A California woman was sentenced on August 5 to 108 months in federal prison for her role in a Medicare fraud scheme involving illegal kickbacks for patient referrals and approximately $10.6 million in fraudulent hospice care claims. The 75-year-old Glendale resident was also ordered to pay $8,270,032 in restitution.
In a separate hearing that same day, her co-defendant, a 75-year-old resident of Lakewood, was sentenced to three years of probation, including two years of home confinement.
Following a six-day trial in December 2024, a federal jury found the Glendale woman guilty of 12 counts of healthcare fraud and 16 counts of paying illegal kickbacks for healthcare referrals. The Lakewood co-defendant was found guilty of six counts of receiving illegal kickbacks.
The primary defendant had previously been excluded from participating in Medicare due to earlier federal convictions for receiving illegal kickbacks. Despite this, she acquired one hospice company through her daughter and another through her husband in 2015, concealing her ownership interest in both from Medicare.
She then paid “marketers,” including her co-defendant, hundreds of thousands of dollars in illegal kickbacks in exchange for patient referrals. These referrals enabled her to bill Medicare for hospice care that was not medically necessary.
According to Medicare guidelines, hospice care is intended for patients who are terminally ill with a life expectancy of six months or less. It focuses on providing comfort rather than curative treatment. Patients who elect hospice typically forgo certain other Medicare-covered services aimed at treating their illness.
However, consistent with instructions from the primary defendant, the co-defendant falsely told prospective patients that they did not need to be dying to receive hospice care. After collecting personal identifying information from individuals who were not terminally ill, the co-defendant forwarded the information to the defendant to facilitate fraudulent billing.
Beginning in 2015, the defendant caused the submission of approximately $10.6 million in fraudulent claims to Medicare through the two hospice companies. For each patient billed, she received roughly $6,000 per month. In turn, she paid the co-defendant and other marketers up to $1,000 per month in illegal kickbacks for each referred patient.
Many of the patients enrolled in hospice through her companies were unaware they had been signed up. Some only discovered their enrollment when they were denied coverage for medical services they actually needed.
During the scheme, when Medicare requested supporting documentation for the submitted claims, the defendant and her husband directed employees to fabricate patient charts. These fake records were then submitted to Medicare in an effort to justify the hospice care charges.
According to court documents, while awaiting trial in this case, the defendant took control of three additional hospice companies and caused the submission of approximately $4.8 million in further fraudulent claims for purported hospice care.
Compliance Perspective
Issue
All medical services provided must be medically necessary, with the patient or resident both eligible for and involved in the decision to receive those services. Medicare covers hospice care only for those who are terminally ill—defined as having a life expectancy of six months or less if the illness runs its normal course. Providing services that do not meet this standard can constitute a false claim. Additionally, failure to promptly report false claims or kickbacks may result in lawsuits, fines, and other regulatory sanctions.
Discussion Points
- Review and update policies and procedures related to hospice services to ensure alignment with current Medicare regulations. Policies should clearly define eligibility criteria, required documentation, and internal controls around hospice referrals and billing practices. Facilities may benefit from working with an external consultant to assess current policies, identify regulatory gaps, and support the implementation of best practices.
- Ensure that staff have a solid understanding of Medicare hospice eligibility criteria as well as the correct procedures for making and documenting referrals. Instruction on recognizing red flags of fraud—especially involving third-party contractors and referral sources—can help staff avoid inadvertently participating in misconduct. Courses such as Red Flags of Fraud, available through Med-Net Academy, provide practical guidance on identifying suspicious activity and following proper reporting protocols.
- Conduct periodic audits of hospice enrollment and related medical records to verify that all patients or residents meet Medicare eligibility requirements and that documentation clearly supports the medical necessity of services. A third-party consultant can assist with focused or modified audits—especially in areas previously flagged through QAPI activities—to provide objective feedback and identify potential risks before survey activity.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*