Risk Update

Conflicts Hints and Appearances Alleged — The New Yorker on “Hospice Hustle”

How Hospice Became a For-Profit Hustle” —

  • “But at AseraCare, a national chain where Farmer worked, she solicited recruits regardless of whether they were near death. She canvassed birthday parties at housing projects and went door to door promoting the program to loggers and textile workers. She sent colleagues to cadge rides on the Meals on Wheels van or to chat up veterans at the American Legion ba. ‘We’d find run-down places where people were more on the poverty line,’ she told me. ‘You’re looking for uneducated people, if you will, because you’re able to provide something to them and meet a need.'”
  • “It might be counterintuitive to run an enterprise that is wholly dependent on clients who aren’t long for this world, but companies in the hospice business can expect some of the biggest returns for the least amount of effort of any sector in American health care.”
  • “Up to a point, the way Medicare has designed the hospice benefit rewards providers for recruiting patients who aren’t imminently dying.”
  • “Almost immediately after the Asera-Care takeover, Farmer’s supervisors set steep targets for the number of patients marketers had to sign up, and presented those who met admissions quotas with cash bonuses and perks, including popcorn machines and massage chairs.”
  • “Farmer’s bigger problem was that her patients weren’t dying fast enough.”
  • “But Farmer’s company, like many of its competitors, had found ways to game the system and keep its money.”
  • “Less than a year later, the Justice Department, after conducting its own investigation, intervened in the whistle-blowers’ complaint, eventually seeking from AseraCare a record two hundred million dollars in fines and damages.”
  • “Before the trial started, the judge in the case, Karon O. Bowdre, disclosed that she’d had good experiences with hospice. Her mother, who had an A.L.S. diagnosis, had spent a year and a half on the service, and her father-in-law had died in hospice shortly before the trial. Principals in the case disagree about whether she disclosed that the firm handling AseraCare’s defense, Bradley Arant, had just hired her son as a summer associate.”
  • “The defense team had petitioned Bowdre to separate the proceedings into two parts: the first phase limited to evidence about the ‘falsity’ of the hundred and twenty-three claims in question, and the second part examining, among other things, the company’s ‘knowledge of falsity.'”
  • “The Justice Department objected to this ‘arbitrary hurdle,’ arguing that the purpose of the False Claims Act was to combat intentional fraud, not accidental mistakes. ‘The fact that AseraCare knowingly carried out a scheme to submit false claims is highly relevant evidence that the claims were, in fact, false,’ the government wrote. Nonetheless, in an unprecedented legal move, Bowdre granted AseraCare’s request.”
  • “But the government lawyers seemed genuinely confused about what the judge would and wouldn’t allow into the courtroom during the trial’s ‘falsity’ phase.”
  • “The judge’s prohibition on ‘knowledge’ during the trial’s first phase constrained testimony in sometimes puzzling ways. Richardson, for instance, could talk about admitting patients, but she couldn’t allude to the pressure she was under to do so. The audit by the Corridor Group that corroborated whistle-blower claims was forbidden because it wasn’t directly tied to the specific patients in the government’s sample.”
  • “Its medical directors were part time, as is common in the industry, and workers testified that they’d presented these doctors with misleading patient records to secure admissions. One said that a director had pre-signed blank admissions forms. ‘Ask yourself: How could a doctor be exercising their clinical judgment,’ Wertkin told the jury at one point, ‘if he’s signing a blank form?'”
  • “She needn’t have worried. Bowdre’s restrictions prevented Farmer from testifying about much of anything. ‘I felt like the judge did not want to know the truth,’ she said. ‘The whole time that I was on the stand, I kept thinking, Why would you not listen to the story?'”
  • “After nearly two months of testimony, the jurors deliberated for nine days on phase one. On October 15, 2015, they found eighty-six per cent of the patient sample ineligible for some period of hospice care. Elated, Barger rushed out of the courtroom to call Farmer and tell her that the jury had come back overwhelmingly in the government’s favor.”
  • “The next part never happened. A few days later, Bowdre made a startling announcement: she had messed up. The instructions that she’d given the jury had been incomplete, she said, and because of this ‘major reversible error’ she was overturning the jury’s findings and granting a request by AseraCare for a new trial.”
  • “She invited the government to submit evidence other than Liao’s opinion to prove that the claims were false; the government replied that the record presented ample evidence of falsity. Five months later, in March, 2016, Bowdre granted summary judgment to AseraCare.”
  • “It’s unusual for a judge to overturn a jury’s findings, order a new trial, and then declare summary judgment on her own accord, Zack Buck, a legal scholar at the University of Tennessee who studies health-care fraud, told me. The case, he said, ‘just kept getting weirder.'”
  • “On September 9, 2019, the False Claims Act took a second hit when the U.S. Court of Appeals for the Eleventh Circuit published a long-anticipated ruling on the AseraCare case. The judges concurred with Bowdre that the government needed more than the testimony of an outside expert to prove a claim was false. However, they vacated Bowdre’s summary judgment, saying that the prosecution should have been able to present all its evidence, including AseraCare’s alleged “knowledge of falsity,” and sent the case back to her courtroom for a retrial. ‘When the goalpost gets moved in the final seconds of a game,’ the judges wrote, ‘the team with the ball should, at the least, have one more opportunity to punch it into the endzone.'”
  • “The government did not appear enthusiastic about trying the AseraCare case for a second time before Bowdre, though.”
  • “In February, 2020, eleven years after Farmer and Richardson filed their complaint, the government reached a settlement with AseraCare, for a million dollars. As in most such settlements, AseraCare paid the sum, admitted no wrongdoing, and was allowed to keep billing Medicare. Jack Selden, a partner at Bradley Arant who worked on the defense team, told the trade journal Law360, ‘When a case settles for $1 million where the claims have been for over $200 million, I think that speaks for itself.'”