Frontier Home Health and Hospice LLC (“Frontier”) filed a complaint yesterday against Amedisys Holding, L.L.C. and Amedisys, Inc. (collectively, “Amedisys”), alleging that the company lied about its fraudulent billing of Medicare in the sale of a group of Wyoming hospices to Frontier. Frontier allegedly learned after it acquired the business that Amedisys had routinely billed Medicare, contrary to law, for patients who were not eligible for hospice care coverage. Frontier purchased the hospices on an expedited timeline and had to rely on Amedisys’ representations about the company. Upon conducting further review, Froniter allegedly discovered that Amedisys had effectively implemented a bonus system incentivizing employees to keep ineligible patients in hospice care and that half of the Medicare hospice patients it inherited from Amedisys didn’t meet the six-month prognosis requirements for receiving such care.
In late March 2014, Amedisys began discussions with Frontier about selling Amedisys Holding’s 100% membership interest in Amedisys Wyoming, L.L.C., a home health and hospice-care business based in Wyoming. It was mutually understood by the parties in negotiating the sale that the value of the business depended in significant part on Medicare revenue, and that the amount of this revenue was a function of how many hospice patients it could accommodate and their length of stay. Based on the information presented and the representations made by Amedisys, Frontier decided to buy Amedisys’s interest in the Wyoming business. It made this decision because Frontier believed that the Medicare patients were qualified recipients of Medicare benefits, and that the current and historical patient census and revenues accurately reflected the Wyoming business’s likely lawful patient census and revenues going forward.
Amedisys allegedly informed Frontier that it was important that a purchase agreement be signed quickly. Having first discussed the sale of the business with Frontier in March, Amedisys insisted that any agreement be signed in mid-April. That same month, Amedisys agreed to pay $150 million to settle seven whistleblower False Claims Act suits accusing some of its offices of billing Medicare for ineligible patients and services. Amedisys allegedly wanted the sale to Frontier to take place before Amedisys entered into a Corporate Integrity Agreement with the government. Amedisys had obtained the government’s consent that the business would not be subject to the Agreement if Amedisys’s interest was sold prior to the effective date of the Agreement. Accordingly, the transaction between Amedisys and Frontier closed on April 17. The extraordinarily compressed schedule effectively eliminated the opportunity for Frontier to conduct customary due diligence. In exchange, Amedisys
After closing, Frontier began to assess the Medicare billing practices, patient eligibility, and staff knowledge of eligibility requirements. On an initial visit, Frontier’s Vice President of Operations allegedly discovered that an unusually high number of the hospice patients inherited from Amedisys had been receiving hospice care for over 180 days—longer than their initial prognosis of a life expectancy of six months or less. Of the 32 Medicare hospice patients Frontier inherited from Amedisys, half had been receiving hospice care for more than 180 days as of April 17. In contrast, the national average for the percentage of patients with stays over 180 days in 2013 was 11.5%.
While a patient’s prognosis can sometimes change, the prevalence of patients who receive hospice care for more than 180 days, and the lengths of stay, are significant indicators that patients may have been improperly certified as having a terminal condition. The staff, after conducting a review, allegedly determined that ten of these patients were ineligible for Medicare hospice coverage, and discharged them. The ineligibility of these patients was allegedly clear under the objective coverage determination guidelines, and there was no documentation of clinical factors supporting eligibility based on factors not set forth in the guidelines. Allegedly, two-thirds of these ineligible patients are still alive today. Hospice care, however, helps patients live out their last days in comfort. It is provided by a team of health care professionals who provide medical and emotional support to patients with a documented terminal condition. Medicare pays for hospice care, but only if the patient’s prognosis is a life expectancy of six months (180 days) or less. For the first 90-day period of hospice eligibility and coverage, the hospice must obtain a written or oral certification of terminal illness by the hospice medical director, and the patient’s attending physician if the patient has an attending physician. For the subsequent 90-day period and each 60-day period thereafter, the hospice must obtain a written or oral re-certification from the hospice medical director or a physician. The certifications must also include specific clinical findings supporting the life expectancy determination, and a narrative explanation of the findings.