Hospice Fraud – A Review For Employees, Whistleblowers, Attorneys, Lawyers and Law Firms

Hospice fraud in South Carolina and the United States is an increasing problem as the number of hospice patients has exploded over the past few years. From 2004 to 2008, the number of patients receiving hospice care in the United States grew almost 40% to nearly 1.5 million, and of the 2.5 million people who died in 2008, nearly one million were hospice patients. The overwhelming majority of people receiving hospice care receive federal benefits from the federal government through the Medicare or Medicaid programs. The health care providers who provide hospice services traditionally enroll in the Medicare and Medicaid programs in order to qualify to receive payments under these government programs for services rendered to Medicare and Medicaid eligible patients.

While most hospice health care organizations provide appropriate and ethical treatment for their hospice patients, because hospice eligibility under Medicare and Medicaid involves clinical judgments which may result in the payments of large sums of money from the federal government, there are tremendous opportunities for fraudulent practices and false billing claims by unscrupulous hospice care providers. As recent federal hospice fraud enforcement actions have demonstrated, the number of health care companies and individuals who are willing to try to defraud the Medicare and Medicaid hospice benefits programs is on the rise.

A recent example of hospice fraud involving a South Carolina hospice is Southern Care, Inc., a hospice company that in 2009 paid $24.7 million to settle an FCA case. The defendant operated hospices in 14 other states, too, including Alabama, Georgia, Indiana, Iowa, Kansas, Louisiana, Michigan, Mississippi, Missouri, Ohio, Pennsylvania, Texas, Virginia and Wisconsin. The alleged frauds were that patients were not eligible for hospice, to wit, were not terminally ill, lack of documentation of terminal illnesses, and that the company marketed to potential patients with the promise of free medications, supplies, and the provision of home health aides. Southern Care also entered into a 5-year Corporate Integrity Agreement with the OIG as part of the settlement. The qui tam relators received almost $5 million.

Understanding the Consequences of Hospice Fraud and Whistleblower Actions

U.S. and South Carolina consumers, including hospice patients and their family members, and health care employees who are employed in the hospice industry, as well as their SC lawyers and attorneys, should familiarize themselves with the basics of the hospice care industry, hospice eligibility under the Medicare and Medicaid programs, and hospice fraud schemes that have developed across the country. Consumers need to protect themselves from unethical hospice providers, and hospice employees need to guard against knowingly or unwittingly participating in health care fraud against the federal government because they may subject themselves to administrative sanctions, including lengthy exclusions from working in an organization which receives federal funds, enormous civil monetary penalties and fines, and criminal sanctions, including incarceration. When a hospice employee discovers fraudulent conduct involving Medicare or Medicaid billings or claims, the employee should not participate in such behavior, and it is imperative that the unlawful conduct be reported to law enforcement and/or regulatory authorities. Not only does reporting such fraudulent Medicare or Medicaid practices shield the hospice employee from exposure to the foregoing administrative, civil and criminal sanctions, but hospice fraud whistleblowers may benefit financially under the reward provisions of the federal False Claims Act, 31 U.S.C. §§ 3729-3732, by bringing false claims suits, also known as qui tam or whistleblower suits, against their employers on behalf of the United States.

Types of Hospice Care Services

Hospice care is a type of health care service for patients who are terminally ill. Hospices also provide support services for the families of terminally ill patients. This care includes physical care and counseling. Hospice care is normally provided by a public agency or private company approved by Medicare and Medicaid. Hospice care is available for all age groups, including children, adults, and the elderly who are in the final stages of life. The purpose of hospice is to provide care for the terminally ill patient and his or her family and not to cure the terminal illness.

If a patient qualifies for hospice care, the patient can receive medical and support services, including nursing care, medical social services, doctor services, counseling, homemaker services, and other types of services. The hospice patient will have a team of doctors, nurses, home health aides, social workers, counselors and trained volunteers to help the patient and his or her family members cope with the symptoms and consequences of the terminal illness. While many hospice patients and their families can receive hospice care in the comfort of their home, if the hospice patient’s condition deteriorates, the patient can be transferred to a hospice facility, hospital, or nursing home to receive hospice care.

Hospice Care Statistics

The number of days that a patient receives hospice care is often referenced as the “length of stay” or “length of service.” The length of service is dependent on a number of different factors, including but not limited to, the type and stage of the disease, the quality of and access to health care providers before the hospice referral, and the timing of the hospice referral. In 2008, the median length of stay for hospice patients was about 21 days, the average length of stay was about 69 days, almost 35% of hospice patients died or were discharged within 7 days of the hospice referral, and only about 12% of hospice patients survived longer than 180 days.

Most hospice care patients receive hospice care in private homes (40%). Other locations where hospice services are provided are nursing homes (22%), residential facilities (6%), hospice inpatient facilities (21%), and acute care hospitals (10%). Hospice patients are generally the elderly, and hospice age group percentages are 34 years or less (1%), 35 – 64 years (16%), 65 – 74 years (16%), 75 – 84 years (29%), and over 85 years (38%). As for the terminal illness resulting in a hospice referral, cancer is the diagnosis for almost 40% of hospice patients, followed by debility unspecified (15%), heart disease (12%), dementia (11%), lung disease (8%), stroke (4%) and kidney disease (3%). Medicare pays the great majority of hospice care expenses (84%), followed by private insurance (8%), Medicaid (5%), charity care (1%) and self pay (1%).

As of 2008, there were approximately 4,700 locations which were providing hospice care in the United States, which represented about a 50% increase over ten years. There were about 3,700 companies and organizations which were providing hospice services in the United States. About half of the hospice care providers in the United States are for-profit organizations, and about half are non-profit organizations.
General Overview of the Medicare and Medicaid Programs

In 1965, Congress established the Medicare Program to provide health insurance for the elderly and disabled. Payments from the Medicare Program arise from the Medicare Trust fund, which is funded by government contributions and through payroll deductions from American workers. The Centers for Medicare and Medicaid Services (CMS), previously known as the Health Care Financing Administration (HCFA), is the federal agency within the United States Department of Health and Human Services (HHS) that administers the Medicare program and works in partnership with state governments to administer Medicaid.

