Medicare Fraud Case Claims Optum Put Patients in Hospice Care Who Weren't Terminal

The U.S. Justice Department has decided to join in a federal lawsuit filed by two Colorado whistleblowers; it alleges that a national palliative care provider improperly billed Medicare millions of dollars for hospice services provided to patients who weren't terminally ill. The suit against Optum Palliative and Hospice Care claims that 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.

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"Hospice care plays a critical role in our health care system, providing for end-of-life care as opposed to curative life care," said John Walsh, Colorado's U.S. Attorney, in a statement announcing the lawsuit. "When companies overbill Medicare by keeping people in hospice when they don't need to be there, it jeopardizes the important benefit for others under the program."

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 feds decided whether to join in the litigation but was finally unsealed late last week.

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 claim 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.

Between 2008 and 2010, Towl and Fowler claim, the number of Evercare hospice patients exceeding 180 days of billings rose from 28 percent to 44 percent, suggesting that close to half the cases may have been suffering from something other than a terminal illness and were thus ineligible.

Towl claims 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.

In response to a request for comment on the case, a spokesman for Optum issued a brief statement: "We are grateful for the opportunity to deliver high-quality, compassionate hospice care to patients and their families. We stand by the services and care provided to our patients in their time of need, and we will vigorously defend our actions."

Richard LaFond, an attorney for Towl and Fowler, says the amount of disputed billings may reach as high as $36 million; under the False Claims Act, damage awards can be doubled or even tripled, in addition to assessed penalties and fees.

Other cases alleging improper hospice care billings are pending elsewhere, and the Colorado action against Optum has already been consolidated with another case in Illinois. LaFond sees the allegations as part of a larger, disturbing trend in health care. "We're watching the emergence of the bean counters," he says. "CFOs are making decisions that medical officers should be making. It's adversely impacting the whole industry."