Lawsuit accuses Senate President Don Gaetz's former company of Medicaid fraud

TALLAHASSEE — The U.S. Department of Justice has sued the hospice company founded by Florida Senate President Don Gaetz, accusing the company of engaging in Medicare fraud for more than 11 years, including during the time Gaetz was vice chairman.

The lawsuit, filed May 2 in the district court for the western district of Missouri, alleges that since at least 2002 Vitas Hospice Services and Vitas Healthcare Corp., the largest provider of for-profit hospice services in the country, "misspent tens of millions of taxpayer dollars from the Medicare program."

Gaetz sold the company in 2004 to its current owner, Cincinnati-based Chemed, and reportedly no longer owns any shares or has any affiliation with the company. Chemed operates hospice services in 18 states including Florida.

The suit, filed on the eve of the final day of the legislative session, alleges that Chemed and its hospice subsidiaries defrauded Medicare by billing the agency for patients who were not eligible for hospice care, and for charging Medicare for crisis care given to patients who either didn't need it or never received it.

Gaetz, R-Niceville, who was elected to the Senate in 2006, said through a spokeswoman late Wednesday that the Department of Justice complaint involves issues that occurred after he left the company.

"For the past nine years, President Gaetz has not owned any stock in the company or served in any capacity as an employee, officer, director, consultant or volunteer,'' said Katie Betta, Gaetz's spokeswoman. "The complaint relates to matters long after President Gaetz sold his interest in the company."

The company said in a statement issued May 3 that it intends "to defend this lawsuit vigorously."

Under federal law, only dying patients with six or fewer months to live are eligible to receive Medicare-reimbursed hospice care and only patients "experiencing an acute crisis that requires the immediate and short-term provision of skilled nursing services" are eligible to receive so-called crisis care, the most costly form of hospice care, according to the complaint.

In 2013, for example, Medicare's daily reimbursement rate for crisis care was $742 more per patient than the daily rate for routine home care, the complaint said.

The lawsuit alleges that Vitas Healthcare systematically attempted to overcharge Medicare for services that were either not provided or given to patients who were not eligible for the level of care billed to Medicare. The Justice Department also claims the company used aggressive marketing tactics and pressured staff to increase the number of crisis care claims submitted to Medicare and set goals for the number of days that were to be billed.

The complaint cites the example of a California patient identified only as "MC." Vitas reported that the patient was eligible for Medicare-reimbursed hospice care, the complaint alleges, but the company's own records stated that MC did not have a terminal illness whose prognosis was six months or less. She was instead, "living independently and performing daily activities without assistance," including doing her own laundry.

The cost to Medicare for crisis care for MC was $170,999 between 2009 and 2012, according to the complaint.

The Justice Department found that Vitas' billings for crisis care was almost six times higher than the national average.

A Vitas nurse reported that on more than one occasion she arrived at the home of a patient described by Vitas as needing crisis care but instead would find the patient "at church, at the beauty parlor, or playing bingo," the complaint said.

Despite the fact that these patients did not need or receive crisis care, the complaint alleges that Vitas billed Medicare for the services anyway.

Gaetz founded Vitas Healthcare as a nonprofit, Hospice Care Inc., in Miami in early 1978 with partners Hugh Westbrook and Esther Colliflower. That same year, Gaetz and Westbrook helped pass Florida's hospice licensure law, which gave his hospice a 20-year head start over for-profit competitors.

Florida's hospice act was the first such law in the nation and became the model for the federal Medicare/Medicaid hospice benefit plan that Congress enacted in 1982. The company became a for-profit company in 1984 and changed its name to Vitas Healthcare in 1992.

Gaetz and his partners sold Vitas for $406 million to Cincinnati-based Chemed, best known as the owner of Roto-Rooter.