In 2007, CMS reorganized its ten geography-based field offices to a Consortia structure based on the agency’s key lines of business: Medicare health plans, Medicare financial management, Medicare fee for service operations, Medicaid and children’s health, survey & certification and quality improvement. The CMS consortia consist of the following:

• Consortium for Medicare Health Plans Operations
• Consortium for Financial Management and Fee for Service Operations
• Consortium for Medicaid and Children’s Health Operations
• Consortium for Quality Improvement and Survey & Certification Operations

Each consortium is led by a Consortium Administrator (CA) who serves as the CMS’s national focal point in the field for their business line. Each CA is responsible for consistent implementation of CMS programs, policy and guidance across all ten regions for matters pertaining to their business line. In addition to responsibility for a business line, each CA also serves as the Agency’s senior management official for two or three Regional Offices (ROs), representing the CMS Administrator in external matters and overseeing administrative operations.

Much of the daily administration and operation of the Medicare Program is managed through private insurance companies that contract with the Government. These private insurance companies, sometimes called “Medicare Carriers” or “Fiscal Intermediaries,” are charged with and responsible for accepting Medicare claims, determining coverage, and making payments from the Medicare Trust Fund. These carriers, including Palmetto Government Benefits Administrators (hereinafter “PGBA”), a division of Blue Cross and Blue Shield of South Carolina, operate pursuant to 42 U.S.C. §§ 1395h and 1395u and rely on the good faith and truthful representations of health care providers when processing claims.

Over the past forty years, the Medicare Program has enabled the elderly and disabled to obtain necessary medical services from medical providers throughout the United States. Critical to the success of the Medicare Program is the fundamental concept that health care providers accurately and honestly submit claims and bills to the Medicare Trust Fund only for those medical treatments or services that are legitimate, reasonable and medically necessary, in full compliance with all laws, regulations, rules, and conditions of participation, and, further, that medical providers not take advantage of their elderly and disabled patients.

The Medicaid Program is available only to certain low-income individuals and families who must meet eligibility requirements set forth by federal and state law. Each state sets its own guidelines regarding eligibility and services. Although administered by individual states, the Medicaid Program is funded primarily by the federal government. Medicaid does not pay money to patients; rather, it sends payments directly to the patient’s health care providers. Like Medicare, the Medicaid Program depends on health care providers to accurately and honestly submit claims and bills to program administrators only for those medical treatments or services that are legitimate, reasonable and medically necessary, in full compliance with all laws, regulations, rules, and conditions of participation, and, further, that medical providers not take advantage of their indigent patients.

Medicare & Medicaid Hospice Laws Which Affect SC Hospices

Hospice fraud occurs when hospice organizations, by and through their employees, agents and owners, knowingly violate the terms and conditions of the applicable Medicare and Medicaid hospice statutes, regulations, rules and conditions of participation. In order to be able to recognize hospice fraud, hospices, hospice patients, hospice employees and their attorneys and lawyers must know the Medicare laws and requirements relating to hospice care benefits.

Medicare’s two main sources of authorization for hospice benefits are found in the Social Security Act and the U.S. Code of Federal Regulations. The statutory provisions are primarily found at 42 U.S.C. §§ 1395d, 1395e, 1395f(a)(7), 1395x(d)(d), and 1395y, and the regulatory provisions are found at 42 C.F.R. Part 418.

To be eligible for Medicare benefits for hospice care, the patient must be eligible for Medicare Part A and be terminally ill. 42 C.F.R. § 418.20. Terminal illness is established when “the individual has a medical prognosis that his or her life expectancy is 6 months or less if the illness runs its normal course.” 42 C.F.R. § 418.3; 42 U.S.C. § 1395x(d)(d)(3). The patient’s physician and the medical director of the hospice must certify in writing that the patient is “terminally ill.” 42 U.S.C. § 1395f(a)(7); 42 C.F.R. § 418.20. After a patient’s initial certification, Medicare provides for two ninety-day benefit periods followed by an unlimited number of sixty-day benefit periods. 42 U.S.C. § 1395d(a)(4). At the end of each ninety- or sixty-day period, the patient can be re-certified only if at that time he or she has less than six months to live if the illness runs its normal course. 42 U.S.C. § 1395f(a)(7)(A). The written certification and re-certifications must be maintained in the patient’s medical records. 42 C.F.R. § 418.23. A written plan of care must be established for each patient setting forth the types of hospice care services the patient is scheduled to receive, 42 U.S.C. § 1395f(a)(7)(B), and the hospice care has to be provided in accordance with such plan of care. 42 U.S.C. § 1395f(a)(7)(C); 42 C.F.R. § 418.56. Clinical records for each hospice patient must be maintained by the hospice, including plan of care, assessments, clinical notes, signed notice of election, patient responses to medication and therapy, physician certifications and re-certifications, outcome data, advance directives and physician orders. 42 C.F.R. § 418.104.

The hospice must obtain a written notice of election from the patient to elect to receive Medicare hospice benefits. 42 C.F.R. § 418.24. Importantly, once a patient has elected to receive hospice care benefits, the patient waives Medicare benefits for curative treatment for the terminal disease upon which is the admitting diagnosis. 42 C.F.R. § 418.24(d).

The hospice must designate an Interdisciplinary Group (IDG) or groups composed of individuals who work together to meet the physical, medical, psychosocial, emotional, and spiritual needs of the hospice patients and families facing terminal illness and bereavement. 42 C.F.R. § 418.56. The IDG members must provide the care and services offered by the hospice, and the group, in its entirety, must supervise the care and services. A registered nurse that is a member of the IDG must be designated to provide coordination of care and to ensure continuous assessment of each patient’s and family’s needs and implementation of the interdisciplinary plan of care. The interdisciplinary group must include, but is not limited to, the following qualified and competent professionals: (i) A doctor of medicine or osteopathy (who is an employee or under contract with the hospice); (ii) A registered nurse; (iii) A social worker; and, (iv) A pastoral or other counselor. 42 C.F.R. § 418.56.

The Medicare hospice regulations, at 42 C.F.R. § 418.200, summarize the requirements for hospice coverage in pertinent part as follows:

To be covered, hospice services must meet the following requirements. They must be reasonable and necessary for the palliation and management of the terminal illness as well as related conditions. The individual must elect hospice care in accordance with §418.24. A plan of care must be established and periodically reviewed by the attending physician, the medical director, and the interdisciplinary group of the hospice program as set forth in §418.56. That plan of care must be established before hospice care is provided. The services provided must be consistent with the plan of care. A certification that the individual is terminally ill must be completed as set forth in section §418.22.

