Supreme Court May Weigh In on Hospice FCA Cases

The U.S. Supreme Court may take up a False Claims Act (FCA) case involving Georgia-Based Bethany Hospice & Palliative Care LLC, despite indications from the U.S. Justice Department that such a review would be unnecessary.

The case comes at a time when regulators are intensifying scrutiny on hospice providers, seeking to root out those who admit patients that may not truly be eligible for the benefit.

In the Bethany case, two former employees allege that the company violated the FCA and the closely aligned anti-kickback statute. Attorneys for the whistleblowers filed a petition in October 2021 to the nation’s highest court after the Eleventh Circuit of the U.S. Court of Appeals dismissed the case in May due to a lack of detail in the complaint.

At the Supreme Court’s request, U.S. Solicitor General Elizabeth Barchas Prelogar filed a brief detailing the government’s position, which in a nutshell said the court should not review the case. The Solicitor General is among the top legal officials within the Justice Department, charged with overseeing litigation involving the federal government.

“As petitioners emphasize, their FCA action turns not on the details of the claims for payment that respondent submitted, but on their allegations that those claims were tainted by kickbacks,” Prelogar wrote in the brief. “It therefore would be difficult for this Court to determine whether petitioners pleaded the submission of false claims with sufficient particularity without also addressing petitioners’ disputed contention that they adequately pleaded a fraudulent kickback scheme.”

The issue of “particularity” is key here. Federal rules require that parties who are alleging fraud must state “with particularity,” the circumstances that contributed those violations. The appellate court’s dismissal hinged on this rule, finding that the plaintiffs did not meet this standard.

The plaintiffs in the Bethany litigation argued that variations exist in the standards that different courts apply when it comes to particularity. They asserted a belief that their case would have been allowed to proceed had it been heard in a different circuit. The Solicitor General disagreed, saying that the divergence of opinions in the lower courts had been “exaggerated.”

However, the solicitor’s recommendation may not be the last nail in the coffin.

The action against Bethany is one of three hospice FCA cases that the nation’s highest court has been asked to review. The court previously decline to hear an FCA action against hospice provider Care Alternatives. With the growing prevalence of these lawsuits, the justices may be inclined to settle the particularity issue.

The court has already asked the Solicitor General to comment on a second hospice FCA case against Fazzi Associates Inc., which offers third-party billing services to providers. Fazzi in 2018 was acquired by the post-acute tech firm WellSky.

A third hospice FCA case, involving Molina Healthcare, has also been referred to the Supreme Court over questions of particularity.

These cases often hinge on the question of patient eligibility for hospice care based on a six-month terminal prognosis, and typically involve a qui tam complaint. This occurs occurs when a whistleblower, called a “relator” by the courts, files a False Claims Act suit on behalf of the government and possibly receives a portion of any funds recovered through the litigation, typically ranging from 15% to 25%.

Recent developments in an FCA suit involving Curo Health Services could have wider implications if higher courts decide to address the particularity issue.

In the Curo Case, the court rejected the company’s motion to dismiss, saying that the government sufficiently alleged that the hospice physician’s medical opinion may have been inaccurate or dishonestly held. This ruling does not assign any guilt to Curo at this time, but it does mean that the court felt that the government’s allegations were sufficiently credible to continue the proceedings.

While the Middle Tennessee District Court court did require relators to provide specific examples of fraud, the judge indicated that it was not necessary for the complaint to include details on every single instance that allegedly occurred.

“The issue here that hospice providers need to be aware of is that the court essentially allowed the [state and federal] governments to go to discovery on allegations of fraud against two dozen hospice locations for whom they did not lead to a specific example,” Chris Sabis, member of the law firm Sherrard, Roe, Voigt & Harbison, told Hospice News. “The standard applied here does provide an awful lot of leeway for someone bringing a False Claims Act case. They have to provide specific examples, but they can leave out an awful lot of territory there.”

The Justice Department in 2021 recovered in excess of $5.6 billion in settlements and judgments related to health care fraud, including false hospice claims. This is the department’s second largest annual total since President Abraham Lincoln signed the False Claims Act into law in 1863. This is the largest total the Justice Department has seen since 2014.

The U.S. Department of Health & Human Services Office of the Inspector General (OIG) is planning a nationwide audit of hospice eligibility. The audit will focus on patients who did not have a hospitalization or emergency department visit prior to electing hospice.

OIG has planned the audit for calendar year 2023 and will contact individual hospices to request Medicare claims and associated documentation. The impetus for the 2023 audit comes from the results of previous, less extensive inquiries.

“Beneficiary eligibility has always been a concern for hospice,” an OIG spokesperson, identified as a “subject matter expert,” told Hospice News. “Additionally, in the last couple of years, our agency has done numerous individual hospice audits, and every one of them found issues with beneficiary eligibility.”