Whistleblowers who worked for Avalon Hospice accuse the agency of knowingly enrolling patients who weren’t going to die within six months, as hospice rules suggest, and concealing evidence that would force them to repay Medicare. Their accusations have now led the U.S. Attorney and the Tennessee Attorney General to get involved.

State and federal prosecutors filed their own suit under the False Claims Act on Tuesday.

More: Read the lawsuit against Avalon Hospice.

In the lawsuit, they lay out an alleged pattern in which poorly trained physicians rarely saw patients to sign off that their illness was terminal, leading to many patients exceeding Medicare’s six-month cap. Some were on hospice for years, with one patient in the suit on hospice for six years.

According to the suit, Avalon rarely removed patients on its own, even when the patient’s health didn’t worsen. In one instance, the company did drop a patient after deciding there was no terminal illness but still charged the Medicare program the per diem rate, according to the suit.

Determining a patient has six months to live, as required for payment from Medicare, is difficult, and the timeline is often extended. But the patient’s condition still has to be declining. The suit describes how Avalon teams were trained to avoid words like “stable” in their medical reports, which might have tipped off regulators to a patient’s true condition.

A system easily abused

Hospice has become increasingly attractive to for-profit agencies, which now outnumber the nonprofits. That’s partly because patients are embracing hospice sooner in their illness, especially those with incurable diseases like Alzheimers.

For unscrupulous agencies, hospice is easily abused because companies are paid nearly $200 a day, whether they actively provide services or not. Those driven mostly by profit are incentivized to enroll as many patients as possible and provide limited services to patients who are usually at home or in a nursing facility.

The federal suit accuses Avalon of working closely with Tennessee nursing homes to enroll their residents, pitching their services as a way to lighten the load for nursing home staff. Nursing home patients also become more profitable to a hospice agency, since they usually don’t need as much help as people being cared for primarily by family members.

By revenue and patient count, Avalon is the largest hospice agency in Tennessee — operating statewide, with a heavier presence outside of urban areas that have more established nonprofit hospice agencies. In 2020, Avalon took in nearly $90 million, mostly from Medicare, according to state reports. The annual revenue is more than triple that of Nashville’s nonprofit Alive Hospice.

Long-running complaint

The Avalon whistleblowers were terminated after raising ethical and legal concerns, according to the original suit under seal since 2013. Since then, federal investigators have been fleshing out the findings and have now brought a False Claims Act suit against the parent company, CURO Health Services.

A statement from CURO, which is based in North Carolina and owned by health insurer Humana along with private equity investors, says the company prides itself on “rigorous compliance.”

“CURO does not believe that we violated the False Claims Act,” spokesperson Patti Miller says in a statement to WPLN News. “We go to great lengths to ensure that our patients meet the Medicare requirements for eligibility—which includes the physician’s certification of terminal illness.”

Prosecutors have requested a jury trial, though federal whistleblower suits often result in a monetary settlement. If the government prevails, the whistleblowers would receive a share of the money.