The Social Security Act, at 42 U.S.C. § 1395y(a), limits Medicare hospice benefits, providing in pertinent part as follows: “Notwithstanding any other provision of this title, no payment may be made under part A or part B for any expenses incurred for items or services-… (C) in the case of hospice care, which are not reasonable and necessary for the palliation or management of terminal illness….” 42 C.F.R. § 418.50 (hospice care must be “reasonable and necessary for the palliation and management of terminal illness”). Palliative care is defined in the regulations as “patient and family-centered care that optimizes quality of life by anticipating, preventing, and treating suffering. Palliative care throughout the continuum of illness involves addressing physical, intellectual, emotional, social, and spiritual needs and to facilitate patient autonomy, access to information, and choice.” 42 C.F.R. § 418.3.

Medicare pays hospice agencies a daily rate for each day a beneficiary is enrolled in the hospice benefit and receives hospice care. The daily payments are made regardless of the amount of services furnished on a given day and are intended to cover costs that the hospice incurs in furnishing services identified in the patient’s plan of care. There are four levels of payments which are made based on the amount of care required to meet beneficiary and family needs. 42 C.F.R. § 418.302; CMS Hospice Fact Sheet, November 2009. These four levels, and the corresponding 2010 daily rates, are as follows: routine home care ($142.91); continuous home care ($834.10); inpatient respite care ($147.83); and, general inpatient care ($635.74).

The aggregate annual cap per patient in 2009 was $23,014.50. This cap is determined by adjusting the original hospice patient cap of $6,500, set in 1984, by the Consumer Price Index. See CMS Internet-Only Manual 100-04, chapter 11, section 80.2; 42 U.S.C. § 1395f(i); 42 C.F.R. § 418.309. The Medicare Claims Processing Manual, at Chapter 11 – Processing Hospice Claims, in Section 80.2, entitled “Cap on Overall Hospice Reimbursement,” provides in pertinent part as follows: “Any payments in excess of the cap must be refunded by the hospice.”

Hospice patients are responsible for Medicare co-insurance payments for drugs and respite care, and the hospice may charge the patient for these co-insurance payments. However, the co-insurance payments for drugs are limited to the lesser of $5 or 5% of the cost of the drugs to the hospice, and the co-insurance payments for respite care are generally 5% of the payment made by Medicare for such services. 42 C.F.R. § 418.400.

The Medicare and Medicaid programs require institutional health care providers, including hospice organizations, to file an enrollment application in order to qualify to receive the programs’ benefits. As part of these enrollment applications, the hospice providers certify that they will comply with Medicare and Medicaid laws, regulations, and program instructions, and further certify that they understand that payment of a claim by Medicare and Medicaid is conditioned upon the claim and underlying transaction complying with such program laws and requirements. The Medicare Enrollment Application which hospice providers must execute, Form CMS-855A, states in part as follows: “I agree to abide by the Medicare laws, regulations and program instructions that apply to this provider. The Medicare laws, regulations, and program instructions are available through the Medicare contractor. I understand that payment of a claim by Medicare is conditioned upon the claim and the underlying transaction complying with such laws, regulations, and program instructions (including, but not limited to, the Federal AKS and Stark laws), and on the provider’s compliance with all applicable conditions of participation in Medicare.”

Hospices are generally required to bill Medicare on a monthly basis. See the Medicare Claims Processing Manual, at Chapter 11 – Processing Hospice Claims, in Section 90 – Frequency of Billing. Hospices generally file their hospice Medicare claims with their Fiscal Intermediary or Medicare Carrier pursuant to the CMS Claims Manual Form CMS 1450 (sometime also called a Form UB-04 or Form UB-92), either in paper or electronic form. These claim forms contain representations and certifications which state in pertinent part that: (1) misrepresentations or falsifications of essential information may serve as the basis for civil monetary penalties and criminal convictions; (2) submission of the claim constitutes certification that the billing information is true, accurate and complete; (3) the submitter did not knowingly or recklessly disregard or misrepresent or conceal material facts; (4) all required physician certifications and re-certifications are on file; (5) all required patient signatures are on file; and, (6) for Medicaid purposes, the submitter understands that because payment and satisfaction of this claim will be from Federal and State funds, any false statements, documents, or concealment of a material fact are subject to prosecution under applicable Federal or State Laws.

Hospices must also file with CMS an annual cost and data report of Medicare payments received. 42 U.S.C. § 1395f(i)(3); 42 U.S.C. § 1395x(d)(d)(4). The annual hospice cost and data reports, Form CMS 1984-99, contain representations and certifications which state in pertinent part that: (1) misrepresentations or falsifications of information contained in the cost report may be punishable by criminal, civil and administrative actions, including fines and/or imprisonment; (2) if any services identified in the report were the product of a direct or indirect kickback or were otherwise illegal, then criminal, civil and administrative actions may result, including fines and/or imprisonment; (3) the report is a true, correct and complete statement prepared from the books and records of the provider in accordance with applicable instructions, except as noted; and, (4) the signing officer is familiar with the laws and regulations regarding the provision of health care services and that the services identified in this cost report were provided in compliance with such laws and regulations.

Hospice Anti-Fraud Enforcement Statutes

There are a number of federal criminal, civil and administrative enforcement provisions set forth in the Medicare statutes which are aimed at preventing fraudulent conduct, including hospice fraud, and which help maintain program integrity and compliance. Some of the more prominent enforcement provisions of the Medicare statutes include the following: 42 U.S.C. § 1320a-7b (Criminal fraud and anti-kickback penalties); 42 U.S.C. § 1320a-7a and 42 U.S.C. § 1320a-8 (Civil monetary penalties for fraud); 42 U.S.C. § 1320a-7 (Administrative exclusions from participation in Medicare/Medicaid programs for fraud); 42 U.S.C. § 1320a-4 (Administrative subpoena power for the Comptroller General).

