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Hospice Care Firm May Still Face Fraud Claims

SAVANNAH, Ga. (CN) - A hospice care provider may still face claims that it fraudulently sought Medicaid payments for hospice-ineligible patients, in violation of a $24 million settlement, a federal judge ruled.

With 75 offices in 15 states, the Alabama-based SouthernCare is one of the nation's largest providers of hospice care.

In a federal complaint filed under seal in May 2010, former employee Chad Willis alleged that SouthernCare fraudulently submitted Medicaid claims for patients who were not eligible for hospice care.

Willis, who worked as a sales director for SouthernCare from 2005 until September 2010, cited various examples in which his former employer allegedly admitted patients to hospice care without physician referrals and certifications of terminal illness and fraudulently altered patients' diagnoses. In one case, SouthernCare improperly drugged a patient to cause a decline in health, making the patient appear eligible for hospice care, according to the complaint.

Willis further claimed that SouthernCare withdrew hospice care services from patients who needed them when the services exceeded costs covered by Medicare, to avoid paying for their care.

The United States had previously reached a $24.7 million settlement with SouthernCare after two other employees brought false claims lawsuits against the hospice provider in Alabama. Willis claimed that SouthernCare had violated the settlement by continuing to submit false claims to the government.

After the United States declined to intervene in the 2010 lawsuit, Willis filed an amended complaint in 2013, reasserting his claims under the False Claims Act and the Georgia Medicaid False Claims Act.

SouthernCare asked the court to dismiss the claims, and filed a breach of duty of loyalty counterclaim against Willis for allegedly luring patients away from SouthernCare during his last month of employment.

SouthernCare argued that claims relating to the admission of patients before the settlement with the government are barred because they were publicly disclosed before Willis filed his complaint.

U.S. District Judge William Moore disagreed, finding that Willis qualified as an original source of that information, since he had direct access to the records that may support the allegations. As for the post-settlement alleged violations, the judge noted they are entirely different from the conduct alleged in the previous lawsuits, and therefore exempt from the public disclosure bar.

And although the settlement agreement bars Willis from bringing claims related to alleged violations that occurred before September 2008, the whistleblower may pursue claims arising from the admission of patients after that date, according to the Sept. 29 order.

Willis has provided enough details about the allegedly improper admissions and re-certifications, the staff involved in the alleged misconduct, as well as the time and place where it occurred to advance fraud claims, according to the 38-page ruling. Nevertheless, the complaint failed to show specific facts tying the alleged violations to submissions of claims to the government, the court concluded.

Willis may amend his complaint to provide specific details in support of false claims allegations, the order states.

Moore ruled that SouthernCare failed to show a connection between its drop in patient admissions during Willis' last month of employment and Willis' alleged referral of patients to SouthernCare's competitor.

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