END-OF-LIFE CARE RIFE WITH FRAUD
Nowhere are hospices as ubiquitous as in L.A., where illegal practices exploit unwitting patients
Martin Huff was 67 when he fell off his bicycle, banged up his knee and spent a couple of hours in a Riverside County emergency room before walking out under his own power.
Ten days later he was in hospice care, diagnosed as terminally ill by a small Covina provider of end-of-life services that said he was weak and wasting away, with six months or less to live.
Five years after that grim prognosis, however, Huff was still very much alive. He testified in federal court that no one from California Hospice Care had ever given him a medical exam before claiming he was dying.
“I really never
knew exactly what the deal was on the hospice,” he said. Huff is among a legion of mostly older Americans targeted for audacious, widespread fraud in an industry meant to provide comfort-
ing care in their final days, a Los Angeles Times investigation found. Like Huff, many are unwitting recruits by unscrupulous providers who bill Medicare for hospice services and equipment for “terminally ill” patients who aren’t dying.
Intense competition for new patients — who generate $154 to $1,432 a day each in Medicare payments — has
spawned a cottage industry of illegal practices, including kickbacks to crooked doctors and recruiters who zero in on prospective patients at retirement homes and other venues, The Times found.
The exponential boom in providers has transformed end-of-life care that was once the realm of charities and religious groups into a multibillion-dollar business dominated by profit-driven operators.
Nowhere has that growth been more explosive, and its harmful side effects more evident, than in Los Angeles County. Hospices in the county have multiplied sixfold in the last decade and now account for more than half of the state’s roughly 1,200 Medicare-certified providers, according to a Times analysis of federal healthcare data.
Scores of providers have sprung up along a corridor stretching west from the San Gabriel Valley, where California Hospice Care was located, through the San Fernando Valley, which now has the highest concentration of hospices in the nation.
“There are too many providers in L.A. County, and too many providers who are in it for the wrong reasons,” said Edo Banach, who heads the National Hospice and Palliative Care Organization, the largest U.S. trade group for hospices. “Folks who go into this for the wrong reason generally do not do a good job.”
Much more than money is at stake.
Some patients who unknowingly enrolled in hospice later discovered they had signed away their rights
to lifesaving emergency medical treatment, state inspection records show. Others endured excruciating pain in their final days when providers failed to deliver the comforting care they desperately needed.
Still others suffered the consequences of neglected, festering sores that developed maggots or resulted in hospitalizations.
Privacy laws and government reports that keep the names of patients, doctors and hospice administrators confidential make it difficult to quantify and humanize many of the cases.
But The Times found that since 2008, regulators have cited hospices in California more often than anywhere else in the country for the most serious types of violations, four times as many as states such as Texas and Georgia, which also have large numbers of providers.
Despite those citations, California and federal regulators have rarely fined, suspended or shut down deficient hospices, state reports show. Oversight has been weakened further during the COVID-19 pandemic, as regulators suspended requirements for most hospice inspections and limited the types of complaints they investigate.
California, which has among the lowest barriers to setting up a new hospice, also leads the nation in violations for enrolling patients without medical proof that they were terminally ill.
The Times’ analysis revealed that Los Angeles County hospices discharged patients 80% more often than highlighting providers a rate nationwide, that federal authorities say is a red flag for Medicare fraud.
California Hospice Care claimed that Jesse Staten suffered from terminal heart failure when it signed him up for end-of-life treatment. His predicted six months to live expired in 2012, but he didn't: When the times contacted him eight years later, he was still going strong.
“I’m hanging in,” said Staten, 75. “I’ve got a lot of issues in my blood and I have other issues, but I can’t complain.”
Federal prosecutors accused California Hospice Care of bilking taxpayers of $7.5 million in illegal payments in connection with Staten, Huff and scores of other ineligible Medicare recipients. The hospice owner and two doctors were sentenced to prison, and several others were convicted or pleaded guilty in the scheme.
Many of the hospice’s patients were addicts lured by the promise of free narcotic painkillers, prosecutors said.