Other criminal enforcement provisions which are used to combat Medicare and Medicaid fraud, including hospice fraud, include the following: 18 U.S.C. § 1347 (General health care fraud criminal statute); 21 U.S.C. §§ 353, 333 (Prescription Drug Marketing Act); 18 U.S.C. § 669 (Theft or Embezzlement in Connection with Health Care); 18 U.S.C. § 1035 (False statements relating to Health Care); 18 U.S.C. § 2 (Aiding and Abetting); 18 U.S.C. § 3 (Accessory after the Fact); 18 U.S.C. § 4 (Misprision of a Felony); 18 U.S.C. § 286 (Conspiracy to defraud the Government with respect to Claims); 18 U.S.C. § 287 (False, Fictitious or Fraudulent Claims); 18 U.S.C. § 371 (Criminal Conspiracy); 18 U.S.C. § 1001 (False Statements); 18 U.S.C. § 1341 (Mail Fraud); 18 U.S.C. § 1343 (Wire Fraud); 18 U.S.C. § 1956 (Money Laundering); 18 U.S.C. § 1957 (Money Laundering); and, 18 U.S.C. § 1964 (Racketeer Influenced and Corrupt Organizations (“RICO”)).

The False Claims Act (FCA)

Hospice fraud whistleblowers may benefit financially under the reward provisions of the federal False Claims Act, 31 U.S.C. §§ 3729-3732, by bringing false claims suits, also known as qui tam or whistleblower suits, against their employers on behalf of the United States. The plaintiff in a hospice fraud whistleblower suit is also known as a relator. The most common FCA provisions upon which hospice fraud qui tam or whistleblower relators rely are found in 31 U.S.C. § 3729: (A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval; (B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim; (C) conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G);…, and, (G) knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government…. There is no requirement to prove specific intent to defraud. Rather, it is only necessary to prove actual knowledge of the false claims, false statements, or false records, or the defendant’s deliberate indifference or reckless disregard of the truth or falsity of the information. 31 U.S.C. § 3729(b).

The FCA anti-retaliation provision protects the hospice whistleblower from retaliation from the hospice when the employee (or a contractor) “is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment” for taking action to try to stop the fraudulent activity. 31 U.S.C. § 3730(h). A hospice employee’s relief includes reinstatement, 2 times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination or retaliation, including litigation costs and reasonable attorneys’ fees.

A SC hospice fraud FCA whistleblower would initially file a disclosure statement, complaint and supporting documents with the U.S. Attorney’s Office in Columbia, South Carolina, and the US Attorney General. After the disclosures are filed, a federal court complaint can be filed. The SC division where the frauds occurred, the relator’s residence, and the defendant residence, will determine which division the case will be assigned. There are eleven federal court divisions in South Carolina. Once the case has been filed, the government has 60 days to decide whether or not to intervene. During this time, federal government investigators located in South Carolina will investigate the claims. If the case involved Medicaid, SC Medicaid fraud unit investigators will likely become involved as well. If the government intervenes in the case, the U.S. Attorney for South Carolina is usually the lead attorney. If the government does not intervene, the relator’s SC attorney will prosecute the case. In South Carolina, expect a qui tam case to take one to two years to get to trial.

Tips on Recognizing Hospice Fraud Schemes

The HHS Office of Inspector General (OIG) has issued Special Fraud Alerts for fraudulent and abusive practices of hospices. U.S. and South Carolina hospices, patients, hospice employees and whistleblowers, their attorneys and lawyers, should be familiar with these hospice fraud practices. Tips on recognizing hospice frauds in South Carolina and the U.S. are:

• A hospice offering free goods or goods at below market value to induce a nursing home to refer patients to the hospice.
• False representations in a hospice’s Medicare/Medicaid enrollment form.
• A hospice paying “room and board” payments to the nursing home in amounts in excess of what the nursing home would have received directly from Medicaid had the patient not been enrolled in the hospice.
• False statements in a hospice’s claim form (CMS Forms 1450, UB-04 or UB-92).
• A hospice falsely billing for services that were not reasonable or necessary for the palliation of the symptoms of a terminally ill patient.
• A hospice paying amounts to the nursing home for “additional” services that Medicaid considered included in its room and board payment to the hospice.
• A hospice paying above fair market value for “additional” non-core services which Medicaid does not consider to be included in its room and board payments to the nursing home.
• A hospice referring patients to a nursing home to induce the nursing home to refer its patients to the hospice.
•A hospice providing free (or below fair market value) care to nursing home patients, for whom the nursing home is receiving Medicare payment under the skilled nursing facility benefit, with the expectation that after the patient exhausts the skilled nursing facility benefit, the patient will receive hospice services from that hospice.
• A hospice providing staff at its expense to the nursing home to perform duties that otherwise would be performed by the nursing home.
• Incomplete or no written Plan of Care was established or reviewed at specific intervals.
• Plan of Care did not include an assessment of needs.
• Fraudulent statements in a hospice’s cost report to the government.
• Notice of Election was not obtained or was fraudulently obtained.
• RN supervisory visits were not made for home health aide services.
• Certification or Re-certification of terminal illness was not obtained or was fraudulently obtained.
• No Plan of care was included for bereavement services.
• Fraudulent billing for upcoded levels of hospice care.
• Hospice did not conduct a self-assessment of quality and care provided.
• Clinical records were not maintained for every patient.
• Interdisciplinary group did not review and update the plan of care for each patient.

Recent Hospice Fraud Enforcement Cases

The DOJ and U.S. Attorney’s Offices have been active in enforcing hospice fraud cases.

In 2009, Kaiser Foundation Hospitals settled an FCA lawsuit by paying $1.8 million to the federal government. The defendant allegedly failed to obtain written certifications of terminal illness for a number of its patients.

In 2006, Odyssey Healthcare, a national hospice provider, paid $12.9 million to settle a qui tam suit for false claims under the FCA. The hospice fraud allegations were generally that Odyssey billed Medicare for providing hospice care to patients when they were not terminally ill and ineligible for Medicare hospice benefits. A Corporate Integrity Agreement was also a part of the settlement. The hospice fraud qui tam relator received $2.3 million for blowing the whistle on the defendant.

In 2005, Faith Hospice, Inc., settled claims an FCA claim for $600,000. The hospice fraud allegations were generally that Faith Hospice billed Medicare for providing hospice care to patients more than half of whom were not terminally ill.

In 2005, Home Hospice of North Texas settled an FCA claim for $500,000 regarding allegations of fraudulently billing Medicare for ineligible hospice patients.

