SouthernCare: When the Census Came Before the Chart

SouthernCare hospice settlements include the $24.7 million resolution in 2009, a separate Pennsylvania settlement in 2018, and SouthernCare locations covered by a broader agreement in 2024, all involving allegations of billing for patients who did not qualify for hospice. The complaints describe a conflict a hospice insider may recognize: a chart showing one thing, an admission target demanding another, and a certification that kept Medicare paying.

The hospice fraud allegations reached decisions made before the bill went out. Who recruited the patient? What did the nurse document? What information reached the physician? The SouthernCare complaints describe marketing promises, unsupported diagnoses and pressure to fill the census, the number of patients enrolled. Those details explain how a clinical decision could become a sales decision. Taxpayers paid for care the government alleged should never have been billed.

The 2009 SouthernCare Settlement

The Justice Department’s January 15, 2009 announcement resolved health care fraud claims alleging that SouthernCare billed for patients who were not eligible for hospice. The Birmingham, Alabama company operated about 99 locations in 15 states. Two former employees brought the cases.

The hospice eligibility decision turns on a physician’s certification that a patient’s life expectancy is six months or less if the illness runs its normal course, as Medicare’s coverage manual explains. The information supporting that certification matters at admission and again when the patient is recertified. In the SouthernCare complaint, the whistleblower alleged that the information in the chart contradicted the story used to enroll the patient.

For the patient, enrollment also changes what Medicare pays for: hospice replaces coverage for curative treatment of the terminal illness. The diagnosis affects the patient’s care as well as the provider’s payment.

What the Chart Said

The complaint behind the earlier settlement alleged that a marketing assessment listed chest pain as a reason for hospice admission even though the clinical nurses’ notes recorded no chest pain and the patient denied having it. Another patient’s certification described nutritional decline despite a chart recording weight gain after enrollment.

A nurse who recorded the patient’s condition could see a discrepancy that the certification alone concealed.

The complaint also alleged that an admission coordinator’s job was to bring patients in and that the clinical team would “make it work.” It described monthly admission quotas and offers of free medications, supplies, equipment and household help to people who were not terminally ill. The alleged sales pitch made enrollment attractive while leaving the clinical staff to supply the terminal diagnosis.

One patient, the whistleblower alleged, remained enrolled for more than four years before SouthernCare discharged her for failure to decline. The complaint described the final nursing entry this way:

An apology from the patient is a remarkable ending to an allegation about the provider’s billing decisions.

Oversight After the Payment

SouthernCare also entered a five-year Corporate Integrity Agreement with the Department of Health and Human Services’ Office of Inspector General. The later Pennsylvania case alleged unsupported hospice billing beginning in the same month as that agreement.

The 2018 Pennsylvania SouthernCare Settlement

SouthernCare agreed to pay $5,863,426 in the Pennsylvania settlement announced December 13, 2018. The government alleged medically unnecessary hospice care or care without supporting documentation at Pennsylvania facilities from January 2009 through December 2014. It said SouthernCare admitted patients who were not terminally ill and kept some on hospice for years.

Two former employees brought the Pennsylvania qui tam cases. Their complaints describe how admission goals and referral relationships allegedly affected the patient record.

In one complaint, a whistleblower alleged that management instructed staff to admit patients without medical records supporting the terminal diagnosis and to rely instead on family accounts. The same complaint described a patient repeatedly recertified with breast cancer despite the absence of medical records supporting that diagnosis or changes in the breast lump during her roughly three-year stay.

The other complaint alleged that an Altoona patient was admitted to meet a month-end goal, then discharged for failure to decline after approximately two and a half years. It also described a husband-and-wife admission in which the husband was terminally ill and the wife entered with a diagnosis of debility, unspecified. The wife was discharged for failure to decline about two months later.

