California Hospice Owner Receives 25 Months in Prison for Fraud, Kickbacks

A federal court has sentenced Akop Atoyan, former co-owner of three California home health and hospice agencies, to 25 months in prison for health care fraud and kickback schemes.

Atoyan pled guilty to the changes. He and his wife Liana Karapetyan owned ANG Health Care, Excel Hospice, and Excel Home Healthcare in the Sacramento area. The U.S. Justice Department accused the pair of submitting thousands of false claims to Medicare and of arranging more than $2 million in kickbacks in exchange for referrals.

Last July, Karapetyan received 18 months in prison for her role in the scheme.

“In total, Atoyan, Karapetyan and others caused the agencies to submit over 8,000 claims to Medicare for the cost of home health care and hospice services. Based on those claims, Medicare paid the agencies approximately $31 million,” the U.S. Justice Department indicated in a statement. “Because the agencies obtained the beneficiary referrals by paying kickbacks, the agencies should not have received any Medicare reimbursement.”

Anti-kickback violations are more likely to result in criminal charges than the civil penalties that often result from False Claims Act complaints, legal experts recently told Hospice News.

In this case, the illegal payments allegedly went to employees of hospitals, skilled nursing and assisted living facilities, as well as spouses of those individuals, according to Acting U.S. Attorney Phillip Talbert.

Some of the recipients also face prosecution. Among them are John Eby, a registered nurse who worked for a hospital in Sacramento; Anita Vijay, the director of social services at a skilled nursing and assisted living facility in Sacramento; Jai Vijay, Anita Vijay’s husband; and Mariela Panganiban, the director of social services at a skilled nursing facility in Roseville, California.

California for more than a year has been cracking down on hospice fraud.

Poor, uncoordinated hospice oversight by government agencies in California has contributed to widespread fraud and other violations, according to a report from the state’s Department of Justice (CDOJ).

The report follows an audit of California’s agencies that oversee hospice providers, including the licensure process. The state’s legislature last October approved two bills requiring this audit and instituting a moratorium on new provider licenses.

The state sharpened its gaze on the hospice space in the wake of two 2019 OIG reports showing that about 20% of hospices surveyed by regulators or accreditors between 2012 and 2016 had a condition-level deficiency that posed a serious patient safety risk.

California and Texas were the states that saw the most serious deficiencies, according to OIG.

CDOJ recommended that the four oversight agencies convene a task force to identify, investigate, and prosecute fraud and abuse by hospice agencies in that county, as well as annually meet to conduct a risk assessment of the Medi-Cal hospice program statewide.

The state agency also indicated that it would provide more detailed guidance to the California Department of Public Health when it refers fraud complaints for litigation or prosecution.

“The state’s weak controls have created the opportunity for large-scale fraud and abuse,” CDOJ indicated in its report. “We identified numerous indicators of such fraud and abuse by hospice agencies, which typically offer palliative end-of-life care to individuals with medical diagnoses of fewer than six months to live.”

Though the CDOJ report focused on hospice, it indicated that similar problems existed among home health companies in the state.

The issue of hospice fraud has gained national attention in recent weeks following the publication of a New Yorker/ProPublica article that delved into instances of potential illegal or unethical behavior. Hospice News published an editorial in response to the piece.

Stakeholders have voiced concerns about potential fraud and other abuses associated with the proliferation of new hospices in several states, including California, Texas, Arizona and Nevada.

The California Department of Public Health reported in one instance that more than 150 licensed hospice and home health agencies were operating from a single address in the city of Van Nuys, though that number exceeded the building’s physical capacity.

Moreover, Los Angeles County in 2019 had more than six times the national average number of hospice agencies relative to its aged population, according to CDOJ. This meant that each hospice served an estimated average of five patients per day, compared to a statewide average of 56.

In November, industry organizations called on CMS to examine the issue nationally. Signatories on the joint letter included LeadingAge, National Hospice and Palliative Care Organization, the National Association for Home Care & Hospice and the National Partnership for Healthcare and Hospice Innovation.

“We believe that, in addition to action at the state level, increased federal oversight is needed to protect hospice patients and their families, as well as the vast majority of hospice providers that properly observe Medicare and Medicaid laws and regulations,” the groups wrote in the letter. “When similar activities were occurring in the home health program, CMS took decisive action to maintain the integrity of the benefit through imposition of temporary moratoria on the admission of new agencies in select areas of the country.”