In 2000, Michigan osteopath Donald Dreyfuss, who pleaded guilty to criminal fraud charges, including violation of the AKS for receiving illegal kickbacks from a hospice for recommending the hospice to the staff of his nursing home, settled an FCA suit for $2 million.


Hospice fraud is a growing problem in South Carolina and throughout the United States. South Carolina hospice patients, hospice employees, and their SC lawyers and attorneys, should be familiar with the basics of the hospice care industry, hospice eligibility under the Medicare and Medicaid programs, and typical hospice fraud schemes. Hospice organizations should take steps to ensure full compliance with Medicare/Medicaid hospice billing requirements to avoid hospice fraud allegations and FCA litigation.

What Is Drop Shipping? What Wholesale Suppliers Can You Trust? Comparisons and Tips

What is Drop Shipping? Well, this form of online retailing is when you list an item, on eBay or Amazon for example, without having the product in inventory. You generally work with a wholesaler, advertise their product at retail price, and when a customer purchases the aforementioned item, you order the product. Usually and profitably you purchase the item from a wholesaler at a discounted price. At this point the wholesaler, usually for free, ships the neatly packaged, new and impeccable, item directly to your buyer. You are essentially Walmart, with less less fluorescent lights and better fashion taste. You have no overhead, no risk, and no inventory except virtually. Best of all, you never even have to exhume your old printer from the basement to print postage labels. It sounds illegal but its not, and technically not even unethical. Retail stores do it. You spend the time researching and advertising, surely it is only fair you that you get your cut of the profits. The wholesaler is happy as his sales skyrocket and your customer is happy as they receive a professionally packaged brand new item directly to their door. You are happy as you slowly watch that $100 you had put away for that trip to the casino turn into $1000 virtually in a couple weeks. Jackpot. Even Uncle Sam’s happy as money changes hands in the “Hoover Dam” of economy boosting donations we call taxes. So why the stigma?

Well for starters it sounds rather felonious don’t you think? Drop shipping. Or you may call it Arbitrage, which is just as chilling. Can’t we call it something nice like “Stay At Home Retailing For Moms, Agoriphobic Persons, or Socially Handicapped”? Its a long name but less likely to arouse suspicion on a resume that you excelled as a previous drug mule. (I have aspergers. Thus I am allowed to reference social inabilities. I was the awkward one who didn’t cry at the end of Titanic at 9, and have the social grace of a former biker-gang member turned military coach.) The other reason that it has such stigma is that it seems like trickery. If you can find such good prices online for these products shouldn’t your buyer be aware of, and have the ability to use, these sources too? Well, they do, and they can. Then they would gleefully spend countless hours doing their own research, communicating with a wholesaler and managing to weed through the false advertising in order to buy one product. Nobodies going to do that for just one item. These good deals don’t just fall into your lap, and you as a Wholesaler/Consumer liaison have that duty. That is why you get paid.

Any profession involves work, be it physical, mental or technological. Think of K-mart. Would you become enraged if you discovered they paid only $10 for that tablet you are buying for $150? No, because you have neither the space or the finances to order 4382 of them at a time. (Mild exaggeration.) So imagine yourself as K-mart, without employees, or a fluorescent light filled electricity bill equivalent to the cost of your home. Also you will be much smaller scale. But equally, if not more so, deserving of compensation for your brilliant ideas and hound-like abilities to sniff out a bargain.

But don’t be fooled there are cons to this situation, and you do need a source of capital to start. How much capital you begin with ultimately determines how far in over your head will inevitably get, the first time you get excited at the opportunities that lie ahead. We all do it. I did. I got caught up in the hype of selling amazon gift cards via email on eBay for twice their worth, which is the going rate. Come on, I should have realized the only reason someone pays twice its value for an amazon gift card is for money laundering a hijacked account and cashing it out. Stupid, stupid me.

First I will get into wholesale product suppliers. I’m really not an advocate of Drop Shipping Online Services as, in my humble opinion, they are the key reason we all do that “in over your head” face plant the first time around. You want to start with one item at a time and develop a consumer relationship with one provider at a time, even if that means stalking their product page for a month. When I search the internet for corporate services and whole sale source providers, I often see the same company masquerading under different titles. They all want to sell you solid gold at about 10 cents a gram. Something’s wrong in that scenario, and even I knew that, the one who thought Gift Cards were just hard to find in some areas where they just fly off the shelf and sell out. See I’ve signed up with these companies, and in exception for a few, I found them all to be at least retail priced. Some were even more costly than retail and usually swimming in fees. How might one identify such sites? Well they aren’t rolling the dice when picking out their HTML Template, if you know what I mean. If you look closely their sites all have the same generic design and products, usually only changing in color scheme and price. Here is a list of some Drop Shipping friendly wholesalers that I trust, with reasonable prices. Let’s start with:


14k.co Drop Ship Program

Just provide a few personal information snippets and you’re good to go with their program, if you must settle for a program. But you don’t even have to enlist in their program to benefit from their prices, which are already very reasonable in my opinion. If you are a Gold connoisseur then you’ll be able to sniff out their specific items that are perfect candidates. I won’t tell you which ones because then I won’t have a monopoly on it, and trust me its hard to find a product that 100 people before you haven’t already broadcasted all over eBay. I prefer independent sourcing and I believe, in my experience, if you brag about your opportunity it becomes a national opportunity. That is when you learn your “Jackpot” just got split with 20,000 other winners.

Sarraf.com Jewelry

By far, Sarraf simply has the cheapest chains and solid gold jewelry you can find retail online, plus free shipping. They’re not even paying me to say that. I just know from months of scouring at 3am for the cheapest Gold Hollow Figaro, without a merchant account, you won’t find gold jewelry cheaper. No account is required to purchase from them and I’ve never seen them run out of stock. They’re selections, explanations of various chain styles and sizes, and straightforward browsing style really makes me feel secure. If I had an online fireplace to cozy up to, with a hot cup of “No Gimmicks” hot cocoa, Sarraf would be my home. (You didn’t know an E-commerce Article could be so packed full of cheesy metaphors, did you? Well now you know.)


