Home Health & Hospice Week

Government-backed lawsuit focuses on kickbacks to physicians.

Are your physician compensation arrangements so clean they shine? If not, a disgruntled employee could bring you to the feds' attention.

That's what happened to Aging Care Home Health Inc. in Monroe, LA, which is facing a qui tam suit the government has taken up.

Former Aging Care nurse and marketing rep Becky Roberts and an employee of one of Aging Care's referring physicians filed a whistleblower complaint in October 2002, accusing the HHA of a laundry list of bad deeds.

The allegations included tracking and billing for referring physicians' care plan oversight services and splitting the proceeds with the docs, providing other kickbacks to physicians, falsely claiming and inflating expenses on cost reports, furnishing visits without doctors' orders, trumping up reasons for visits, and more.

The charges were "weird and unbelievable," insists Aging Care's counsel, Liz Pearson of Covington, KY-based Pearson & Bernard. Roberts is a disgruntled former employee who already has tried to sue the agency for defamation in state court in an unrelated matter, Pearson tells Eli.

But when the government partially intervened in the case in June 2004, it picked up on the physician kickback issue - and that could be enough to cost Aging Care dearly.

Anti-Kickback, Stark Violations Alleged

In a November 2004 complaint filed in U.S. District Court for the Western District of Louisiana, the government spells out its charges against the agency, CEO and owner Janice Davis and CFO Otis Davis from 1999 to 2002. Aging Care violated the Anti-Kickback Statute and Stark law by entering into "sham" compensation arrangements with 11 referring physicians, the complaint accuses.

The HHA paid docs up to $800 a month for being on its Advisory Board and entering into physician service agreements that included tasks such as conducting in-services, evaluating staff and evaluating records. But the physicians weren't actually required to perform those duties, and instead were paid varying amounts based on their referral volume, the government alleges.

Aging Care also paid some of the physicians up to $1,000 a month to be a medical director or compliance officer, although they also weren't required to perform any duties, the government charges. The agency would drop docs from the Board or these positions if they didn't refer enough patients, the complaint says.

And Aging Care paid physicians for so-called care plan oversight services to patients, even though the docs performed the same services for other agencies'patients without extra payment, the government alleges.

Aging Care denies the allegations and plans to defend itself vigorously in court, Pearson says. The HHA had valid written contracts with these physicians, as required by Stark, and the agency had only five physicians at a time on the Board, she explains.

One Step Further: False Claims Act Charges

Not only did Aging Care violate Anti-Kickback and Stark laws, the government argues. The HHA also violated the False Claims Act - which carries heavy financial penalties - by submitting the fraudulent physician costs on its cost reports and billing Medicare for the improperly referred patients.

Piggybacking FCA claims onto kickback and Stark allegations is "dangerous for the entire industry," Pearson warns. "Bootstrapping" on the FCA claims is a "trend they are using now" and shows the government is after recovering dollars, she says.

The government also has failed to file suit against any of the physicians implicated- only the HHA is being targeted, Pearson complains.

And now Medicare has suspended any payments to Aging Care that are affiliated with those 11 physicians, Pearson notes. So if one of the doctors - many of whom no longer served on Aging Care's Board when the suit was unsealed - signed a patient's plan of care or is the attending physician, Medicare won't pay.

Aging Care sought a temporary restraining order against the payment suspension, but the court denied it, Pearson reports. But after Aging Care agreed to disband its Advisory Board, the government has indicated it will reactivate payments, she says.

Damage to Reputation the Worst

The hidden danger of whistleblower suits is reputational damage, and Aging Care is no exception. The qui tam relator has appeared twice on local television repeating the unsubstantiated claims in her original whistleblower filing, Pearson says.

After succeeding against a default motion, Aging Care is in the process of defending itself in court, says Pearson, who doesn't expect a trial in the case until next year.