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Federal Hospice Fraud Charges – What You Need to Know

Federal Hospice Fraud Charges – What You Need to Know

Federal agents just knocked on your hospice office door. Or you received a target letter from the Department of Justice. Or a former employee told you that investigators have been asking questions about your patient certifications. Your first instinct might be to think this is some kind of misunderstanding – you provide comfort care to dying patients, your staff works hard. Heres the first thing you need to understand: hospice fraud prosecutions dont require proof that patients were harmed. You can be convicted for billing services that were actualy provided if those patients werent terminally ill when you certified them. Rodney Mesquias received 20 years in federal prison for the Merida Group scheme. His co-defendant Henry McInnis received 15 years. These arnt theoretical outcomes.

Welcome to Spodek Law Group. We handle federal healthcare fraud defense cases regularly, including cases were hospice owners first realize theyre facing serious criminal exposure through exactly this kind of contact. The second thing you need to understand is this: hospice fraud has become a federal enforcement priority. In 2024 alone, the HHS Office of Inspector General documented approximately $143.81 million in alleged hospice fraud enforcement actions. In 2023, that number was $198.1 million. The government recovered $3.44 billion in misspent Medicare and Medicaid funds through OIG audits and investigations in fiscal year 2023. Federal prosecutors view hospice as a fraud-prone industry – and theyre aggressivly pursuing criminal charges.

Heres something most hospice owners dont realize about this industry. The paradox of hospice fraud is brutal. Hospice exists to comfort the dying. But fraud schemes enroll patients who arnt terminally ill at all. Medical directors certify patients as having six months or less to live – and those patients live for years. Every claim submitted for a non-terminal patient is a false claim. Every certification that wasnt accurate is potential criminal liability. The uncomfortable truth is that you dont need to fail to provide care. You just need to have certified patients who werent actualy dying.

The Terminal Certification That Creates Criminal Liability

Heres the uncomfortable truth about hospice billing. Everything depends on a physician certification that the patient has a terminal prognosis – six months or less to live if the illness runs its normal course. That certification is the foundation of every hospice claim. If the certification is false, every claim that follows is fraudulent.

The certification requirement creates the entire criminal exposure. A physician must certify that a patient is terminally ill and requires hospice-level care. That certification determines Medicare eligibility. If the patient wasnt actualy terminal – if they had chronic conditions that werent going to kill them in six months – the certification was false. Every subsequent claim becomes a false claim.

Jesus Virlar-Cadena was the medical director for the Merida Group in Texas. From 2009 to 2018, he certified patients as terminally ill who werent dying. The scheme submitted over $150 million in false claims to Medicare. He received luxury trips and bottle service at exclusive nightclubs in exchange for signing those certifications. He recieved 4 years and 2 months in federal prison. The scheme’s owner, Rodney Mesquias, recieved 20 years.

Dr. Victor Contreras in California falsely stated on claims forms that patients had terminal illnesses. He typically adopted diagnoses provided by hospice employees wheather or not they were true. The scheme submitted approximately $3.9 million in fraudulent claims. He recieved 24 months in federal prison.

Think about what that means for your hospice. Every patient certification is a potential criminal charge. If your medical director is signing certifications without properly evaluating patients, youre building a fraud case against yourself. If patients are living years beyond their hospice enrollment, prosecutors will argue those certifications were false from the start.

The Patient Recruitment Machine

Heres something about hospice operations that creates massive criminal exposure. The way many hospices find patients is itself a federal crime.

Patient recruiters are paid to find Medicare beneficiaries. They approach seniors at group homes, nursing facilities, hospitals. They offer enrollment in hospice services. Then they sell the patient information to hospice companies. This is a kickback scheme – and everyone involved faces federal charges.

Hospital discharge coordinators take bribes to steer patients. In the Houston United Palliative scheme, Evelyn Shaw was a hospital discharge coordinator who accepted bribes to refer patients to the hospice. The hospice owner, Dera Ogudo, paid kickbacks to group homeowners who helped enroll patients. The total scheme exceeded $110 million. Seven people were arrested.