Wait, don’t write me off on your list of credible sources of information just yet. It sounds weird, I know. Isn’t Groupon for finding cheap movie tickets? Or last minute, “I forgot our anniversary and went to the casino last night”, cheap dinner deals? Well not only does Groupon constantly have smoking wholesale type deals on solid gold, but they also tell you exactly what they have left in stock along with how many have been bought. With that knowledge combined with their countdown style end times of each promotion, I’ve had some good success with Groupon-to-eBay auction arbitrage. I mean, they have had, virtually for months now, 6mm solid 14k stud earrings for 9.99. If you can’t make a profit from that price, K-mart is disappointed in you, and I don’t know if you will ever be welcomed at the Hoover Dam, not even for a peek. I once spotted a Groupon deal for a name brand watch that goes for $159 dollars elsewhere, for $19.99.

Other Merchandise


Aliexpress is basically Alibaba, except it’s not an app on your phone. I’m not going to get into details, primarily because I can’t really figure it all out myself. I think by now its pretty clear from my my various Casino related metaphors that I like to indulge in a little gambling every now and again-next-week. And in my opinion this site could be a Jackpot or a face-plant, depending on your ability to stay strong under pressure and sales tactics. From what I can gather, having navigated the paths of purchasing an item once or twice, its a collection of wholesalers who have their own stores. They have minimum buying requirements and separate pricing. Its noteworthy that the pricing that they have on the site may be totally different then what they have in actuality, and they don’t mind a little bit of bartering.

If you download the Alibaba app you can make requests and receive quotes at which point you contact the seller and work out a deal. Alibaba wholesalers can be very, shall we say, persistent. But they can also be tricky. Personally, I tend to explore other avenues since I work with jewelry, and apparently nobody is monitoring the requirements for listing something as “Solid 14k Gold”. That turns my “No Gimmicks” Hot Chocolate ice cold, I’m afraid. Although for something like electronics, you’re welcome, I just pointed you towards your new paradise. Be free and buy as many.10 cent cellphone covers as your heart desires. Just make sure you know the merchandise you’re selling well, and investigate the seller

eBay-to-eBay Arbitrage

eBay itself offers you the opportunity to have more than one account, the technical reason is so that your buyers can’t peruse your sources thus rendering you obsolete. So even eBay to eBay drop shipping is possible, although you have to keep a keen eye on your product and ultimately increase your shipping time by double, as no eBay seller is going to ship to a random address. And, lets face it, understanding and patience is a foreign concept on eBay. It’s a bit like Day-Before-Christmas shopping, but with more blackmail and threats because no one has to look you in the eye. It’s not for the easily virtually intimidated, nor is it for the digital doormats. My advice is to opt for sellers with expedited shipping in the US, and watch their stock closely. Most importantly, remember that people aren’t all honest, and if your “Genuine” item turns out to be fake a long drawn out process of return-refund-return-refund-report ensues. Ultimately you will have to exhume that old printer after all, and probably lose your e-commerce appetite. At the very least, your long sought after eBay reputation will be smudged. Check the sellers reviews. If all 349 of them are from the same buyer in the last 2 weeks, and they opened they’re account a month ago, don’t do it. They will be shut down in a week or two I promise you.


Doba is by far the most popular Drop Shipping Source Provider, and one that you might consider, if you want to jump headfirst in large quantities. But regardless of the advertising, no source ships first and gets paid later. You need to have the capital to buy the product and then wait the time it takes for your buyers PayPal transaction to settle into your account to get paid. Period. And companies like Doba offer free trials but ultimately charge a monthly or yearly fee. The benefits are being informed of stock supply and help with integration into your website if you aren’t going the eBay way, thus saving you the hassle of being on ‘Stock-watch”. They also supply you with up to date photos, but these are the same photos they have supplied to 300 other sellers so you must know how to stand out. Besides the point, the unbeatable truth of the trade is, unless you have a credit card, you need to have the means to buy the product.

Everything I saw on Doba during my free trial I was able to find elsewhere, sometimes cheaper. But for companies to go with, its the most reputable company. And if that’s your hot cup of “Safety Cocoa” then give them a try and at least browse their supply. It will probably be slow to start, eventually leading to bigger profits, but you will come out on top. You will profit, one unbranded Bluetooth speaker at a time.

To summarize my comparisons list, I find it the most effective to stick with one product you know well, scour the internet yourself, and find an amazing deal. I prefer talking with the wholesaler directly. Usually they ship free and swiftly and there’s no hidden fees. Just go with your gut and stick with what you know. The most important thing is to watch stock. And you will do something silly at some point. You will get excited and accidentally face-plant yourself off eBay for life. (In actuality, they are very understanding I’d like to note, and very forgiving too. This is coming from an accidental accessory to “Who Know’s What” that still sells on eBay). This brings me to the potential pitfalls of this trade.

Perilous Face-Planting Potentials

Well you ignored all my advice and you went on your merry way only to find yourself in a bind because you listed your product exactly as the supplier had it listed. Now your buyer is angry because you claimed to have an “Impressive” men’s bracelet chain that ended up being.5mm and nearly microscopic. Now refund them their money, slap your own hand and don’t do it again. No matter how the wholesaler describes the product, you are the one responsible. So you must know size, inches, centimeters, materials, wattage, capacity, compatibility and everything there is to know about the product. Shake it off. It’s just one sale.

In the beginning I had a couple harrowing situations where an auction ended and my supplier was out of supply, leaving me scrambling. I was scouring Etsy and Poshmark for an exact pair of Dolce and Gabannas. At times getting my tush saved by other eBay sellers or Bonanza. Even the local Craigslist was my knight in shining armor when this Distressed Damsel had dug herself into a whole by not doing her homework. Most of all you want your customer to be happy and also protect yourself! Follow the 5D rule. “Don’t Do Digital Dumb Dumb”. Send everything via snail mail, (well, have your supplier snail mail for you, you’re too busy being a retail superstar in your own home to mess with postal problems).

