Hospice provider beats whistleblower case over Medicare claims

REUTERS/Shaun Best
  • Company accused of unsupported hospice care admissions
  • Lawsuit was previously revived after being dismissed on other grounds

Dec 16 - Hospice care provider Care Alternatives has defeated a whistleblower lawsuit accusing it of routinely admitting patients who were not eligible for hospice care and billing Medicare for them.

U.S. District Judge Juan Sanchez in Camden, New Jersey, ruled on Wednesday that the plaintiffs failed to support their accusations that the government had paid the company's claims because of inadequate medical documentation. The case had previously been dismissed but was revived last year by an appeals court.

"After 13 years, this decision ends a case that was flawed from the start," said William Jordan of Alston & Bird, Care Alternatives' lawyer, in an email. "Care Alternatives' personnel at all times provided compassionate care to patients and their families."

A lawyer for the plaintiffs, former Care Alternatives employees, could not immediately be reached for comment.

The plaintiffs said in their 2008 lawsuit that the New Jersey-based hospice care provider violated the False Claims Act by admitting Medicare patients to hospice care based on physician evaluations that were not supported by medical evidence.

The False Claims Act allows whistleblowers to file lawsuits on behalf of the government to recover money paid out based on false claims and receive a share of any recovery. The government may intervene in such cases but did not do so against Care Alternatives.

Medicare regulations require that a patient be terminally ill and expected to live no longer than six months to be admitted into hospice care. The company had argued that its doctors' medical opinions about whether patients should be admitted were subjective and could not violate the False Claims Act.

The late U.S. District Judge Jerome Simandle agreed, dismissing the case in 2018 on the grounds that the plaintiffs could not show that the doctors' evaluations were "objective falsehoods."

However, the 3rd U.S. Circuit Court of Appeals last year revived it, finding that doctors' opinions can be "legally false," as opposed to factually incorrect, when they do not comply with regulations requiring that prognoses be backed up with documentation.

That ruling deepened a circuit split. The 3rd Circuit joined the 10th Circuit, which had made a similar ruling in a whistleblower lawsuit accusing a hospital of billing for unnecessary cardiac procedures. The 11th Circuit held in a different case involving a hospice care provider that medical judgments cannot be false for False Claims Act purposes.

On remand, however, Sanchez said the fact that Medicare paid out claims that lacked supporting documentation doomed the plaintiffs' case, since it meant they could not show that any falsity was material.

The case is Druding et al v. Care Alternatives Inc, U.S. District Court, District of New Jersey, No. 1:08-cv-02126.

For plaintiffs: Ross Begelman of Begelman & Orlow

For Care Alternatives: William Jordan of Alston & Bird

(Editor's Note: This story has been updated with a comment from Care Alternatives' counsel.)

Read more:

Whistleblowers don't need to prove doctors' judgment was 'falsehood' - 3rd Circuit

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Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.