VistaCare: The Sample Could Not Prove the Claims

On June 20, 2016, a Texas federal court ruled for VistaCare in a case alleging that it billed Medicare for hospice patients who did not qualify. The whistleblower brought employee accounts of altered charts, a physician’s review of patient files and a statistical analysis intended to extend those findings across the business. The court rejected the fraud claims because the evidence failed to connect the alleged practices to the patients and claims being challenged. For someone who knows what happened between a bedside assessment and a billed certification, that missing connection is the heart of the case.

VistaCare provided hospice services across fourteen states. The challenged Medicare claims covered 2003 to 2012. A social worker from the Denton, Texas office brought the hospice fraud case on behalf of the United States. The government did not take over the case.

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

The Allegations Behind the Certifications

The whistleblower alleged that VistaCare caused ineligible patients to be certified for hospice and billed Medicare for their care. She pointed to pressure to admit patients before determining eligibility, obstacles to discharging them, and instructions to write charts that supported continued enrollment. Taxpayers would pay for days the patients did not qualify to receive.

The allegations reached the ordinary paperwork of hospice care. According to the court’s account of their testimony, two nurses from the Montgomery, Alabama office said supervisors returned patient evaluations with sticky notes directing changes. One nurse described changing Palliative Performance Scale and Functional Assessment Staging Scale scores to make patients appear more eligible. The nurses said physicians relied on the altered records when signing certifications.

Those allegations made the information behind a hospice certification central to the dispute. A nurse’s assessment, a supervisor’s revision and a physician’s certification were different decisions. The court later focused on whether the evidence connected those decisions for the particular patients whose claims the whistleblower challenged.

The case also included a referral-kickback allegation involving employee bonuses. VistaCare’s incentive programs rewarded admissions and census targets. The court rejected this part of the case too, finding no link between an alleged kickback and a false claim.

What Happens If a Hospice Patient Lives Longer Than 6 Months?

A patient can continue receiving Medicare hospice care when recertification still supports a prognosis of six months or less if the illness runs its normal course. That forward-looking judgment mattered in VistaCare because the case focused on patients with long stays.

Medicare pays the hospice for each day an eligible patient receives care, and a physician must recertify the patient for continued coverage. The physician considers the patient’s terminal condition, other illnesses, current findings and treatment. The chart supports a prediction about the course of the illness.

Hospice also changes how Medicare pays for a patient’s health care. The patient elects comfort-focused care for the terminal illness, and Medicare generally pays the designated hospice for that care instead of paying other providers separately. A patient falsely enrolled in hospice can lose access to other Medicare coverage for that illness while the hospice collects.

Why the Patient Sample Fell Short

The court refused to extend the sample’s findings to the wider group of patients because of problems with both the data and the clinical conclusions. A statistician selected 291 patients from approximately 12,000 who had received at least 365 days of hospice care. A hospice physician reviewed their files, and the statistician sought to extend his conclusions to the larger group.

The medical expert concluded that more than 90% of the sampled patients were ineligible for at least some of their hospice days. But he also acknowledged that one physician’s assessment of a patient’s eligibility could not establish how another physician assessed a different patient.

The data had errors of its own. Multiple identification numbers left duplicate patients in the group, while patients with common names were wrongly removed as duplicates. Other patients were assigned to the wrong ownership period, changing their chances of selection.

The analysis also did not account for differences in disease, clinical staff or physicians across VistaCare’s locations. The court found that these errors made the proposed extension unreliable. The reviewed charts could not stand in for the larger group.

The Missing Link Between Sticky Notes and Claims

The whistleblower had accounts of altered records and a separate set of reviewed charts. The court found that she had not connected the employees’ accounts to the patients in the sample or to a submitted false claim. That left allegations about practices in the business and an expert’s disagreement with certifications, without the patient-specific connection the court required.

For a healthcare insider in clinical care, compliance or billing, the useful question is where an instruction entered the patient’s record and what happened to the resulting claim. We examine how the observed condition, the chart, the certification and the Medicare billing fit together. In VistaCare, the sticky notes never connected to the sampled patients’ claims.

Why Ownership and Long Stays Matter

Odyssey HealthCare bought VistaCare in 2008. The acquisition became part of the sampling design because patients were grouped by ownership period. It also placed VistaCare inside a business whose financial disclosures show the importance of census, length of stay and Medicare payment limits.

A case study in the Journal of Finance Case Research, Odyssey Healthcare: Issues of Fiduciary Malfeasance and Class Action Suits, published in 2008/2009, describes the payment economics of that period. Revenue arrived at a fixed daily rate, while costs were higher around admission and near death and lower between them. The paper puts the incentive plainly:

The cap pulled in the other direction. Medicare’s aggregate cap links a hospice’s total payment to its beneficiary count. Odyssey’s fiscal 2009 financial filing recorded cap repayments and balances acquired from VistaCare. The acquired business brought $8.2 million in accrued cap liability into the deal. Keeping patients enrolled brought daily revenue, while cap exposure could produce money owed back to Medicare.

A separate whistleblower complaint against Odyssey alleged that the company moved long-stay patients between programs after the acquisition:

That separate allegation gives an operational example of why the program receiving a patient’s days matters. In the VistaCare sampling dispute, assigning patients to the wrong ownership period damaged the analysis. A patient record has a clinical history and a place in the company’s payment records. Both matter when the business changes hands.

AseraCare and Care Alternatives Put Clinical Evidence in Context

Other hospice cases show why the evidence behind a certification deserves close attention. The VistaCare court relied on a 2016 ruling for AseraCare. In 2019, the Eleventh Circuit set that judgment aside so the government’s other evidence could be considered. AseraCare later settled.

In Care Alternatives, the Third Circuit’s 2020 opinion allowed expert disagreement over whether the records supported a terminal prognosis to count as evidence of a false certification. That court gave the reviewing physician’s doubts about the chart more weight than the VistaCare court had. The practical importance for an insider is the content of the clinical record and how the certification was reached, the questions our whistleblower experts work through with you.

You Know How the Chart Changed

If you saw a bedside assessment rewritten or an eligibility concern overridden, talk with our whistleblower experts about what happened inside your hospice. We build the case with you around the patients, the decisions and the Medicare claims, and bring in hospice fraud whistleblower lawyers who understand clinical evidence. We stay beside you as your knowledge of the care becomes the foundation of the case.