The Lawyer Taking on Hospice Fraud

In November 2022, The New Yorker published “How Hospice Became a For-Profit Hustle” [newyorker.com/magazine/2022/12/05/how-hospice-became-a-for-profit-hustle]. It focused on the $22 billion industry riddled with kickbacks, overbilling, and the practice of enrolling moderately ill patients a country mile from death’s doorstep. Barger and his law firm, Frohsin Barger & Walthall in Birmingham, Ala., specialize in litigation under the False Claims Act.

In 2009, two whistleblowers represented by Barger filed a lawsuit against AseraCare. The case would become the “most consequential lawsuit the hospice industry had ever faced,” according to The New Yorker. When I was asked to interview Barger, my nose wrinkled a little bit.

I understood that the U.S. Department of Justice intervened in a good number of health care fraud cases filed by private attorneys under the FCA. These lawsuits are known as qui tam litigation.

The FCA allows a private person to sue on behalf of the government. Once the DOJ intervenes, the plaintiff’s lawyer may sit back and ride the coattails of the government lawyers and collect a fee when the DOJ settles the case. Some lawyers fall into this category, but Barger isn’t one of them.

After Barger graduated from Furman University, he enrolled in a master’s degree program in Southern studies at the University of Mississippi, Ole Miss to those who live south of the Mason-Dixon Line. No other college or university offered such a curriculum based on the roots of southern culture.

As part of the program, Barger lived with a family on Sapelo Island, off the coast of Georgia for two years. The barrier island is the home of the last intact Gullah Geechee community of descendants of enslaved people brought to southern states to work on cotton and indigo plantations in the early 1800s.

Barger says he spent two years learning to knit and cast nets, plant gardens, and clean and cook conches while standing in the smoke of a smudge pot to ward off mosquitoes. He has a soulful passion and a voice for people afflicted by systemic wrongdoing.

We recently connected with this University of Alabama School of Law grad and adjunct professor at the school teaching a course on white collar practice to find out the lessons of his litigation battles with for-profit hospice industry players.

GJT: How did you get interested in the business of health care fraud?

JB: It started in law school—health care, generally. I had a mentor, Pamela Busy Pierson, who was one of my professors and a noted expert on health care fraud generally and the FCA in particular.

Later, there was a nurse named Nancy Romeo. She was the next-door neighbor of a partner in the firm where I worked as a young lawyer. She’d been approached by federal investigators for an interview and wanted somebody to sit with her. I was assigned by the firm, pro bono, to that task.

During that interview, it became very clear Nancy had information that would support an FCA complaint. I worked with her, after hours, because my firm didn’t do much in the way of contingent fee work.

Nancy taught me everything she knew about the hospice industry and hospice fraud. She was an internal auditor for a hospice company. She’d tried to report her findings within the company, but the company wasn’t doing anything. So we filed an FCA complaint under seal. That was our first big case. I trace our law firm’s success to that one case.

GJT: Your website says your firm handles qui tam litigation. How does this type of litigation work?

JB: It starts with a whistleblower, someone inside the corporation who has witnessed fraud—not waste, not abuse of a system, but fraud against the federal government or various state governments. We review the whistleblower’s information and consult with them. Often, the whistleblower has to teach us how the business works, and then we verify that.

Ultimately, we report the fraud to the DOJ or state attorneys general offices. It’s our best practice to do that first. Then we file a complaint, under seal in federal court, under the FCA.

GJT: In some of these health fraud cases, the DOJ intervenes in the litigation, right?

JB: Yes. They have, by statute, 60 days to investigate and usually file to extend their investigative time for as much as three, four, sometimes five years. During that time, we work at their direction only.

We’re instructed not to investigate independently, but we spend a lot of time with them—delivering information to them, consulting with them, having our client sit for interviews with them.

If they determine fraud has been committed and it’s in the best interest of their regulatory authority to pursue it, they have the right to intervene and take over the bulk of the responsibily for the case. If they determine it’s not in their best interest or that they think we can handle the case better, they allow us to proceed. If they determine there’s been no fraud, they’re sort of obligated to dismiss the case.

GJT: How many of your cases has the government taken over or intervened in?

JB: We have a fairly high rate of intervention. It has varied over the years, but it hovers around 30–40 percent. That has tapered off over the last few years due to a lack of resources allocated to the DOJ’s civil division, specifically to the civil fraud section.

GJT: You mentioned resources. You mean monies for investigators, lawyers, or both?

JB: Both. And experts. The cases are incredibly expensive to prosecute, and the government has, of late, been much more willing to defer to private attorneys general, like ourselves, to let us prosecute the case and take on the risk, spending the upfront costs to do so.

GJT: You filed a whistleblower complaint against AseraCare accusing the company of Medicare fraud. The New Yorker called it the most consequential lawsuit the hospice industry had ever faced. But the result was less than expected. What happened at trial?

JB: We were approached by a nurse and a manager of a hospice branch of AseraCare in Alabama. There were also three nurses in Wisconsin and a doctor in Atlanta, all of whom were making the same allegations—that AseraCare was recklessly enrolling elderly people into hospice care and therefore making them forego curative treatment so that AseraCare could receive Medicare dollars at low costs for their care. They also claimed AseraCare knew or should have known those patients didn’t have a terminal illness—the primary requirement for hospice care.

GJT: And the government intervened in this case?

JB: It did. Not only that, we worked in complete partnership with them in prosecuting the case all the way through trial. We proved that the vast majority of AseraCare’s claims were false claims.

