troubling problems,” according to the government’s lawsuit, which was unsealed on Dec. 22. The U.S. alleges false claims were submitted for payment since at least January 2007.

The whistle-blower suit was filed in 2009 by two former AseraCare employees - Dawn Richardson and Marsha Brown - who will receive a portion of any recovery. First enacted during the Civil War, the federal False Claims Act , 31 U.S.C. § 3729 et seq., authorizes treble damages and a penalty from $5,500 to $11,000 per claim for anyone who knowingly submits or causes the submission of a false or fraudulent claim to the United States. Under the False Claims Act, whistleblowers may file lawsuits on behalf of the United States and share in any recovery.