Law & Medicine

Hospice liability


Question: Hospice liability may exist in which of the following?

Dr. S.Y. Tan, emeritus professor of medicine and former adjunct professor of law at the University of Hawaii, Honolulu

Dr. S.Y. Tan

A. False claims in violation of Medicare rules regarding eligible beneficiaries.

B. False claims for continuous home care services.

C. Negligent billing practices.

D. Only A and B are correct.

E. A, B, and C are correct.

Answer: D. With an aging population and better end-of-life care, the United States has in the last decade witnessed about a 50% increase in the number of hospices. Hospice care is a Medicare-covered benefit, and most hospices operate on a for-profit basis. Although occasionally institution based, services are more often offered as an outpatient or home-care option. In 2016, hospice care reached 1.4 million beneficiaries, with total Medicare expenditure of $16.7 billion.1

There are two broad categories of legal jeopardy that hospices face: Medicare fraud and malpractice lawsuits. This article will address these two issues. In addition, hospices, like all health care institutions, face numerous other liabilities, such as negligent hiring, breach of confidentiality, premise liability, HIPAA violations, sexual harassment, vicarious liability, and many others.

Medicare fraud

The False Claims Act (FCA) is an old law enacted by Congress way back in 1863. It imposes liability for submitting a payment demand to the federal government where there is actual or constructive knowledge that the claim is false.2

Intent to defraud is not a required element. But knowing or reckless disregard of the truth or material misrepresentation are required, although negligence is insufficient to constitute a violation. Penalties include treble damages, costs and attorney fees, and fines of $11,000 per false claim – as well as possible imprisonment. The FCA is the most prominent health care antifraud statute.3 Two others are the federal Anti-Kickback Statute and the Stark Law.

A recent example of hospice fraud involved Ohio’s Chemed and Vitas Hospice Services, which were accused of knowingly billing for hospice-ineligible patients and inflated levels of care.4

The government alleged that the defendants rewarded employees with bonuses based on the number of patients receiving hospice services, irrespective of whether they were actually terminally ill or needed continuous home care services (CHCS). CHCS commands the highest Medicare daily rate and is meant only for the temporary treatment of acute symptoms constituting a medical crisis.

According to the complaint, the defendants set aggressive billing goals for CHCS without regard to whether the patients actually required such a level of service. The defendants agreed to pay $75 million to settle the lawsuit, the largest in the history of hospice false-claim settlements.

Can an alleged wrong prognosis regarding life expectancy amount to a false claim? Under Medicare rules, a physician certifying that a patient is eligible for hospice care must attest that the condition is terminal, with death expected within 6 months.

AseraCare, a hospice company, was accused of knowingly submitting false claims to Medicare by certifying patients as eligible for hospice. The government claimed that the medical records of the 123 patients at issue did not contain clinical information and other documentation that supported the medical prognosis, and thus, AseraCare’s claims for those patients were false.

AseraCare won a summary judgment defending against the $200 million lawsuit in a federal district court in Alabama. The court opined that, when hospice-certifying physicians and government medical experts look at the very same medical records and disagree about eligibility, the opinion of one medical expert alone cannot prove falsity without further evidence of an objective falsehood.5 The government, however, has appealed the decision to the Court of Appeals for the Eleventh Circuit.


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