Avalon Hospice: A Doctor’s Login and the Pressure to Keep Patients

Gentiva’s $19,428,570 multistate settlement included the Avalon Hospice lawsuit over alleged false claims for ineligible patients and retained Medicare and Medicaid overpayments in Tennessee. The government alleged pressure to admit and retain patients, alongside failures to ensure physicians received or adequately considered complete and accurate clinical information. For a nurse who questioned a patient’s decline, or a biller who saw an audit warning followed by another claim, this case reaches the decisions behind the paperwork. The alleged result was taxpayers paying for end-of-life care for patients who did not qualify for it.

Avalon was the operating name of TNMO Healthcare, LLC. The Tennessee hospice fraud case covered allegations involving Avalon’s Nashville and Chattanooga provider numbers from January 1, 2010 through February 20, 2020.

The whistleblowers’ complaint alleged that internal reports at hospices such as Avalon’s Jackson office used Curo, Regency Health Care and Avalon interchangeably. Curo later joined Kindred at Home, and some settling entities subsequently became part of Gentiva.

Who Determines Eligibility for Hospice?

Physicians certify whether a patient has a terminal illness with a life expectancy of six months or less if the illness runs its normal course. Their judgment depends on the clinical information they receive. In Avalon, the government alleged that the companies failed to ensure physicians received or adequately considered complete and accurate information when making those decisions.

That puts the hospice eligibility allegations inside the clinical workflow. Who assessed the patient? What did the nurse record? What reached the physician, and who actually signed? The whistleblowers’ second amended complaint alleged that operations directors let staff:

The complaint says those signatures went on certifications of terminal illness without the doctor seeing the patient or reviewing the medical record. A certification could reach the billing process with the crucial judgment missing.

The complaint also alleged that a director told a nurse to assign the same designation to every Alzheimer’s patient:

The complaint says the nurse questioned whether a patient who remained alert, oriented and able to walk belonged in hospice. Elsewhere, it describes a nurse reporting no health decline and questioning whether patients had a terminal condition. It records a management instruction “to step up” documentation. In that account, the pressure fell on what the chart said about the patient.

What Happens If a Hospice Patient Lives Longer Than Six Months?

Hospice care can continue beyond six months when the patient’s condition still supports certification. Medicare’s hospice coverage manual allows continued benefits when a patient lives longer than expected. Each recertification returns to the patient’s condition and the physician’s judgment.

The Avalon allegations concerned how that judgment was obtained. A copied signature, a blanket chart designation and pressure to change documentation each describe something staff could observe at work. They bring the question back to the information behind the certification.

Census Pressure and the Money in a Longer Stay

The government alleged that Avalon staff faced aggressive financial targets and incentives to maximize admissions and census, while management discouraged discharge of patients who no longer qualified. Under routine home care payment, an enrolled day brings revenue even when no visit occurs that day.

The economics help explain why the alleged pressure ran in both directions: bring patients in, then keep them. Hospice care generally costs more around admission and near death, with less intensive care in between. Longer stays give a provider more of those lower-cost days.

The HHS Office of Inspector General examined that incentive in its 2015 report Medicare Hospices Have Financial Incentives to Provide Care in Assisted Living Facilities:

Using 2012 claims, the office found that hospices typically delivered fewer than five hours of visits per week while receiving about $1,100 per beneficiary per week for routine home care in assisted-living facilities. Beneficiaries in those facilities often had diagnoses requiring less complex care. The study shows why a hospice’s choice of patients and referral settings matters to its revenue.

At Avalon, a social-work case manager alleged that employees marketed hospice to people who were not terminally ill, then admitted and recertified them for Medicare and Tennessee Medicaid payment. The complaint described some patients remaining enrolled for as long as five years. The government’s allegation connected that retention to financial targets and discouraged discharges.

Discharge Before an Expensive Hospital Visit

The whistleblowers alleged that Avalon employees caused patients to leave hospice before expensive hospital visits to shift those costs away from the company. They also alleged that employees backdated admission and discharge elections. In those allegations, the timing of a patient’s enrollment served the hospice’s bill.

Hospice takes responsibility for health care related to the terminal illness. Medicare generally pays the chosen hospice for that care, and leaving hospice restores the coverage the patient gave up by electing it. The date of departure can therefore change who pays for treatment.

A patient’s decision to revoke hospice, a provider’s discharge decision and continued enrollment each leave different records. The billing question is how those records line up with the hospital care, the hospice’s responsibility and the dates claimed. We look at who initiated the departure, the reason recorded and the instructions behind it. The allegation here was that an expensive visit could drive a departure that staff presented as voluntary.

What Evidence Is Needed to Prove Fraud?

For these allegations, useful evidence connects the patient’s condition to the certification, the claim and what management knew. Connecting them is the work we do with you. The government’s account of the Avalon complaint alleged that internal complaints and audits alerted the companies to billing for ineligible patients, yet they did not return the payments. The response to a warning became part of the case alongside the original admission.

The second amended complaint also alleged that employees prepared patient-chart notes for nurses who were on vacation. A staffing schedule can give a chart entry a very different meaning.

The same connection between warnings and payments appeared at Caris Healthcare. The government alleged that internal audits, the chief medical officer and nurses raised eligibility concerns, yet Caris continued submitting claims and took no meaningful action to determine whether earlier payments were improper. The shared pattern is a clinical concern that reaches management while the money keeps coming.

Hospice whistleblowers see different parts of that sequence. A nurse may know what changed in a note. An intake or clinical manager may know the admission target and the discharge recommendation. A biller or compliance employee may know which claims followed the audit and what happened to repayment. We work with those connections to show how the healthcare business made its decisions.

The Avalon Hospice Lawsuit and Settlement

Whistleblowers started the Tennessee cases, and the United States and Tennessee joined them. The resolution announced on July 17, 2024 brought nine whistleblower actions into one settlement involving Avalon, Kindred, SouthernCare and New Beacon operations.

The agreement allocated $5,551,200 of the federal settlement to the Avalon conduct associated with Nashville and Chattanooga. It separately required $448,800 to Tennessee.

The Avalon whistleblowers’ complaint also alleged referral kickbacks in the form of in-kind services to nursing homes and other facilities.

Can You Get Paid for Reporting Medicare Fraud?

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

You Saw What the Chart Left Out

If you saw a clinical objection rewritten, a physician’s login shared or an audit warning followed by more billing, talk with our whistleblower experts about what happened inside the hospice. We build the case with you and bring in hospice fraud whistleblower lawyers who understand the connection between clinical records, management pressure and Medicare claims. We stay beside you as partners through the pursuit of that case.