GJT: Looking back, was there any witness who stood out for the plaintiffs?

JB: One patient I’ll never forget had depression issues and was taken off her depression medicine. The hospice slowly watched her decline and essentially created the situation that made it look like she had a terminal illness. Once a nurse actually read the patient’s file and understood this wasn’t a dementia patient but a patient suffering from depression, they got the patient back on her depression meds, and she improved and lived.

Without that intervention, the patient probably would have died. She was rapidly losing weight and had become nonambulatory and bed bound, all conditions typically used to justify hospice care as a terminal illness. But her illness wasn’t terminal. She’d just lost necessary medication and treatment.

GJT: I read the jury found in favor of the DOJ but that the judge, sua sponte, reversed the verdict. Was the case appealed?

JB: It was, and the U.S. Court of Appeals for the 11th Circuit remanded for a new trial, finding that the judge had improperly bifurcated the presentation of evidence. Essentially, the trial judge ruled that first we had to prove the claims were false strictly through medical records and only thereafter could we demonstrate the actual scheme to defraud.

We had evidence AseraCare had all sorts of prizes for recruiters who recruited people into hospice. They sent people out into communities to knock on doors and canvas homes that had wheelchair ramps. They looked at church bulletins to see who was on the prayer list and would approach those people to offer a new type of hospice care they claimed wasn’t about terminal illness but more about whole health.

They made a lot of promises they couldn’t deliver, offering to clean people’s homes and pay for all their medications. Of course, they could pay only for pain and other palliative medications, not curative care. But we weren’t allowed to present that evidence because the judge bifurcated the trial.

And after the jury found the claims were false, the judge sua sponte granted summary judgment; the company’s wrongdoing never got submitted to the jury. The 11th Circuit held that was improper, finding that the evidence of knowledge and a scheme was relevant to whether the claims themselves were false.

GJT: The New Yorker reported that the case settled. In your opinion, has AseraCare changed the landscape of hospice fraud litigation?

JB: It did—dramatically—in three ways. First, the DOJ became incredibly timid after AseraCare. There was a settlement, but the government lost money, which is rare. Our firm also lost money, which is the only time we’ve had a settlement like that.

After AseraCare, we’ve seen almost zero DOJ intervention where litigation was necessary. There have been interventions, but only where settlements were negotiated prior to intervention.

The Vitas case, which our firm handled with colleagues, resulted in the largest hospice fraud settlement after AseraCare. It settled for $75 million [justice.gov/opa/pr/chemed-corp-and-vitas-hospice-services-agree-pay-75-million-resolve-false-claims-act<]. But the government wasn’t called on to litigate that case. It began to settle those cases at much lower rates or to allow private attorneys to proceed without the government.

Second, I don’t believe there will ever again be a bifurcation of the evidence of proof for falsity. The 11th Circuit drove a nail into the coffin of that idea, which is a blow to the defense bar they haven’t recognized.

Third, it altered the proof requirements. In AseraCare, experts battled over whether a patient would live or die within in six months. Now these cases must focus primarily on the process.

Did the company follow its own guidelines? Did it follow the requirements for submitting a hospice claim to Medicare? Did they hold interdisciplinary team meetings every two weeks to review each patient? Did they adequately review patient records? Did they have a medical director who actually looked at patient records and discussed the patient or just sign papers?

GJT: You’re quoted in The New Yorker about whistleblowers and hospice wrongdoing as saying there’s “a ludicrous amount of optimism in a system with a capitalist payee and a socialist payer.” What does that mean?

JB: Hospice has been taken over by private equity. Investors demand financial payouts and results. When you have the most capitalist of payees and then a socialist payor, whose only job is to pay out claims and not root out fraud, people in the company are going to be your primary source of defense against fraud.

There should be a much more robust fraud enforcement mechanism. But for now, whistleblowers—people inside the company who see fraud and are willing to stand up to their employer and risk their career—are the only true line of defense. To me, that’s ludicrous.

GJT: At this point, what’s the prospect of holding for-profit hospice companies accountable without the courage of whistleblowers?

JB: Without regulatory change, there’s no hope of doing that without whistleblowers. Imagine a bucket with 20 holes in the bottom, and water’s being poured into the bucket. Our firm, the whistleblowers, and firms like ours are plugging up one or two holes in the fraud bucket. We’re slowing the stream of hospice fraud, but we can’t stop it.

GJT: If a friend came to you asking advice on how to choose hospice care, how would you advise them?

JB: The first thing I’d tell them to do is to involve their primary care doctor. Every hospice has its own medical director. Some of those medical directors are very noble members of the profession, and some are in it only for the fee. But all are implicitly biased toward their hospice company and its goals. So having your primary care doctor involved at the outset and throughout is one of the most important things.

The second thing I’d do would be to use only a nonprofit hospice. Fraud goes on inside nonprofit hospices as well. We’ve had only one nonprofit hospice case, but fraud is rampant in the for-profit hospice industry.

For example, the company that owned Vitas was called Chemed, and their other primary business entity was Roto-Rooter. So you had a septic cleaning company entering into hospice care, and their hospice arm is far more profitable than Roto-Rooter.

The third thing I’d do would be to ask for, and review, the plan of care for your loved one. That’s a term of art. The POC is meant to be reviewed every 14 days by an entire interdisciplinary group.

I’d also ask to see the notes related to my loved one taken during the interdisciplinary team meetings. Armed with that kind of information at a nonprofit hospice, and with the engagement of the primary care physician, hospice can be a wonderful thing.