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$18 Million Settlement in Medicare Fraud Case

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One of the country's leading hospice-care providers has agreed to pay $18 million to the federal government to resolve claims that it improperly billed Medicare for end-of-life care for patients who weren't terminally ill.

The case, which we first reported on in 2014, has its origins in a Colorado lawsuit filed by two whistleblowers formerly employed by Optum Palliative and Hospice Care; they claim the company offered hefty bonuses to employees who kept the numbers of patients up and fired those who attempted to weed out patients who weren't eligible for hospice benefits.

The Minnesota-based Optum, formerly known as Evercare, operates in eleven states. The lawsuit was originally filed in 2011 by two former employees, Lyssa Towl and Terry Lee Fowler, under the False Claims Act, which allows citizens to sue on behalf of the government to recover funds that were improperly paid. The case was sealed for three years from public view while the Justice Department decided whether to join in the litigation but was finally unsealed two years ago.

Towl, at one time the company's executive director for northern Colorado, and Fowler, an RN who became a regional hospice-quality manager, claim that up to one-fourth of Evercare's hospice clients at any given time didn't meet the Medicare eligibility requirements. Such care is reserved for patients with a life expectancy of six months or less, but the plaintiffs charge that the company billed for patients who suffered from dementia, non-terminal pulmonary problems and other diagnoses such as "failure to thrive" — and sometimes collected benefits for years. By way of example, the complaint in the lawsuit lists 21 cases involving patients who didn't meet the hospice criteria but generated Optum billings for periods ranging from several months to three years.

Towl maintains that she was fired for discharging ineligible patients. Fowler claims to have been put on a "corrective action plan" for also questioning the company's methods.

"The decision to put someone into hospice care is an emotionally wrenching one for the patient and the patient's family," noted John Walsh, U.S. Attorney for Colorado, in a statement announcing the settlement. "When hospice companies exploit and overbill Medicare by having people in hospice when they do not belong there, it jeopardizes this important benefit for others."

The settlement doesn't include any acknowledgement of wrongdoing by Optum. The exact share that Towl and Fowler will receive for first bringing the complaint has not yet been determined.

One of their attorneys, Richard LaFond, says it took considerable "guts and perseverance" for his clients to prevail in the action.

"Hopefully, this will serve as encouragement to others who want to do the right thing, stand up and blow the whistle on fraud against the United States," LaFond said. 

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