Home Health & Hospice Week

California crackdown may herald a similar movement across the nation.

The hospice industry has been fighting a reputation as fraud-riddled for years, and two recent cases out of California won’t help matters.

Case #1: Authorities arrested 14 individuals in connection with a $4.2 million Medicare and Medicaid fraud scheme run through New Hope Hospice Inc. and Sterling Hospice Care Inc. in San Bernadino County. Two defendants remain at large.

Among the 16 defendants are two married couples who operated the hospices, Ralph Canales and Rochell Paragados Canales, and Giovanni Ibale and Maureen Ibale, reports the Los Angeles Times. Los Angeles County’s number of hospices multiplied sixfold in the last decade, accounting for more than half of the state’s roughly 1,200 Medicare-certified providers in 2020, says the newspaper, which has run a series of articles highlighting hospice fraud in recent years.

From 2015 to 2021, the defendants allegedly billed the programs for patients who were not terminally ill and were often enrolled in the hospice benefit without their knowledge. The hospices paid kickbacks to recruiters for the referrals, falsely represented what services patients would receive, and switched patients between hospices to avoid detection, California Attorney General Rob Bonta says in a release.

“Numerous ineligible patients were incorrectly certified as terminally ill and tricked into receiving hospice services, which would have made access to potentially lifesaving medical care difficult in the event that any of them required it,” the release says.

“The crimes allegedly committed by the defendants against their patients, Medicare, and our state’s Medi-Cal program will not be tolerated,” Bonta says in the release.

As of Jan. 1, California now has a minimum one-year moratorium on new hospice licenses, largely due to the Times coverage, the newspaper claims. In an HHS Office of Inspector General report, California and Texas had the highest number of “poor performer” hospices in the country, note attorneys Alexander Foster and Hedy Silver Rubinger with law firm Arnall Golden Gregory in Atlanta, in online legal analysis.

The moratorium’s end is tied to a forthcoming report from the California State Auditor on hospice licensure, Foster and Silver Rubinger note. But the moratorium will last a minimum of one year.

“The moratorium on new licenses will effectively make California akin to a certificate of need (CON) state,” Foster and Silver Rubinger believe. And accordingly, it may push up the price of acquisitions there.

Watch out: “Additionally, both transactions and day-to-day operations will be affected as providers contend with increased scrutiny from the state,” the attorneys caution.

Plus: “Hospice providers around the country will also be thinking about the old saying: ‘as California goes, so goes the nation,’” Foster and Silver Rubinger expect.

Case #2: Authorities have arrested physician Victor Contreras and marketer Callie Jean Black on Medicare fraud charges related to a $30 million hospice fraud scheme, the Department of Justice says in a release. Arcadia Hospice Provider Inc. owner Juanita Antenor, also implicated in the case, remains at large and is believed to have fled to the Philippines. Antonor also controlled Saint Mariam Hospice Inc.

Arcadia and Saint Mariam submitted claims for patients who were not terminally ill and for services they never provided, the indictment alleges. Both hospices are in Pasadena.

Contreras, who was already on probation imposed by the California Medical Board, provided fraudulent certifications, including for patients he claimed to have examined but never actually saw, the DOJ says. Antonor paid marketers, including Black, for referrals.