AseraCare and Care Alternatives: A Doctor’s Signature Is Only the Start

The AseraCare and Care Alternatives False Claims Act cases concerned allegations that hospices billed for patients whose terminal-illness certifications lacked clinical support. The courts reached different answers about whether competing medical opinions could show that those claims were false. For a hospice nurse, medical director or billing employee, the dispute reaches beyond two experts reading the same chart. It reaches who supplied the clinical information, whether the physician actually considered it, and what the hospice billed. A signature is where that inquiry starts.

What Medicare Hospice Eligibility Asked Physicians to Decide

Medicare hospice eligibility centers on a physician’s prognosis that a patient has six months or less to live if the illness runs its normal course. The hospice framework in the Third Circuit’s 2020 opinion requires both a physician’s certification and clinical information supporting it in the medical record. The initial benefit period is 90 days, with recertification for subsequent periods of 90 or 60 days.

That decision changes the health care Medicare pays for. Hospice focuses on comfort and relief of suffering, and patients electing the benefit give up Medicare payment for curative treatment of the terminal condition. Wrongly placing a patient in hospice puts Medicare coverage for curative care at stake while taxpayers fund care the patient may not need.

The work behind it involves more than the signing physician. At Care Alternatives, a New Jersey hospice provider, nurses, social workers, home health aides, chaplains and therapists worked in teams alongside physician medical directors. Those teams reviewed care plans and discussed patients approaching recertification. An employee in that process could know what information reached the physician and what the chart actually supported.

What Did AseraCare Decide?

AseraCare required evidence beyond a reasonable disagreement between doctors about a patient’s prognosis. In its 2019 opinion, the Eleventh Circuit required a flaw in the clinical judgment that could be demonstrated through verifiable facts.

Former AseraCare employees brought the qui tam case, and the government joined it. The government alleged that aggressive admission quotas discouraged meaningful physician involvement and led AseraCare to bill Medicare for ineligible patients.

The government’s expert reviewed a sample of 223 patients and considered 123 ineligible when AseraCare received payment for their care. The government planned to apply the sample’s findings to additional claims. But its expert acknowledged that his assessment reflected his own clinical judgment. He did not testify that no reasonable doctor could have reached AseraCare’s conclusion, and he changed some of his own eligibility opinions during the case.

The experts also approached the charts differently. The government’s expert compared them against diagnostic guidelines. AseraCare’s experts emphasized the patient’s overall history and combined illnesses. Those guidelines helped doctors assess eligibility, but the court explained that they were not a mandatory checklist.

The jury found false claims involving 104 patients, but the judge set that verdict aside and later ruled for AseraCare.

The appeals court set aside the ruling for AseraCare and required the trial court to consider all the government’s relevant evidence, including how certifications were produced. The rule about clinical disagreement survived. So did the opportunity to show something more.

What Did Care Alternatives Decide?

Care Alternatives took a different approach: competing expert testimony about the support for hospice certifications could let a jury decide whether the claims were false. The Third Circuit’s 2020 opinion rejected AseraCare’s requirement for a verifiable flaw beyond reasonable medical disagreement.

Former employees, including clinicians who participated in the care teams, alleged that Care Alternatives billed for hospice patients whose certifications lacked adequate clinical support. They continued the case after the government declined to join.

Their expert concluded that the documentation failed to support hospice eligibility during thirty-five percent of the certification periods he reviewed, and that any reasonable physician would have reached the same conclusion. Care Alternatives’ expert said a physician could reasonably have certified eligibility in every instance challenged. The trial court had ended the case because it found this disagreement insufficient to show that the claims were false.

The Third Circuit focused on what Medicare required before the hospice could bill. A claim could be false because it represented compliance with a payment requirement that the provider had not met. Expert testimony about whether the medical records supported the certification could address that question, even though it concerned clinical judgment.

The court also kept separate what the claim represented and what the provider knew. Evidence that a claim was false and evidence that the company knowingly submitted it answer different questions.

These courts disagreed about what medical-opinion evidence could establish. We look at the clinical evidence and the court’s actual rule together.

