United States: The Nursing Home/Hospice Relationship Garners Increased Scrutiny, Leading To Multi-Million-Dollar Penalties And Potential Criminal Sanctions

A Wide Range of Practices Are Under Increased Scrutiny

The government is taking aggressive action after years of warning nursing homes and hospices about requesting or providing illegal compensation to influence the nursing home's patient referrals, in violation of the federal anti-kickback statute (AKS) and the federal False Claims Act (FCA).1 The government is using the broad reach of these laws to identify, prosecute and penalize hospices and nursing homes based upon a wide range of practices that are viewed as providing improper incentives to nursing homes. These practices have included:

  • A hospice providing staff at its own expense to the nursing home to perform duties that otherwise would be performed by the nursing home staff.2
  • Hospices providing services merely at the request of the nursing home instead of according to the medical needs of the patient.3 For example, providing a Certified Nursing Assistant to the nursing home several days per week solely for the convenience of the nursing home staff, furnishing continuous care to dying patients in the nursing home who do not exhibit acute symptoms that would justify this higher level of care or supplying specialty durable medical equipment (DME) to patients, even though the full extent of such services or equipment is not medically necessary.
  • Nursing homes requesting and hospices providing services that are not considered hospice services, such as providing around-the-clock, nonskilled companionship-type services.
  • A hospice offering or providing free goods or services to nursing home staff, such as gift cards.4

Consequences: Monetary Penalties, Prison and More

The potential consequences of violating the AKS or FCA are immediate, severe and could threaten the continued viability of many nursing homes and hospices. For example, even before an AKS or FCA complaint is filed, the government can suspend Medicare payments to nursing homes and hospices if there is a "credible allegation of fraud," such as an alleged AKS or FCA violation.5 In addition, both nursing homes and hospices that engage in practices that violate the AKS and FCA can be prosecuted and given severe penalties, including:

  • A fine of up to $25,000, plus
  • Imprisonment for up to 5 years, plus
  • Fines of up to $11,000 per claim, plus
  • 3 times the amount of damages sustained by the government, plus
  • Nonpayment for services, plus
  • Exclusion from federal health care programs.

Moreover, providing free services to nursing home residents may violate the federal prohibition against giving beneficiary inducements, which would bring additional fines of up to $10,000 per claim. This type of allegation has already been used by the government to secure a $1 million settlement in a recent FCA case.6

The Risk Is Real: More Contractors and More Money Mean A Higher Risk of Scrutiny

With surveyors and a myriad of other government contractors such as ZPICs scrutinizing the nursing home/hospice relationship, the risk of governmental prosecution is higher than ever. In addition, whistleblowers, patients, and patients' families all are incentivized to report bad conduct that could lead to serious consequences for nursing homes and hospices.

Nursing homes in particular are vulnerable to increased scrutiny. Under their new regulatory requirements, nursing homes must ensure that the services they provide to resident hospice patients are consistent with the level of care that would have been provided before hospice care was elected.7 Moreover, nursing homes are surveyed regularly, and the survey will now likely include a review of residents who are receiving hospice care. With the government budgeting $2 billion for its health care fraud and abuse program in 2015—nearly $700 million more than spent in 20148—the risk of scrutiny will only increase. This is particularly evident due to the significant recoveries that the government already has realized on its fraud detection investment. Even before this infusion of prosecutorial resources, the amount of money recovered has been substantial, and the rate of health care fraud prosecutions has risen dramatically over the past few years:

  • $4.3 billion recovered in health care fraud in 2013 - third straight year of over $4 billion collected in health care fraud.9
  • 522 new health care fraud cases initiated in 2013, up from 313 in 2009.10
  • 66% increase in new health care fraud cases since 2009.11
  • The number of whistleblower cases filed in 2013 was nearly double the number as were filed in 2009.12

Avoid Becoming a Statistic: Do Not Request and Do Not Provide Medically Unnecessary or Non-Hospice Services

Nursing homes and hospices can reduce their risk of becoming an AKS or FCA statistic by avoiding the practices described in this article. Both nursing homes and hospices should evaluate their mutual relationships in light of the following questions.

  • Are the items and services requested by the nursing home or provided by the hospice actually needed by patients, commercially reasonable, and necessary to achieve a legitimate business purpose other than to generate of referrals or business?
    • The answer should be "yes."
  • Do the services requested by the nursing home or provided by the hospice comprise "hospice services" as that term is defined by federal law?
    • The answer should be "yes."
  • Does the nursing home (or its affiliates or representatives) directly or indirectly receive anything of value from the hospice that is not related to or based upon the contracted provision of hospice services?
    • The answer should be "no."
  • Is an arrangement between a nursing home and a hospice intended to induce or reward referrals?
    • The answer should be "no."

If a nursing home or hospice cannot answer each of these questions as cited above, then the particular relationship or arrangement should be evaluated to determine whether it could lead to the kind of scrutiny and potential consequences discussed in this article.

Nursing Home-Hospice Relationships Are Here to Stay: Center Your Partnership on Patient Need

CMS has made clear that end-of-life care is critically important in the nursing home setting, and a good hospice partner should play an important role in quality end-of-life care while avoiding the serious risks discussed above. To do so, the relationship between the hospice and the nursing home must be defined by the medical needs of the patient and each provider's responsibilities for care.


1 Office of the Inspector General ("OIG"), Special Fraud Alert, Fraud and Abuse in Nursing Home Relationships with Hospices, March 1998 ("OIG Special Fraud Alert"). A violation of the AKS is a per se violation of the FCA. 42 U.S.C. § 1320a-7b(g).

2 OIG Special Fraud Alert. See also OIG, OIG Supplemental Compliance Program Guidance for Nursing Facilities, 73 Fed. Reg. 56832, 56845 (Sept. 30, 2008) and OIG, Compliance Program Guidance for Hospices, 54031, 54040 (Oct. 5, 1999).

3 See Relator's First Amended Complaint, U.S. ex rel. Numbers v. Hernando-Pasco Hospice, No. 8:10-cv-00912-T- 27-27EAJ (E.D. Fla. Feb. 20, 2012).

4 See Relator's Amended Complaint, U.S. ex rel. Wall v. Vista Hospice Care, Inc., No. 3-07-CV-0604-M (N. D. Tex. Sept. 29, 2009). See also, U.S. ex rel. Wall v. VistaCare, Inc., Civil Action No. 3:07-CV-604-M (filed March 9, 2011).

5 See 42 C.F.R. § 405.371(a)(2).

6 See note 3, supra.

7 See 42 C.F.R. § 483.75(t)(2)(ii)(G). See also, 42 C.F.R. § 418.112(c)(4)

8 U.S. Dept. of Health and Human Services, Fiscal Year 2015 Budget in Brief, available at http://www.hhs.gov/budget/fy2015/fy-2015-budget-in-brief.pdf.

9 The Department of Health and Human Services and The Department of Justice Health Care Fraud and Abuse Control Program Annual Reports for Fiscal Years 2011-2013, available at http://oig.hhs.gov/reports-andpublications/ hcfac/.

10 U.S. Dept. of Justice, Fraud Statistics - Health and Human Services, October 1, 1987 - September 30, 2013, available at http://www.justice.gov/civil/docs_forms/C-FRAUDS_FCA_Statistics.pdf.

11 Id.

12 Id.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Lucien A. Beaudry
Heather L. Fields
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions