The hospice case.

IN 2003, HEALTH CARE workers and families of patients who were at Hospice Home Care Inc. of Little Rock voiced concerns to Arkansas Hospice officials that HHC might be defrauding the federal government, according to the whistleblower lawsuit that Arkansas Hospice filed.

Hospice Home Care allegedly billed Medicare for patients at a higher level of care and a higher rate than was needed.

Officers at Arkansas Hospice then spent between $25,000 and $30,000 digging further into the allegations, said its president and CEO, Michael Aureli.

With documents and other evidence in hand, Arkansas Hospice turned to the Mitchell Blackstock Barnes Wagoner Ivers & Sneddon PLLC of Little Rock firm to file the lawsuit under the federal False Claims Act. Aureli declined to say what the legal fees were.

The lawsuit was filed under seal in U.S. District Court in Little Rock on April 26, 2004. The suit accused HHC of overbilling Medicare between $1.5 million and $3 million.

Cecilia Troppoli, HHC executive director, was named as a defendant in the lawsuit, but couldn't be reached for comment last week.

After an FCA lawsuit is filed, the U.S. Attorney's Office is the only entity that is served with the complaint.

U.S. attorneys have 60 days to review the allegations and decide if they want to intervene in the case, pursue the allegations criminally, or both, U.S. Attorney Jane Duke said. A U.S. Attorney's Office usually will need more than 60 days to investigate the allegations.

Pursuing the case in civil court, rather than criminal, is easier because a lower threshold of proof is required. The decision to go after HHC in civil court was based on several factors, Duke said.

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In a case involving medical judgments, "it is oftentimes very, very difficult to prove beyond a reasonable doubt," Duke said. The cost to prosecute and staff time dedicated to the case also would have been high, she said.

Assistant U.S. Attorney Dan Stripling said reviewing the patients' files took hours and expert nurses and forensic examiners were needed to determine the dollar amount of the alleged loss.

"It's a very difficult and expensive process," Stripling said. "And the issue for us is whether it's a wise use of our funds."

While the case was being investigated, negotiations to settle the case were being conducted, Duke said.

In addition to HHC, the other named defendants are Hospice Home Care of Pine Bluff; several officials of HHC; barrow Road Care & Rehabilitation Center LLC, which did business as Parkview Rehabilitation & Healthcare Center; Presbyterian Village Inc.; and Presbyterian Village Foundation Inc.

Duke said her office had been dealing with Arkansas Hospice, its attorney, the defendants and the Department of Justice in an attempt to settle the case.

"From the defendants' stand point, they're wanting to make sure all the liability is extinguished," Duke said.

But the sides weren't able to reach a settlement and the U.S. Attorney's Office decided to move forward with the lawsuit.

The government declined to pursue the case against Parkview because it had filed for bankruptcy. It also decided not to follow a case against Presbyterian Village because only a few patients were admitted there. "Presbyterian Village ceased its relationship with HHC soon after the contracts were negotiated and prior to any knowledge of the Government's investigation," the U.S. Attorney's Office said in a May news release.

Still, after looking at the case files of 34 patients, the U.S. Attorney's Office said it discovered HHC submitted 257 false claims to Medicare.

The total amount paid on those claims was $1.7 million, and of that amount, "$1.4 million represents overpayment to HHC," the news release said.

"The error rate was substantial," Duke said. "But whether we could prove that it was a criminal act is still a separate matter."