The Chart Behind the Signature

AseraCare itself identified evidence that could show a certification was false: a physician who had not reviewed the records or otherwise learned the patient’s condition, a physician who did not believe the prognosis, or expert evidence that no reasonable physician could have reached it. The opinion also discussed judgments based on information the physician knew, or had reason to know, was incorrect.

The testimony described in the opinion makes that distinction concrete. A former clinical services director testified that, when she refused to admit ineligible patients, she was told to find what she needed to admit them. The court then described what she supplied to the physician:

We see an obvious question in that testimony: whose clinical judgment did the signatures represent?

The government also planned evidence that auditors had criticized medical directors’ limited involvement and the failure to give them clinical information before certification. It planned testimony from a former physician that employees filed claims despite his judgment that certain patients were ineligible.

The court required a connection between those practices and the particular claims being challenged. That is where the clinical record, internal warning and billing record belong together. We examine which patient an instruction concerned, what the physician received, what was certified and which claim followed. Someone who knows that sequence can explain much more than a general complaint about pressure to increase admissions.

Did Continued Medicare Payments Settle the Question?

Continued Medicare payments did not settle whether Care Alternatives’ alleged documentation failures mattered to the decision to pay. In its 2023 opinion, the Third Circuit set aside a ruling that had treated those payments as decisive.

The court said payment history had to be considered alongside why clinical documentation mattered, how serious the alleged failures were, and what the government actually knew.

The Company’s Own Chart Checks

Care Alternatives’ internal audit supplied evidence about the extent of the documentation problems. In 2007, only 56.5% of randomly audited charts contained all necessary data in the first quarter. In the fourth quarter, that figure was 43.6%. The company’s own checks. Worse at year’s end.

The opinion also recounted employee testimony that staff were directed to alter or rewrite records to make patients appear hospice eligible. The court left the credibility of that testimony for the jury, but explained why it mattered: the missing clinical support could reach the patient’s actual need for hospice care.

Care Alternatives answered the alleged documentation failures by pointing to physicians’ signatures and compassionate care. We see the same gap the court identified: neither supplies the missing clinical support for putting a patient in hospice.

What Medicare Saw When It Paid

The appeals court identified a practical error in assuming that Medicare saw the inadequate charts when it paid the claims. Hospice providers kept certifications and supporting clinical documents in patients’ medical records. They were not required to send them with each payment claim. Reviewing the bill alone would not reveal what was missing from the chart.

The Department of Justice and the Department of Health and Human Services’ Office of Inspector General had investigated Care Alternatives. Even so, the court found an unresolved question about what the government knew and when it knew it. Awareness of an allegation differed from actual knowledge of the violation, and the disputed claims had already been paid before the later investigation.

The court treated payment with actual knowledge of a violation as strong evidence that the failure did not matter to Medicare, but required it to be weighed with the rest. It gave the government’s decision not to join the case little weight on that question.

The Hospice Pattern Beyond These Two Cases

Other hospice cases show why the alleged practice matters as much as the label of medical judgment. In the Chemed and Vitas settlement announced in October 2017, the companies agreed to pay $75 million to resolve allegations involving ineligible patients and inflated levels of care. The government also alleged enrollment incentives. Those allegations concerned both who entered hospice and the level of care billed once they were there.

In the 2019 Nurses To Go decision, the Fifth Circuit reversed dismissal of allegations involving billing for deceased patients. It considered the payment-related factors together. A bill for someone who had died raised a different factual question from a disputed prognosis, even though both appeared in a hospice case.

What Your Place in Hospice Care Can Reveal

A clinician may know what the patient showed and what the team told the physician. An auditor may know which problems kept appearing in charts. A billing employee may know which certifications became claims. The opinions show why those perspectives belong in the same account of what happened.

We work with insiders to connect those observations to the company’s decisions and the Medicare payments at issue. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What Reached the Physician

If you saw clinical concerns disappear between a care-team meeting and a signed certification, talk with our whistleblower experts about what happened inside your hospice. We build your case around the clinical facts, the billing and the decisions behind them, and bring in healthcare fraud whistleblower lawyers who understand hospice eligibility disputes. We stay beside you as that inside knowledge becomes the case we pursue together.