Normita Sierra in California operated two hospices. She allegedly paid kickbacks of up to $1,300 per patient per month to recruiters who brought patients to her facilities. The scheme submitted more than $4.8 million in false claims. She faces nine counts of healthcare fraud, four counts of illegal remuneration, and conspiracy charges.

Heres the irony that should disturb every hospice owner. Patient recruiters are often presented as marketing services – helping you find patients who need care. In reality, theyre kickback conduits. Paying per patient for referrals is a federal crime under the Anti-Kickback Statute. The recruiter faces charges. The hospice that paid them faces charges. The group home owners who accepted money to enroll residents face charges. Everyone in the chain faces federal prosecution.

The Kickback Arrangements That Destroy Hospice Owners

Heres something about hospice operations that creates enormous criminal exposure. The relationships that bring patients to your facility may be illegal kickback arrangements.

Nita Almuete Paddit Palma operated a Glendale hospice. She participated in a scheme involving hundreds of thousands of dollars in illegal kickbacks paid for patient referrals. The scheme submitted approximately $10.6 million in fraudulent claims to Medicare. She recieved 108 months – nine years – in federal prison. She was also ordered to pay $8,270,032 in restitution.

The scheme worked like many do. Pay recruiters to find patients. Pay physicians to certify those patients as terminally ill. Bill Medicare for hospice services. Everyone gets paid. Everyone goes to prison.

Gayk Akhsharumov operated two California hospices. He concealed his ownership from Medicare, inserted nominee owners, and paid kickbacks to patient recruiters. The scheme stole over $9 million from Medicare. He recieved one year and one day in federal prison and was ordered to pay $9,185,211 in restitution. His biller, Karen Sarkisyan, also recieved prison time and $3.6 million in restitution.

Heres the hidden connection most hospice owners miss. Every payment you make to find patients is potentialy a kickback. Every relationship with a physician who certifies your patients is potentialy a kickback arrangement. The Anti-Kickback Statute prohibits paying anything of value to induce referrals. The “one purpose” rule means that if kickbacks were even ONE purpose of the payment – among other legitimate purposes – you violated the law.

The Cases That Show What Happens

If you think hospice fraud prosecutions are theoretical, look at what actualy happens to hospice owners and operators.

Rodney Mesquias owned the Merida Group in Texas. The company operated dozens of hospice locations throughout Texas. They enrolled patients with long-term incurable diseases like Alzheimer’s and dementia – patients who werent actualy dying within six months. They targeted people with limited mental capacity in group homes and nursing homes. The scheme submitted over $150 million in false claims. Mesquias recieved 20 years in federal prison and was ordered to pay $120 million in restitution. His co-defendant Henry McInnis recieved 15 years.

Petros Fichidzhyan ran sham hospice companies in California. From 2019 to 2023, he and his co-defendants operated four fraudulent hospices. They concealed the scheme by using foreign nationals’ names and personally identifiable information to act as straw owners. The scheme defrauded Medicare of nearly $16 million. Fichidzhyan recieved 12 years in federal prison and was ordered to pay $17,129,060 in restitution.

Shiva Akula owned Canon Healthcare in New Orleans. A federal jury convicted him on all 23 counts of False Claims Act violations. The company billed Medicare for $62 million total, with nearly $47 million in fraudulent claims between 2013 and 2016. Akula recieved 240 months – 20 years – in federal prison and was ordered to pay $42 million in restitution.

Kristal Glover-Wing operated a Louisiana hospice. She was convicted of conspiracy to commit healthcare fraud. Heres the part that should terrify every hospice owner: none of the patients had been diagnosed with a terminal condition. Many patients themselves testified that they never knew they had been placed on hospice. She recieved 72 months – six years – in federal prison and was ordered to pay $3.6 million in restitution.

Sophia Shaklian was charged in a $54 million California scheme. From 2019 to 2024, companies she was connected to allegedly submitted more than $54 million in fraudulent hospice claims. The money laundering charges alleged she purchased $6 million in gold coins and bars using fraud proceeds. The scheme recieved more than $23 million from Medicare for those claims.

