Chemed: The Parent Behind the Crisis-Care Targets

In the Chemed hospice lawsuit, Chemed and VITAS agreed to pay $75 million to resolve allegations of Medicare billing for ineligible patients and inflated levels of hospice care. The hospice fraud allegations reached into the parent company’s decisions about sales targets, marketing and internal warnings. The government alleged that Chemed helped set the number of crisis-care days VITAS should bill and that internal reviews warned both companies about patients who did not qualify.

The Justice Department announced the settlement on October 30, 2017, describing it then as the largest False Claims Act recovery from a hospice provider. The settlement covered three cases brought by whistleblowers and the government’s own case. The allegations ran from 2002 through 2013 and concerned both patients who were not terminally ill and continuous home care that was unnecessary, unprovided or outside Medicare’s requirements.

Why Chemed Was Named in the VITAS Lawsuit

Chemed allegedly directed parts of the billing and marketing system that produced the disputed claims. The government’s amended complaint said Chemed set goals for crisis-care days billed to Medicare and directly participated in decisions about how VITAS marketed those services.

Chemed, headquartered in Cincinnati, acquired VITAS in 2004. The government’s complaint placed the parent’s alleged submission or direction of false claims after that acquisition. VITAS operated the hospices.

The acquisition filing explained the business plainly. In its February 2004 disclosure, the company described VITAS as heavily dependent on Medicare and Medicaid payments, made primarily by the day. Profitability depended largely on managing those patients’ health care costs.

The government’s allegation put that financial interest into the field offices. It said Chemed and VITAS managers regularly corresponded with those offices about crisis-care use, especially when the numbers fell below expectations. The complaint quoted a VITAS operations executive asking a Texas office to explain a falling crisis-care margin:

A falling margin had a same-day deadline for an explanation. The complaint also described clinical warnings that went unanswered.

What Qualifies for Continuous Care in Hospice?

Continuous home care covers a brief crisis requiring care to manage acute symptoms and keep the patient at home. The Medicare requirements described in the government’s complaint called for at least eight hours of care in a day, predominantly nursing care. This level is also called crisis care.

The complaint described crisis care as the highest-paid of Medicare’s four hospice levels. In fiscal year 2013, its daily rate was $742 higher per patient than routine home care.

The alleged hospice billing fraud was about both the patient’s need and the work actually done. According to the government, VITAS marketed intensive comfort care without explaining the acute-crisis requirement. Some patients chose VITAS over other providers because its marketing suggested Medicare would routinely cover care around the clock. That alleged sales pitch cost competing hospices patients while taxpayers paid for care the government said did not qualify.

A whistleblower’s complaint described how the staffing schedule allegedly made routine services look like crisis care. Management explained a system of two 12-hour shifts: a registered nurse or licensed practical nurse on one, an aide or homemaker on the other, with brief nursing visits during the aide’s shift. The whistleblower alleged:

The schedule supplied the nursing proportion. In the whistleblower’s account, the patients supplied neither the crisis nor the need for that care. She also alleged that workers recorded progress notes every two to four hours despite an internal requirement for hourly entries. The staffing roster, sign-in sheet and clinical notes could tell different stories about the same billed day.

Payment design helps explain why those decisions matter. The March 2026 Kansas State University paper Quality, Reputation, and Reimbursement Design in the Hospice Industry modeled California hospice competition, measuring quality through visits per patient day. It found that a payment combining daily reimbursement with payment for visits could reduce Medicare spending without lowering modeled quality. Paying for the enrolled day and paying for care delivered create different incentives. In the VITAS allegations, the crucial decision was which care the company claimed to have delivered.

The Patient Records Behind the Claims

The government alleged that VITAS’s own patient records contradicted its crisis-care bills. In one example, the chart said the patient was playing bingo in the activity room. In another, VITAS continued billing for crisis care for eleven days after its notes said the patient’s breathing symptoms were controlled and she was comfortable.

The hospice eligibility allegations reached an earlier decision: whether the patient qualified for hospice at all. Medicare requires a life expectancy of six months or less if the illness runs its normal course, and the patient elects to forgo curative treatment for that illness.

The complaint described a patient admitted for heart failure whose admitting physician questioned whether heart failure was present. Later records described the patient performing daily activities without assistance and going fishing while Medicare was paying for hospice.

The government connected those records to management pressure. It alleged that nonclinical managers evaluated employees against admissions goals, that VITAS paid nonclinical staff bonuses based on enrollment, and that managers disregarded doctors’ and nurses’ concerns about eligibility. One admissions nurse reported pressure to reconsider refusals until he agreed to admit the patient.

Another nurse described instructions to write down symptoms a patient did not have and leave improvement out of the chart. Under that alleged system, the employee recording the patient’s condition faced pressure to make the medical record serve the enrollment target.

What Chemed and VITAS Learned From Their Own Reviews

Internal reviews allegedly brought the billing problems to both companies’ attention. The government said Chemed and VITAS conducted regular crisis-care audits beginning at least in 2007. Those reviews identified patients who did not qualify, services inconsistent with care plans or Medicare requirements, and records showing patients were not in crisis.

According to the complaint, a September 2010 internal review in San Fernando, California, found that only 10 percent of crisis-care claims matched the patients’ plans of care.

The eligibility warnings reached management too. According to the complaint, a Medicare claims review in San Antonio prompted VITAS medical directors to review admissions. VITAS then discharged 75-80 patients it determined were ineligible. The government alleged that VITAS did not repay Medicare and that neither VITAS nor Chemed conducted a broader investigation. A physician also told an operations executive that patients had knowingly been admitted and recertified despite failing eligibility requirements.

The response to a warning appears in other hospice cases. Caris Healthcare’s 2018 settlement resolved allegations that it continued billing after internal audits, nurses and its chief medical officer raised eligibility concerns, and knowingly retained overpayments. In both cases, the allegation reached what management did after its own people identified the problem.

The VITAS Corporate Integrity Agreement

VITAS entered a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General in connection with the settlement.

The agreement included independent review, hospice-specific reviews, board resolutions and management certifications.

What Evidence Is Needed to Prove Fraud?

The Chemed complaints tied patient conditions and services to Medicare claims, then used management emails and internal audits to show who knew about the billing problems. The strongest connections ran from the patient’s chart to the company’s decisions.

Healthcare workers who become hospice whistleblowers may know the instruction behind a changed chart, the reason a discharge was reversed, or who received an audit and continued the same billing.

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

You Saw Who Set the Targets

If you saw pressure to increase hospice admissions, turn staffing schedules into crisis-care bills or disregard an internal review, speak with our whistleblower experts. We build your strongest hospice whistleblower case around those decisions and bring in hospice fraud whistleblower lawyers who understand Medicare billing and corporate responsibility. We stay beside you as the case moves from your account of the business to the pursuit of a recovery.