Novus Hospice: The Accountant Made the Medical Decisions

The Novus hospice fraud case exposed what the Department of Justice described as a $27 million scheme: an accountant and hospice staff controlled admissions, discharges and medications while physicians supplied false certifications. Inside the Dallas, Texas hospice, a doctor’s signature could appear on a decision the doctor had never made. Patients lost medical oversight while taxpayers paid for care the accountant controlled.

Novus Health Services’ CEO admitted the health care fraud, and a jury convicted medical directors and a registered nurse. The Department of Justice’s May 2021 verdict announcement said Medicare and Medicaid paid the Novus entities approximately $40 million for hospice services before they shut down.

How Is Hospice Fraud Committed?

At Novus, management took over medical decisions and obtained physicians’ signatures to support the resulting claims. The CEO’s admissions covered billing for hospice services that were never provided, lacked medical direction or went to people who were ineligible for hospice.

The CEO Who Chose the Care

The CEO was an accountant by trade. In the March 19, 2021 plea announcement, the Department of Justice described his admissions about billing Medicare and Medicaid from 2012 through 2016. He also admitted using blank, signed prescriptions to dispense controlled substances without physician input.

According to his plea account, doctors received around $150 for each false order they signed. At trial, he testified that he and nurses decided who entered hospice, who left, and which drugs and dosages patients received. The medical directors supplied certifications saying examinations had occurred.

The original indictment described Novus and Optim Health Services as businesses the CEO operated essentially as one. It alleged that he ordered continuous care without regard to patient need and that staff uploaded false physician orders to support the higher billing rate.

The indictment also alleged that nurses administered high doses of Schedule II drugs even when patients did not need them. One reason was to create medical-record documentation to justify continuous care billing. The billing decision drove the medication.

The Operations Director Filling the Physician’s Role

The operations director had no medical training. The court’s account of the trial evidence describes her receiving signed physician orders and using them to enroll patients. She also testified that she saw a medical director complete encounter forms without visiting the patients.

Her description of her role was blunt:

She pleaded guilty to conspiring to commit health care fraud and testified at trial. Her account explains how the signatures worked in practice: an administrator could use a physician’s signed paperwork to carry out the admission herself.

False Certifications and Pre-Signed Prescriptions

Novus medical directors certified visits that had not happened and supplied blank prescriptions that let other people choose medications. Both practices put medical authority on paper while handing the decision to someone else.

The hospice eligibility requirement rests on a physician’s certification that the patient’s prognosis is six months or less if the illness runs its normal course. Medicare’s coverage manual places the face-to-face encounter requirement before the third benefit period and each later recertification. At Novus, the specific evidence concerned signed statements that those encounters had occurred when they had not.

The indictment also alleged that medical directors routinely gave others their login information to create and sign physician orders in the electronic medical record. An order under a doctor’s login could conceal who actually entered it.

The Medical Director Whose Visit Dates Came From Management

One medical director wrote patient narratives from recent nursing notes while the CEO supplied the dates for the encounter forms. According to trial testimony described in the court opinion, the CEO told him to use dates when he was at Novus’s clinic and his other office was closed, making the claimed visits harder to disprove.

The court explained why the false signature mattered even apart from the patient’s condition:

This medical director also participated in the plan to move patients after Medicare suspended payments. The jury convicted him of healthcare fraud and conspiracy offenses, including obstruction.

The Medical Director Whose Visit Dates Conflicted With Travel

Another medical director received batches of nursing narratives and blank encounter forms by fax. The CEO testified that she signed and dated them as directed, then left the completed forms under her doormat for collection. The government produced encounter forms recording visits on a date when she was outside the country.

The same doctor left signed C-II prescription forms, known as triplicates, for others to retrieve. The operations director testified that she used one to order hydromorphone for a patient, and text messages corroborated her account. The jury convicted this physician of unlawful distribution of a controlled substance as well as health care fraud and conspiracy. The medication evidence showed what someone outside the medical role could do with a signature obtained in advance.

The Additional Medical Director Who Supplied Blank Prescriptions

A further Novus medical director also supplied blank controlled-substance prescriptions, according to the CEO’s admissions. Sometimes the doctors left an entire pad. The accountant could then choose the medication without a physician directing it.

This medical director pleaded guilty to conspiring to commit health care fraud.

How Does the Medicare Hospice Cap Work?

The aggregate cap limits a hospice’s annual Medicare payments using a per-beneficiary cap amount and its allocated beneficiary count. That made recruitment valuable to Novus even when the person being recruited did not need hospice.