These arnt unusual cases. They represent standard enforcement outcomes. The prison sentences are substantial. The restitution orders are crushing. And the False Claims Act multiplies the exposure exponentialy.

How Hospice Fraud Investigations Begin

Heres something about how these cases develop that should concern every hospice owner. Investigations often begin long before anyone contacts you.

Medicare data analytics identify suspicious patterns. Your claims are compared against statistical norms. If your patients are living years beyond their certified prognosis, thats flagged. If your admission patterns deviate from typical hospice operations, thats flagged. If your per-patient billing is unusualy high, thats flagged. The investigation starts with data – before anyone visits your facility.

CMS has identified fraud hotbed states. California, Texas, Arizona, and Nevada are under enhanced CMS oversight due to hospice fraud proliferation. If your hospice operates in these states, you face heightened scrutiny. The California Hospice and Palliative Care Association has warned that continuing scrutiny by the FBI, OIG, and Department of Justice should be expected.

Whistleblowers have massive financial incentive to report. Under the False Claims Act qui tam provisions, whistleblowers can receive 15-30% of government recoveries. Your billing staff, your nurses, your recruiters – anyone who sees something questionable has powerful financial motivation to report it. A single employee who reports certification irregularities could receive millions.

Cooperating defendants name everyone involved. When the government investigates patient recruiters, those recruiters identify every hospice they worked with. When they investigate physicians who signed certifications, those physicians identify every hospice that paid them. You may become a target because someone else’s investigation led to your name.

Heres the consequence cascade. You pay a recruiter to find patients. Years later, that recruiter is investigated. The recruiter cooperates and provides records of every hospice they worked with. Your hospice is on the list. Now youre a target. The investigation that started with someone else ends with federal charges against you.

The Sham Company Problem

Heres something about hospice fraud that creates specific criminal exposure. Using nominee owners or straw companies to hide ownership from Medicare is itself a federal crime.

The Fichidzhyan scheme used foreign nationals as straw owners. They concealed the true ownership of four hospice companies from Medicare. They used other people’s names to open bank accounts, submit information to Medicare, and sign property leases. Every person involved went to prison – including those who lent their names.

Gayk Akhsharumov concealed his ownership from Medicare. He inserted nominee owners into his California hospices. The concealment itself was part of the fraud – hiding who actualy controlled the companies. The scheme contributed to his conviction and $9.1 million restitution order.

Money laundering multiplies the exposure. Spending fraud proceeds creates additional felony exposure. Sophia Shaklian allegedly purchased $6 million in gold coins and bars. Money laundering charges carry up to 20 years per count – on top of the healthcare fraud charges. What seemed like hiding assets actually created additional criminal liability.

Think about what that means. If youre structuring your hospice ownership to avoid detection, youre creating evidence of criminal intent. If youre using nominee owners or straw companies, youre building the conspiracy case yourself. Prosecutors will argue the concealment proves you knew the underlying activity was illegal.

What You Cannot Do When Investigated

Heres what hospice owners do when they learn about investigations. They panic. They try to fix things. They make decisions that create additional criminal exposure.

Do NOT destroy or alter documentation. Patient certifications, billing records, employee records, contracts with recruiters or physicians. Destroying any of this is obstruction of justice. The government probly already has copies through Medicare claims data. Destruction proves consciousness of guilt while accomplishing nothing.

Do NOT contact recruiters, physicians, or others to coordinate stories. If you paid kickbacks to patient recruiters or certifying physicians, your natural instinct is to talk to them about the investigation. Dont. Coordinating testimony is witness tampering. They may already be cooperating with the government. Your conversation could be recorded.

Do NOT continue questionable enrollment practices. If youre enrolling patients you know arent terminally ill, your instinct might be to stop. Thats correct. But dont try to “clean up” by backdating certifications or creating documentation that didnt exist. Thats additional fraud.

Do NOT assume cooperation will protect you. Hospice owners often think full cooperation will result in leniency. Cooperation might help at sentencing if youre convicted. But it dosent prevent prosecution. Everything you say to investigators can be used against you. You need an attorney before you say anything.