Don’t ever, and I mean EVER, I beg of you, sign up for a shopping line of credit to obtain your merchandise. These sites will pose as credit cards for the credit challenged but they are lines of credit for their online outlet only. You WILL NOT PROFIT EVER. Their prices are so beyond retail that Movie Theater Concession Stands are speechless with admiration. Not only that but there is interest, fees, and application fees. Plus sending email fees, emailing emails to email you fees, and fees for the metaphorical tissues to wipe your e-commerce tears when you drown financially. I’m not going to point any FINGERS at any particular place, but they always say no money down and promise a guaranteed credit limit of way more than anyone with your credit score should be allowed. What they mean is a credit line of 150 dollars, which may buy you a set of silverware, and 50 of that goes towards your initial fee. Then as a proud new member, all that you receive at this point is the joy of browsing. Once you go to buy your silverware there is a 35 dollar down payment leaving you with about 60 something to spend. Oh shoot, with the shipping costs of 33 dollars you can only afford a pair of socks. These socks will ruin you, and possibly anyone associated with you, for life when it comes to credit and you won’t be able to get a secured prepaid collateral payday loan without uproars of laughter. Don’t do it. If they say no credit check, no employment check, and no down payment they mean they’ve ruined people. They’ve pillaged enough swarms of people to be confident that they can ruin someone as high risk as your neighbor. The neighbor who hid his car in your garage to prevent repossession, and asked you to pretend to be his boss if rent-a-center calls. That kind of confidence is trouble my friend.

You know how they say “If it fits it ships” for USPS drop boxes? (This is for you who have to unfortunately deal with some shipping). Well it doesn’t ship if you have to shove, is my unfortunate experience. In fact just avoid the drop boxes for USPS altogether. Out of the 30 or so times I’ve used them, only about 10 items didn’t end up in the Bermuda Triangle called the “Dead Mail Center” in Atlanta. This is a facility that is fictitious I’m convinced, as they have no number or e-mail and you will never get your item back. It’s just gone. I like to think these prodigal items are being distributed amongst the poor, but they are probably just sitting in a pile somewhere. And nobody but you and your buyer cares, so if you use eBay get that nifty pay-as-you-go insurance application, it’ll save you in the long run.

The last pitfall will be brief, due to embarrassment factor, and it also has to do with the unfortunate jungle of shipping etiquette. I know there are new eBay sellers out there this will help, and I know I’m not the only one who has ever done this. So when you go to actually pay for postage through eBay of course you want to pick the cheapest option. And as you mindlessly peruse your methods you see the cheapest option. But be aware, Media Mail is not just a catchy name for Cheap Shipping, it actually needs to be Media related. And they will know. And you will feel like I do telling this story right now. Again, slap your hand, and don’t do it again.

Well that’s my take on the ever more popular method of Drop Shipping, a profitable yet pitfall riddled minefield. But it’s a whole new world of opportunity for those of you who are picking up the pieces of their credit like I was, (I’ll turn the FINGER around for a moment), and don’t have much capital to start a business. So if you’re like me, and the thought of seeing another human being is something you could live without, it’s enticing. If the end of the movie “The Notebook” seemed technically endearing in theory, but not personally identifiable and everyone must be told, then yes drop shipping is for you. And on a side note if you said yes to that last part, maybe you have aspergers. I’d look into that, but that’s just my opinion.

May your wholesale hunting be fruitful, and your face-plants and perils be few, as you journey onward in finding your home business niche. If you are hungry for success you will find it, just keep your eyes open and your wallet will grow fatter. Watch out Wal-mart.

Attention, More Regulations Are in Place and You Could Go to Jail After August 1, 2005

Be advised that as of July 1, 2005 – all ezine publishers or email broadcasters need to pay attention to new laws in Utah and Michigan.

“Child Protection Registry” laws are now in affect and the trend may well extend into all of the other states. These laws went into effect on July 1, 2005 and you must comply with them by August 1, 2005.

What this law means (in a nutshell) if you broadcast your ezine, newsletter or alike to anyone who is a “child” (regardless if they have opted in your database or double opted in), you must scrub their address through the registry database of Utah and Michigan. That will cost you $.005 per e-mail in Utah and $.007 per e-mail in Michigan.

How many e-mails do you have in your mailing database? Multiply that by $.005 and $.007. That’s how much it’s going to cost you to keep the government away from your business.

By the way, do you know who’s child in your database?

Yes, you’ve guessed it right. It means that you have to scrub your database each time you broadcast an e-mail to your database.

Interestingly enough, you don’t have to publish any objectionable content yourself. You just have to have a link to it someplace that maybe links to another link, and to another link, and to another link that contains the following areas of primary interest:

Alcohol & tobacco
Adult or obscene content
Gambling, Lotteries
Drugs, pharmaceuticals, prescription drugs (illegal or not)
Matchmaking services
Finance related services such as mortgage, credit card, banking, etc.
Phishing or other scams

It’s not that anyone wants to market alcohol to kids – I have kids. It’s that this is a stupid and a cumbersome law that doesn’t solve the problem. It just creates a massive and a costly burden on email broadcasters. This law was not very well thought of.

Of course, the only people who will not comply with this law are the same scammers who didn’t care about the CAN-SPAM Act and continue to slam us with spam from remote corners of the planet.

Why doesn’t the government spend their energy finding these scammers instead of harassing us the legit marketers?

Do you see the problem here?

These two states have set-up Do Not Email Registries (like the DO Not Call Registry) for people to enter minors’ email addresses. But, it’s not just email addresses that belong to minors. People can also enter email addresses to which minors have access to. So, parents looking to stop spam can also input their addresses too, claiming their children can access their email.

You can NOT email these addresses any email (even if they’ve double-opted in your database), a material that contains links to which kids cannot legally see or respond to.

Let’s say you send out your article that contains only a link back to your site. You have Google AdSense (trying to make money) on your site displaying ads from sites that have links to these illegal items for kids. You just broke the law.

Even though your email contained absolutely nothing illegal for minors, and your site contains nothing illegal, and you were linking to what you thought was a perfectly acceptable site, you could be in trouble.

But, do you see even the bigger problem here?

The law is vague, overly broad, and creates a chilling effect on the exercise of basic first amendment rights. It is as dangerous as it is stupid because it gives parents the right to sue in a civil action. That means any of us are potential targets of greedy scamster parents who were just rewarded by the government “a right to get rich fast.”

Of course, as you would expect, the law carries criminal sanctions, too.

No one knows how far the Attorney Generals of Michigan and Utah will take these statutes. And it isn’t just the states’ Attorney Generals you have to worry about. Parents who will register their e-mail addresses for the soul purpose of filing lawsuits because that’s “their way of living.”

Do you think you comply with this law?

