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Envision to Sell to KKR for $9.9 Billion

We represented Envision Healthcare Corporation (NYSE: EVHC) in its definitive agreement to sell to KKR in an all-cash transaction for $9.9 billion, including debt. KKR will pay $46 per Envision share in cash to buy the company, marking a 32 percent premium to the company's volume-weighted average share price from November 1, when Envision announced it was considering its options. The transaction is expected to close the fourth quarter of 2018. Read more

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Six Things to Know Before Buying a Physician Practice spotlight

Dermatology, ophthalmology, radiology, urology…the list goes on. Yet, in any physician practice management transaction, there are six key considerations that apply and, if not carefully managed, can derail a transaction. Download the 6 Things to Know Before Buying a Physician Practice to keep your physician practice management transactions on track.

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United States Files False Claims Act Complaint against Largest For-Profit Hospice Chain


May 6, 2013

The United States Department of Justice announced that it has filed suit against Vitas Hospice Services LLC and Vitas Healthcare Corporation ("Vitas"). The United States alleges that Vitas, the largest for-profit hospice chain in the United States, violated the False Claims Act by submitting false billings for hospice services.

As discussed further below, the government's Complaint highlights the need for hospice providers to periodically assess marketing strategies and evaluate patient data that might suggest the appearance of compliance issues and to proactively address such issues as a means of heading off enforcement efforts by the government.

Allegations against Vitas

The Complaint filed by the United States alleges that Vitas knowingly submitted or caused the submission of false claims to Medicare by providing care for ineligible patients and billing for crisis care services that were not necessary, not actually provided, or not provided in accordance with Medicare requirements. The Complaint further alleges that Vitas focused on maximizing reimbursement and disregarded patients' medical needs, Medicare guidelines, and concerns expressed by medical personnel regarding whether hospice patients were receiving appropriate care.

Examples of problematic conduct cited by the government included: 

  • Using aggressive marketing tactics and expecting employees to increase the number of crisis care claims submitted to Medicare, without regard to whether such care was medically appropriate; 
  • Marketing "intensive comfort care" to patients and their families to suggest that the Medicare hospice benefit would routinely cover around-the-clock care for hospice patients, absent the requisite acute medical symptoms resulting in brief periods of crisis; 
  • Conducting improper staff training on how and when to initiate crisis care, which resulted in the commencement of crisis care without physician orders and for patients who were not experiencing periods of crisis requiring crisis care; 
  • Setting aggressive goals for the number of crisis care days to be billed to Medicare, which led to excessive billing for unnecessary crisis care and at a percentage of days of service for crisis care that significantly exceeded the national average; 
  • Employing business practices that led to the submission of false claims for patients who did not need end of life care, including the setting of aggressive hospice admissions goals, paying bonuses to non-clinical staff based on the number of patients enrolled, and taking adverse actions against marketing representatives who did not meet monthly admissions goals; 
  • Failing to properly train staff on hospice eligibility criteria and pressuring medical staff to admit or readmit patients who were inappropriate for hospice care; and 
  • Falsifying medical records to support determinations of hospice eligibility and overruling physicians regarding the certification of patients as eligible for hospice care.

The government alleged that Vitas knowingly engaged in the foregoing conduct because many of these issues came to light as a result of internal audits and reviews at particular Vitas facilities and were reflected in the company's own financial records.

Lessons for Hospice Providers

It remains to be seen whether the government will prove its allegations against Vitas. And, the allegations against Vitas must be viewed against Medicare guidelines and requirements for reimbursement for hospice.

Hospice is a program designed to provide patients with palliative rather than curative care. To be covered by Medicare, hospice services must be reasonable and necessary for the palliation and management of a patient's terminal illness, as well as related conditions. Hospice care is available to terminally ill individuals for two 90-day periods, and then an unlimited number of 60-day periods, as long as certain conditions are met.

To be eligible to participate in hospice care under Medicare, an individual must be certified as terminally ill, i.e. with a medical prognosis that the patient’s life expectancy is six months or less if the illness runs its normal course. Patients must elect hospice care and, as such, voluntarily agree to forgo curative treatment of their terminal illness. This requires a patient to be informed that his or her death is imminent.

To bill Medicare, the hospice provider must ensure that a patient is terminally ill before the individual is faced with the decision to stop receiving medical care that could cure his or her illness. This also requires that the hospice provider have a written certification of terminal illness signed by a physician attesting to that medical conclusion and reflecting a sound medical basis supporting the physician's clinical judgment. The certification of the initial hospice period typically is required from both the hospice medical director and the patient’s attending physician.

Hospice patients are entitled to receive crisis care when such care is designed to palliate a patient's acute medical symptoms, is provided for at least eight hours in a 24-hour period, and when that care is predominantly nursing care. If the care provided lasts less than eight hours in a 24-hour period, the hospice may only bill Medicare for routine home care for that day of hospice services.

The government's Complaint against Vitas concerning improper admissions and crisis care appears to be based largely on information gleaned from the company's marketing strategies and internal email communications with Vitas marketing personnel, internal audits performed at Vitas locations, and a comparison of patient data at Vitas locations with national averages. For hospice providers, the importance of evaluating marketing strategies and patient data is evident and should be a routine part of any compliance program.

Such evaluations standing alone, however, are insufficient to protect hospice providers from enforcement actions or whistleblower lawsuits. Hospice providers must go the extra step and address questionable marketing strategies that might surface and go beyond raw data when comparisons to national averages suggest that a hospice location might be an outlier. The increased focus of government enforcement officials and Medicare contractors on hospice providers makes that extra step - the need to fully and completely follow-up on issues that are identified - absolutely critical to a successful hospice compliance program.

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