Some were enlisted by a doctor who collected a bounty from the hospice on each, according to his indictment.
One was a 47-year-old woman who lost her place on a waiting list for a liver transplant when she signed up for hospice, which prohibits curative care. It took her months to get reinstated, and she died not long after finally receiving a new organ.
“That’s the last hope, and having that person removed from the liver donor list by placing them in the program is conduct that is hard to understand,” U.S. District Judge S. James Otero said when sentencing a hospice nurse to 18 months in prison. “That’s callous.” Conceived as an end-of- life option for terminally ill patients, hospice care properly delivered has been a godsend for millions of dying Americans and their families. It provides palliative care and prescription drugs, nursing services, medical equipment, supplies and spiritual counseling for those given a prognosis of six months or less to live. The U.S. hospice industry took root in the mid-1970s but f lourished only after Medicare began covering its services in 1983. For-profit providers sprang up to meet a growing need that outstripped the capabilities of charities and religious institutions that pioneered endof-life care. In the last 20 years, the number of U.S. providers has roughly doubled, while Medicare spending on hospice has grown sixfold, to $19.2 billion a year. More than 1.5 million Medicare beneficiaries now receive care from some 5,000 hospices, nearly a quarter of them in California. “Virtually all of the growth is of for-profit providers, which appear to be crowding out the local nonprofits that established the hospice model and had a desire to maintain its integrity,” said Michael Connors, a long-term care advocate with California Advocates for Nursing Home Reform. For-profit operators now make up 70% of all hospices certified by the Centers for Medicare and Medicaid Services and 91% of those in California. In Los Angeles County, they account for 97% care. Many provide excellent Satisfaction surveys reported by hospices nationwide show that more than 80% of respondents rate their hospice as a 9 or 10 out of 10, but in L.A. County that figure drops to 74%. Respondents in L.A. also were less likely to report that hospices always gave them the help they needed.
Most hospice care is provided in patients’ homes, but services also are rendered at stand-alone facilities, nursing homes and assisted living centers. Regulatory inspections and financial audits are infrequent, making the system a soft target for scammers.
Complaints about shady operators began lighting up the California Senior Medicare Patrol hotline in mid2017 and have not let up, said Sandy Morales, who oversees the federally funded statewide hotline, whose mission is to help Medicare beneficiaries prevent, detect and report fraud.
“It’s all over Southern California: Riverside County, Hemet, Indio, Long Beach, Los Angeles, Bakersfield,” she said. “Right now, it’s huge.”
Since January 2019, her agency has forwarded more than 100 cases of suspected hospice fraud to federal investigators, Morales said. One doctor’s office in Los Angeles County recently reported that 10 patients appeared to have been fraudulently enrolled by a hospice.
Fraudsters stick to a familiar script, enticing or duping Medicare recipients into signing up for services they don’t need, she said.
They send recruiters door to door and to churches, food banks, senior
centers and apartment complexes, often misrepresenting hospice as an “extra” Medicare benefit that pays for nursing visits, hospital beds or other needs.
The pandemic has spun off new schemes, she said, with unscrupulous recruiters now enticing prospects with hand sanitizer, gloves and promises of other COVID-19 “freebies.”
Many who sign up don’t even realize they are in hospice care.
“They’ll say, ‘No, I’m not dying. I wanted help with housekeeping and cooking, and that’s what I signed up for,’ ” Morales said.
In May 2017, the daughter of an Alzheimer’s patient told a state investigator that a marketer for All Seasons Hospice in Paramount signed up her mother with a promise of 24-hour nursing care.
When no one showed up, she called the hospice and was told the only 24-hour service was by phone.
The hospice administrator acknowledged the bogus sales pitch but mostly shrugged it off.
“It is a dog-eat-dog situation out there, very competitive,” the administrator told inspectors, according to a state report that did not name the employee.
“I have no control over what these marketers say or do. They do what they want and promise anything to get the patient.”
The Centers for Medicare and Medicaid Services did not respond to specific questions about the extent of hospice fraud but said in a statement that the agency aggressively seeks to ferret it out.
