Vitas, a unit of Cincinnati-based Chemed Corp. (CHE), is the largest U.S. provider of hospice care, which has attracted government scrutiny as its Medicare-covered patients have doubled to 1.1 million over the last decade.
Chemed fell 15 percent, the most since April 2008, to $49.10 at 10:37 a.m. in New York.
The allegations came in a lawsuit unsealed last week in U.S. District Court in Dallas. Vitas spokeswoman Kal Mistry said the company “cannot comment on pending litigation.”
In the same court, the Department of Justice is seeking internal Vitas documents in an investigation focused on alleged abuses of federal health-insurance programs. The government has told the court it suspects Vitas of “an extensive scheme” to defraud Medicare and Medicaid of “hundreds of millions of dollars” by falsifying records and hospice certifications.
Vitas has “consistently been in compliance with Medicare and Medicaid rules,” Mistry said.
The newly unsealed suit was filed by Michael Rehfeldt, a former branch manager for Vitas in San Antonio, who is seeking damages for the government as a whistleblower under the U.S. False Claims Act, which entitles him to part of any recoveries. Such claims are also called qui tam suits.
“False certifications, fraudulent billing and cost shifting to the United States constitute a widespread, systematic practice endemic to Vitas,” Rehfeldt’s suit alleges.
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Whistleblower Accuses Chemed Unit of Medicare HMO Conspiracy