A Referral Pitch Built Around the Facility’s Savings

The Pennsylvania allegations connected recruitment to the costs a nursing facility could move onto hospice. One complaint described the marketing pitch in unusually concrete terms:

The alleged menu sold hospice to the facility as a way to cut its own expenses. The other complaint alleged an arrangement to send a nursing assistant to a facility once it housed at least six SouthernCare hospice patients. For someone working in intake or a referring facility, those arrangements connect the sales conversation to the patients who entered care.

SouthernCare Locations in the 2024 Agreement

The broader settlement announced July 17, 2024 covered SouthernCare alongside other hospice businesses. The signed agreement sets the total at $19,428,570 across the settling entities and federal and state claims.

SouthernCare was among Curo’s hospice brands, which joined Kindred at Home in 2018, before further ownership changes brought certain settling businesses into Gentiva in 2022.

The SouthernCare locations covered were Demopolis, Daphne and Mobile in Alabama, South Bend in Indiana, and Youngstown in Ohio. The agreement allocated $2,106,181 of the federal settlement to the Youngstown allegations involving ineligible-patient claims and retained overpayments. The broader total also covers Avalon operations in Tennessee and Kindred locations in Rhode Island, Texas and Missouri.

Keeping Payments After the Eligibility Problem

The government alleged both false claims for ineligible patients and improper retention of overpayments at the listed SouthernCare locations. That brings a later decision into the hospice billing story: what the business did with payments for care the government contended should not have been billed.

In the Avalon portion of the same resolution, the government’s allegations went further into the operating practices. The United States and Tennessee alleged admission and census pressure, discouraged discharges, failures to supply certifying physicians with complete and accurate information, and internal warnings and audits followed by failure to return overpayments. For an insider, the admission decision, the information sent to a doctor and the response to a later audit are different parts of the same payment history.

The Separate Gadsden Referral Arrangement

The agreement allocated $362,000 to allegations involving hospice referral kickbacks at SouthernCare New Beacon in Gadsden, Alabama. The government alleged that New Beacon and Curo paid a physician through consulting agreements to induce Medicare hospice referrals, covering October 2016 through October 2022.

New Beacon disclosed the arrangement to the inspector general in March 2023.

Why the Patient Census Mattered

Medicare pays routine hospice care by the enrolled day, including days when no visit occurs. A hospice takes responsibility for care related to the terminal illness, including nursing, medication, equipment and supplies. An additional enrolled day therefore brings revenue, while the work required on that day varies with the patient’s needs.

Milliman’s 2019 report Hospice Medicare Margins, commissioned by the National Partnership for Hospice Innovation, explains the cost pattern:

Its analysis of 2017 care found more intensive nursing and social worker visits near admission and death than across the stay overall. That industry pattern helps explain the financial attraction of keeping a patient enrolled through less intensive days. In SouthernCare’s case, the complaints supplied the specific allegations: a monthly target, recruitment through promised savings, and clinical records that conflicted with the diagnosis used for enrollment.

The same concern about what reached the physician appeared in Evercare’s 2016 hospice settlement. The government alleged unsupported terminal diagnoses, practices discouraging appropriate discharge and failures to ensure accurate nursing documentation. Across these cases, the useful connection is between the patient’s condition, what staff recorded, what the doctor received and the claims that followed.

How Much Does a Whistleblower Payout on Medicare Fraud?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The SouthernCare cases show why the employee’s view inside the hospice can matter in a healthcare whistleblower case: former employees brought both the earlier national cases and the later Pennsylvania cases.

The two whistleblowers in the 2009 resolution shared approximately $4.9 million. The two in the Pennsylvania resolution shared approximately $1.1 million.

When Your Notes Tell a Different Story

If you saw an admission pushed through without supporting records, a referral bought through promised savings or an eligibility warning ignored, speak to one of our whistleblower experts about what you saw. We bring in hospice fraud whistleblower lawyers and work beside you throughout the case, connecting your knowledge of the patients and the business decisions to build your strongest hospice fraud whistleblower case.