“CMS identifies fraud, waste and abuse in hospice services utilizing cuttingedge data analytics, medical review and program integrity investigations,” it said. “In instances of potential fraud, CMS refers those providers to law enforcement for further criminal investigation and for appropriate administrative actions.”
The U.S. Department of Health and Human Services’ Office of Inspector General reported in July 2018 that inappropriate billing and fraud by hospice providers cost taxpayers “hundreds of millions of dollars,” but the full extent is unknown.
The watchdog agency declined to comment on the scope of hospice fraud and said it could not provide a count of cases it has investigated. The Department of Justice did not respond to repeated requests for its prosecution numbers.
But according to interviews with hospice providers and industry experts, and a review of law enforcement releases on individual cases, state licensing reports, lawsuits and federal data, fraud is widespread.
“Hospice fraud remains absolutely rampant in the United States,” said Mark Schlein, an attorney with the Los Angeles firm Baum Hedlund who specializes in hospice whistleblower lawsuits. He links the fraud in large part to the industry’s unfettered growth.
“That translates into much more money being paid to hospice companies by federal healthcare programs,” he said. “When Willie Sutton was asked, ‘Why do you rob banks?’ he said, ‘Because that’s where
More than two dozen hospices pepper a mile-long stretch of Victory Boulevard, an east-west artery in the San Fernando Valley. One well-worn office building in the 13600 block in Van Nuys is home to 15 providers.
“Hospices have been growing like mushrooms around here,” said one of the other tenants, who declined to give his name for fear of alienating his neighbors in the complex, where monthly rents start at an enticingly low $399.
Scores of others are in neighboring Valley communities, all part of a sprawling regional hotbed of for-profit hospices. Many are small operations, some purchased as investments by people with little or no healthcare experience.
Since 2010, the number of providers in Los Angeles County has skyrocketed from 100 to 618, federal data show.
North Hollywood is home to 35 hospices, while Glendale has 60, Burbank has 61 and Van Nuys 63.
By comparison, New York state and Florida each have fewer than 50.
With a population of 103,000, Burbank has a per capita rate of hospices that is nearly 40 times the national average, according to The Times’ analysis.
“It makes no sense,” said Jan Jones, recently retired chief executive officer of the California Hospice Network, a coalition of nonprofit providers. “I can’t imagine there are 60 hospices in Burbank that are doing it the right way. There can’t be enough people for 60 hospices there.”
New York, Florida and dozens of other states require prospective hospice owners to obtain a “certificate of need” to justify the demand for additional providers before they can get licensed.
California providers must be free of felony convictions, but there are few other qualifications for starting or operating a hospice beyond getting licensed by the state and certified by Medicare, a process that costs only a few thousand dollars.
“There is not a high-cost entry point to start a hospice program, unlike a hospital or a nursing home,” Jones said. “A lot of people think it is an easy business, which frankly I think is wrong.”
With the explosive growth have come serious quality-of-care issues.
The Times’ review of more than 800 state licensing and inspection reports revealed instance after instance in which patients were deprived of comforting care because of the actions — or inaction — of hospice providers.
Mismanaged pain medications, neglected infections, missed nursing visits, incompetent or dishonest home health aides — all were cited among hundreds of violations that required hospices to draw up plans to correct the problems but resulted in little or no disciplinary action.
Patients suffered for lack of pain medication or had maggots crawling out of festering foot sores and head wounds, state inspection records show. Others died alone or without the help they needed because no one from the hospice showed up in their final hours.
“We will never heal from that devastation,” Joyce Craig said of the final moments of her brother, Peter Craig, 74, a partner in a Los Angeles accounting firm who died of cancer in 2017.
The California Department of Public Health licenses and regulates hospices to ensure they meet state and federal standards but has limited ability to punish offenders. The only fines it can impose are for breaches of patient confidentiality.
To qualify for hospice, patients must be certified as terminally ill by their attending physicians, if they have them, and by a hospice doctor. The certification process is ripe for fraud.
The Times’ analysis of federal data showed that California hospices led the nation in violations for enrolling nonterminal pa
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