The court described the pressure inside the company: Novus had exceeded its cap in 2012 and 2013, and its own calculations showed another excess by mid-2014. The business needed more patients with short stays. The CEO admitted that he responded by seeking an influx of first-time hospice patients.

The payment incentive reaches beyond this company. In its January 2015 report, Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities, the Department of Health and Human Services Office of Inspector General analyzed Medicare claims from 2007 through 2012. It found longer stays and higher payments in assisted living than in other settings, often for diagnoses requiring less complex care. Its service-and-payment comparison was stark:

The report identified an incentive to select patients for their financial return. At Novus, the court described how long stays generated daily payments, then cap pressure drove a search for short stays. The patient list became a way to manage the payment ceiling.

Express Medical Turned Patient Information Into Recruitment

Express Medical was a physician home-visit business whose owner gave Novus access to confidential patient information. In exchange, the CEO agreed to use Express Medical for laboratory services and home health visits. Novus staff approached people from that patient pool for hospice enrollment regardless of eligibility, according to the CEO’s admissions.

The court described the practical access: Express Medical’s owner provided a Novus nurse with login credentials for its electronic records database. The CEO and nurse searched the database for prospective hospice patients. The information exchange supplied the recruiting operation with people to call.

The Express Medical owner pleaded guilty to wrongful use of individually identifiable health information.

The Nurse Whose Recruitment Bonuses Appeared in Texts

The registered nurse who went to trial helped find and enroll patients through Express Medical’s database, according to the court’s account of the evidence. The CEO testified that she received bonuses for patients found there, and text messages corroborated that testimony. He also directed her to discharge patients before their initial 90-day period expired.

The jury convicted her of conspiracy and healthcare fraud tied to recruiting and enrolling patients. For a nurse or intake employee, that part of the case connects the recruiting instructions, the compensation and the discharge decision. Each could look like a separate task in the workday, while together they served the cap calculation.

Novus also used payments for hospice referrals. The CEO admitted paying physicians kickbacks disguised as medical-director salaries to induce referrals. The title on the payment concealed what bought it. The indictment also alleged that Novus paid for certified nursing assistants to staff assisted living facilities in exchange for patient referrals.

What Happened After Medicare Suspended Novus Payments?

Novus moved patients and staff to another hospice and continued billing after Medicare suspended its payments. In his plea account, the CEO admitted that the replacement hospice used Novus staff and sent hospice reimbursements back to Novus.

The medical director who participated in the transfer plan became a medical director of the replacement hospice. The court described a recorded discussion about moving patients and avoiding Medicare’s attention. His obstruction conviction concerned the plan to get around the payment suspension.

The movement of the reimbursements matters as much as the changed provider. The patients could appear under another hospice while the money returned to the business Medicare had stopped paying.

The Department of Justice’s August 2022 account shows how widely the scheme reached: those convicted included the CEO, medical directors, nurses, operations staff and marketing staff.

What Evidence Is Needed to Prove Fraud?

In the Novus case, evidence connected the signed medical record to who actually made the decision and what Medicare paid. Testimony supplied the inside account, while forms, messages and a recorded conversation supplied concrete checks on it.

For the encounter forms, the court described nursing narratives sent for signature, instructions about dates, testimony from someone who watched a doctor sign, and travel evidence inconsistent with the claimed visits. The signature, its date and the event it purported to certify could be tested against each other.

For the prescriptions, the evidence connected signed blank forms to the nonphysician who filled one out and ordered the drug. For recruitment, database access and bonus messages connected the patient search to the business incentive. After suspension, the movement of patients, staff and reimbursements showed how the operation continued.

Those are the connections we examine with hospice fraud whistleblowers. A billing employee may see the claim, a nurse the patient’s condition, and an operations employee the instruction behind the chart. The case becomes clearer when those accounts meet.

The same false-visit practice has appeared in civil hospice allegations. In the government’s case against Creekside Hospice, it alleged that employees altered medical records to make physician visits appear to have occurred so Medicare and Medicaid would pay. A chart representing a visit can be central to a payment even when the visit itself never happened.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Saw Who Made the Decision

If you saw admissions, prescriptions or encounter forms signed for decisions someone else made, speak with our whistleblower experts about who made those decisions. We work with you to build your strongest hospice whistleblower case and bring in hospice fraud whistleblower lawyers who understand clinical records and Medicare billing. We stay beside you through the case, connecting what you saw at work to the claims the government paid.