I don’t think so. If you’re an Internet marketer, you most likely promote other’s products and services, or have a resource section or AdSense on your site that links to a number of other websites. Therefore, you’re screwed. You’re stuck with only 3 options.

The “link to link to link” aspects of the legislation will make this play very vulnerable.

Option 1: If you cannot afford to evaluate your e-mail database list with the Do Not Email Registry of every state, in your e-mail broadcast do not include content related in any way to the topics of primary interest (listed above). And also, do not include any links. Just pure content. (This is out automatically for the Internet marketers).

Option 2: If you can’t pay with money, you have to pay with your time. Make sure non of your links in your e-mail broadcast are linking to links that are linking to another links and so on … that may lead to the “illegal content.” Sincerely, good luck there.

Option 3: Scrub your lists against the registry every single time you email.

So, what are the consequences here?

You can face legal action. You could face a civil suit brought by the attorney general of the state, by the parent and/or by the ISP. Thus a parent who wants to sue, because he or she has a grudge and wants to collect money, can certainly do so.

The government seems to have forgotten to protect us from these lowlife and ridiculous lawsuits that we hear of quite often nowadays.

I’m all for the safety of the children as I do anything to protect my children. I even donate money to children’s organizations. But, this law has its good sides and the side that wasn’t very well thought of. I wonder who had a major influence on it.

The Michigan law has the larger damages allowing $5,000 for each message received by a recipient or $250,000 for each day that the violation occurs.

Even worse, you could face a criminal suit. In Michigan the first violation is a misdemeanor punishable by imprisonment for not more than 1 year. The second violation is a felony punishable by imprisonment for not more than 2 year. Utah is not much better.

So, what do you have to do if you’re an Internet marketer?

I don’t know about you but I won’t give up my Internet business all of a sudden and I do not want to face jail time in these states or even a fine because of an overzealous parent. Therefore, I am investigating how to make sure to get my businesses email lists compliant.

What’s the Difference Between Lehman Bros and Bear Stearns? Lehman’s CEO is on NY Fed Board

An earlier article by this author (“The Secret Bailout of JP Morgan”) summarized evidence presented by John Olagues, an expert in options trading, suggesting that JPMorgan, far from “rescuing” Bear Stearns, was actually its nemesis.[1] The faltering investment bank was brought down, not by “rumors,” but by insider trading based on a plan drawn up much earlier. The deal was a lucrative one for JPM, handing the Wall Street megabank $52 billion in loans from the Federal Reserve (meaning ultimately the U.S. taxpayer). So how did JPM get away with it? Olagues notes the highly suspicious fact that JPM’s CEO James Dimon sits on the Board of the New York Federal Reserve.

In his latest post, Olagues discusses the fate of Lehman Brothers, the nation’s fourth-largest investment bank and the next faltering bank expected to fail.[2] Unlike Bear Stearns, which got decimated by the JPM buyout using Federal Reserve money, Lehman Brothers is probably in line for a massive bailout from the Fed. At least, that’s what its CEO Richard Fuld seems to believe. The June 4, 2008 Financial Times of London quoted him as stating, “The Federal Reserve’s decision earlier this year to lend directly to investment banks should take questions about Lehman’s liquidity off the table.” Whether Lehman can come up with the “liquidity” to meet its debts is no longer an issue, because it expects to be feeding at the trough of the Federal Reserve, just as JPM did when it bought Bear Stearns at bargain-basement prices. The difference between the two “bailouts” is that Lehman Brothers, unlike Bear Stearns, will actually get the money. Why is Fuld so confident of this rescue operation? Olagues notes that Fuld, like Dimon (and unlike Bear CEO Alan Schwartz), sits on the Board of the New York Federal Reserve.

A conflict of interest? It certainly looks like it. Indeed, Olagues points to a statute defining this sort of self-dealing as a criminal offense. 18 U.S.C. Chapter 11, Section 208, makes it a felony punishable by up to 5 five years in prison for members of the Board of Directors of a Federal Reserve Bank to make decisions that benefit their own financial interests. That would undoubtedly apply here:

“Fuld, at last count, owns 1.9 million shares of Lehman . . . . Although Mr. Fuld sold over $320,000,000 worth of stock at near all time highs in 2006 and 2007, received through the premature exercise of his stock options, he still has value in his present holdings of approximately $100,000,000.”

Likewise, says Olagues, “James Dimon holds almost 3 million shares of J.P. Morgan stock worth over $120 million with taxes already paid and executive stock options equal in my estimate of another $70 million. His dispositions of stock equaled $140 million over the past few years.” Olagues adds:

“Fuld, like Jamie Dimon, was at the luncheon on March 11, 2008 with Bernanke, Rubin, CEO of Citigroup, Geithner, President of the New York FED, Thain of Merrill Lynch, and Schwarzman. Some claim that the meeting was about Bear Stearns and how to handle the situation.”

Needless to say, Bear CEO Schwartz was not invited to the luncheon. “Lehman Bros. is one of the original stock holders of the New York Federal Reserve Bank,” Olagues observes. “Bear Stears does not now have any ownership in the FED banks.”

The luncheon was held three days before the March 14 collapse of Bear Stearns stock that led to the bank’s demise. If the luncheon attendees were indeed discussing the Bear problem on March 11, testimony before the Senate Banking Committee in which the principals said they first heard of the problem on the evening of the thirteenth, says Olagues, was “less than truthful.”

The evidence at least warrants an investigation, but who is going to hold these self-dealing Federal Reserve Board members to account? New York Governor Eliot Spitzer, the former thorn in the side of the Wall Street bankers, has been summarily disposed of; and under the latest proposal of U.S. Treasury Secretary Hank Paulson, the Federal Reserve itself will soon become the chief overseer and regulator of the banks. The Federal Reserve will regulate the Federal Reserve Boards, with their litany of private bank CEOs, a clear case of the fox guarding the henhouse.


1. Ellen Brown, “The Secret Bailout of JP Morgan: How Insider Trading Looted Bear Stearns and the American Taxpayer,” webofdebt.com/articles (May 13, 2008); John Olagues, “Bear Stearns Buy-Out . . .100% Fraud,” optionsforemployees.com/articles (March 23, 2008).

2. John Olagues, “Conflict of Interests at the N.Y. Fed,” optionsforemployees.com/articles (June 11, 2008).