HA550 Unit 6 Hospice Qui Tam Fraud Analysis Example

Long Stays, Batch-Signed Certifications and a Bonus per Admission: A Fraud and Abuse Analysis of a Billing Manager's Sealed Qui Tam Complaint Against a Composite Hospital-Owned Hospice Under Federal Fraud Law, With the Physician Self-Referral Law Explained Out

[Student Name]

Purdue University Global

HA550: Health Care Law and Ethics

Unit 6 Fraud and Abuse Analysis

[Instructor Name]

[Date]

The hospice, the relator and every figure are composite and bracketed for the writer's own data; the statutes and cases are real, and the analysis is coursework, not legal advice.

Facts Alleged

[Forty-one] patients with dementia remained on hospice service longer than [two] years. Physician certifications of terminal illness were signed in batches of [20] or more at monthly meetings, often without a visit. Community liaisons, who are employees, received [$250] for each admission they generated from nursing homes and physician offices. The relator, the billing manager, raised concerns internally in [month] and was told the census targets came from the parent hospital.

The False Claims Act

The Act makes a person liable for knowingly submitting, or causing someone else to submit, a bill to a federal program that is false (31 U.S.C. § 3729, 2024). A private person, the relator, may file suit in the name of the United States and receive a portion of whatever is recovered; the complaint stays under seal while the government decides whether to intervene. Claim. Each hospice claim to Medicare for a patient's daily care is a claim for payment. Falsity. Medicare pays for hospice care when a physician certifies a terminal prognosis, meaning the patient is expected to live no longer than half a year on the disease's usual course. A long stay alone does not make a certification false; patients sometimes outlive a reasonable prognosis. The Eleventh Circuit held that a reasonable disagreement among physicians about prognosis, without more, does not show falsity (United States v. AseraCare, Inc., 2019). The relator's case therefore depends on objective evidence: certifications signed in batches without review, records that contradict the prognosis at the time it was made, or physicians admitting they did not exercise judgment. A long hospice stay is a question; a certification signed without looking at the patient is evidence. Materiality. A false statement must be material to the government's payment decision. The Supreme Court described this standard as demanding and asked whether the government would actually refuse payment if it knew (Universal Health Services, Inc. v. United States ex rel. Escobar, 2016). Eligibility for hospice goes to the heart of payment, so materiality is likely. Knowledge. The Act requires that the defendant knew a claim was false, acted in deliberate ignorance or acted in reckless disregard. The Supreme Court held that this turns on what the defendant actually knew and believed, not on what an objectively reasonable person might have thought (United States ex rel. Schutte v. SuperValu Inc., 2023). Internal warnings from the billing manager, if ignored, would be strong evidence.

The Government's Choice and the Relator's Path

While the complaint is sealed, the Department of Justice investigates, often with the inspector general's office, and decides whether to intervene. Intervention usually means the government takes over the case and the chance of a recovery rises sharply. If the government declines, the relator may continue alone, which is harder and more expensive. In either path, the hospice will learn of the case only when the seal is lifted or when investigators request records, so the hospital's compliance office may already be facing subpoenas without knowing their source. Many hospice cases resolve through settlement and a corporate integrity agreement rather than trial.

The Anti-Kickback Statute

The statute makes it a crime knowingly and willfully to offer or pay anything of value to induce referrals of patients for services paid by federal health programs (42 U.S.C. § 1320a-7b, 2024). It contains an exception for amounts paid by an employer to a bona fide employee for employment in providing covered services, with a matching regulatory safe harbor. The liaisons are employees, which points toward the exception. But whether per-admission pay to staff whose job is generating referrals is pay "for employment in the provision" of services is contested, and the government has scrutinized such arrangements. The analysis concludes only that the bonus schedule raises a question a compliance review must examine. A kickback violation can also make resulting claims false under the False Claims Act.

Why Stark Does Not Apply

Stark is a law about doctors' money ties. Where a doctor or an immediate family member profits from an entity through investment or pay, Medicare referrals from that doctor to that entity for certain listed service types are off limits unless an exception fits. The liaisons are not physicians, and hospice is not among the designated health services. Stark therefore does not reach these facts. If the hospice paid referring physicians, for example as medical directors, Stark could become relevant, and that relationship should be reviewed separately.

Retaliation

The Act protects employees who act to stop violations. If the billing manager suffers retaliation, the hospice faces a separate claim.

What the Hospice Should Do Now

Preserve records; engage outside counsel; suspend per-admission bonuses pending review; audit a sample of long-stay patients' certifications; consider whether any overpayments must be reported and returned within the deadlines that apply once they are identified.

Conclusion

The False Claims Act case rests on evidence that certifications were not real clinical judgments, not on the length of stays. The bonus raises a separate kickback question, and Stark does not apply.

References

United States ex rel. Schutte v. SuperValu Inc., 598 U.S. 739 (2023).

United States v. AseraCare, Inc., 938 F.3d 1278 (11th Cir. 2019).

Universal Health Services, Inc. v. United States ex rel. Escobar, 579 U.S. 176 (2016).

31 U.S.C. § 3729 (2024). https://www.law.cornell.edu/uscode/text/31/3729

42 U.S.C. § 1320a-7b (2024). https://www.law.cornell.edu/uscode/text/42/1320a-7b