The owner and operator of two California hospices was arrested on June 3, 2025, following a 14-count federal grand jury indictment alleging she submitted more than $4.8 million in false and fraudulent claims to Medicare. Medicare paid more than $3.8 million on those claims, which involved medically unnecessary services provided to individuals who were not terminally ill, as well as illegal kickbacks paid to marketers in exchange for patient referrals.
The 71-year-old defendant was charged with nine counts of healthcare fraud, one count of conspiracy, and four counts of illegal remuneration for healthcare referrals. A co-conspirator, 55, was also arrested and charged with one count of conspiracy and four counts of illegal remuneration for healthcare referrals.
According to the indictment, the defendant owned and operated both hospices, which billed Medicare for hospice services provided to patients who were not terminally ill, in a scheme that ran from September 2018 through October 2022.
The two defendants allegedly collaborated to pay marketers to recruit patients for the hospices, despite knowing that most had not been referred by their primary care physicians. These kickbacks—referred to internally as “girl scout cookies”—amounted to as much as $1,300 per patient per month for each month the patient remained on hospice care.
Others involved in the scheme included a marketer, 53, who pleaded guilty in September 2024 to one count of receiving kickbacks in connection with a federal healthcare program. Sentencing is scheduled for October 23. Another conspirator, 60, a nurse practitioner involved in the assessments, pleaded guilty on May 22 to one count of healthcare fraud and is scheduled to be sentenced on November 20.
The nurse practitioner conducted initial hospice assessments and found that many patients did not qualify. However, under pressure from the owner—who was not a medical professional but made final enrollment decisions—and from marketers, she exaggerated or falsified medical records to make the patients appear terminally ill. Hospice physicians then relied on these records to certify patients as eligible for hospice services.
Once enrolled, those patients, who were not terminally ill, rarely died. Instead, they were often discharged after approximately six months at the direction of the owner, sometimes transitioning to her home health company or the second hospice.
During the scheme, one of the hospices submitted approximately $3,870,642 in fraudulent claims, on which Medicare paid about $2,912,187. The other company submitted roughly $945,647 in fraudulent claims, resulting in Medicare payments totaling approximately $894,199.
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 patients 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 policies and procedures related to hospice services to ensure they are accurate, compliant with current regulations, and clearly reflect eligibility criteria and documentation requirements. Update as needed.
- Train staff on the eligibility criteria for hospice enrollment. Ensure nursing and social services staff are trained on the correct process for initiating, receiving, and documenting hospice referrals.
- Conduct regular audits to confirm that all residents enrolled in hospice meet Medicare eligibility requirements and that documentation supports the medical necessity of hospice care.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*