The False Claims Act Multiplier

Heres something about hospice fraud that exponentialy increases legal exposure. Every fraudulent certification triggers False Claims Act liability for EVERY claim connected to that patient.

How the multiplier works. A patient is incorrectly certified as terminally ill. Every hospice visit billed for that patient becomes a false claim. Each false claim carries penalties of up to $27,894 (as of 2024). Plus treble damages – three times the government’s loss. A patient enrolled for two years generates hundreds of false claims from a single bad certification.

The exposure compounds across your patient population. If your hospice has systemic certification problems, every patient file becomes a source of False Claims Act liability. Hundreds of patients with problematic certifications means thousands of false claims. The math quickly reaches tens of millions in potential exposure.

Mesquias and McInnis faced $83.8 million in civil penalties EACH. On top of the $29.6 million in treble FCA damages. On top of the criminal restitution. On top of the 20 and 15 year prison sentences. The False Claims Act transforms significant fraud into financially catastrophic liability.

Heres the uncomfortable truth about False Claims Act exposure. Individual certification problems might seem manageable. A few patients who lived longer than expected. A recruiter who was paid a bit too much. But the False Claims Act transforms every connected claim into seperate liability. What seems like limited exposure becomes financial devastation that follows you for the rest of your life.

The Exclusion That Ends Everything

Heres something about hospice fraud convictions that owners need to understand. Federal conviction triggers mandatory exclusion from Medicare, Medicaid, and all federal healthcare programs.

Exclusion means your hospice cannot bill federal programs. In hospice care, where Medicare represents the vast majority of revenue, exclusion effectively closes your business. You cannot provide services to Medicare beneficiaries. Your business model disappears.

Individual exclusion follows you personally. Even if you close the hospice, you cannot work for any entity that bills federal healthcare programs. You cannot start a new hospice. You cannot work for another provider. Your career in healthcare is effectively over.

The punishment extends far beyond the prison sentence. You serve your time. You pay your fines. But you still cant work in hospice because youre excluded. Even a favorable resolution that avoids prison might still result in exclusion that ends your career permanantly.

What You Should Do Right Now

If federal investigators have contacted your hospice, or if you have certification practices that might trigger scrutiny, heres exactly what you should do:

Contact a federal healthcare fraud defense attorney immediatly. Not a general business lawyer. Not your regulatory compliance consultant. Someone who specificaly handles federal healthcare fraud cases and understands how these investigations become prosecutions.

Do NOT speak to investigators without counsel. Federal agents may approach you or your staff for “voluntary” interviews. There is nothing voluntary about it. Anything said can be used to build the case against you. Politely decline and contact an attorney immediatly.

Preserve all documentation exactly as it is. Patient certifications, billing records, physician agreements, recruiter contracts, financial records. Do not alter, destroy, or organize anything. Document preservation is critical.

Identify all potential exposure areas. Patient recruitment relationships. Physician certification arrangements. Patients who have lived significantly beyond their prognosis. Staff who might have concerns. Your attorney needs to understand the full scope.

Do NOT discuss the investigation with staff, recruiters, or physicians. Anyone you talk to can be compelled to testify. They may already be cooperating with the government. Only attorney-client communications are protected.

Todd Spodek tells every hospice owner in this situation the same thing: federal hospice fraud investigations are serious criminal matters. Rodney Mesquias got 20 years. Petros Fichidzhyan got 12 years. Shiva Akula got 20 years. Patients testified they never knew they were on hospice in the Glover-Wing case – she still got 6 years. Your response in the next few days could determine wheather this becomes a matter that resolves favorably – or federal charges that destroy your business and your freedom.

Call Spodek Law Group at 212-300-5196. Before you speak to investigators. Before you make decisions that create additional exposure. Before a certification question becomes a federal prosecution.

Hospice fraud is a federal enforcement priority. The OIG documented nearly $200 million in hospice fraud enforcement in 2023 alone. What you do next matters enormosly.