Illinois Hospice Executive, Three Former Employees, and Company Indicted for Allegedly Falsely Elevating Level of Patients’ Care
CHICAGO—An owner and three former employees of an Illinois hospice company, as well as the company itself, were indicted on federal health care fraud charges for allegedly engaging in an extensive scheme to obtain higher Medicare and Medicaid payments by fraudulently elevating the level of hospice care for patients. In many instances, the level of hospice care allegedly exceeded what was medically necessary or actually provided, including for some patients who did not have terminal illnesses or who were enrolled far longer than the required life expectancy of six months or less.
One defendant, Seth Gillman, 45, of Lincolnwood, an attorney and the co-administrator and co-owner of Passages Hospice LLC, which was based in Lisle and has suspended operations, was initially charged in a criminal complaint when he was arrested in January.
Gillman, together with three new individual defendants and Passages Hospice, were charged in an 18-count indictment returned by a federal grand jury on Thursday.
Gillman, Passages, and Gwen Hilsabeck, 47, of Pontiac, Illinois, who served as co-administrator of Passages, were each charged with 16 counts of health care fraud and one count of conspiracy to obstruct a federal audit. Hilsabeck was also charged with one count of making false statements regarding a health care benefit program in a patient’s initial plan of care.
Also indicted were Carmen Velez, 35, of Palatine, who served as Passages’ director of nurses for the Chicago region and director of clinical services, and Angela Armenta, 34, of Wheeling, who served as Passages’ director of certified nursing assistants for the Chicago region. They were charged with four counts each of health care fraud.
All four individual defendants and Passages are scheduled to be arraigned on June 2 in U.S. District Court in Chicago.
According to court documents, Passages did not have its own inpatient facility but instead deployed nurses to visit hospice patients in nursing homes and private residences. Between August 2008 and January 2012, Passages received more than $90 million in Medicare payments for hospice services, including more than $20 million billed as general inpatient services.
The indictment alleges that between August 2008 and January 2012, Gillman and the other defendants caused Passages to submit false claims to Medicare and Medicaid for medically unnecessary hospice care for patients who were not terminally ill and did not qualify for general inpatient care.
Gillman, Hilsabeck, and Passages allegedly paid bonuses to nursing directors and certified nursing assistant directors, including Velez and Armenta, to increase the number of patients on general inpatient care. In addition, they offered incentives, such as payments to nursing homes based on the number of patients on general inpatient care to increase Passages’ patient census, the indictment alleges.
In August and September 2009, Gillman, Hilsabeck, Passages, and Velez allegedly conspired to obstruct a federal audit by agreeing to alter patient files that had been requested by TrustSolutions, which contracted with the Centers for Medicare and Medicaid Services to audit providers for fraud and abuse.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Lamont Pugh, III, Special Agent in Charge of the Chicago Regional Office of the HHS-OIG; and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The Illinois Attorney General’s Office is also participating in the investigation.
The government is being represented by Assistant U.S. Attorney Stephen C. Lee.
Each count of health care fraud carries a maximum penalty of 10 years in prison and a $250,000 fine, while conspiracy to obstruct a federal audit and making false statements regarding a health care benefit program each carry a maximum sentence of five years in prison and a $250,000 fine, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The Medicare Fraud Strike Force began operating in Chicago in February 2011, and consists of agents from the FBI and HHS-OIG, working together with prosecutors from the U.S. Attorney’s Office and the Justice Department’s Fraud Section. The strike force is are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Scores of defendants have been charged locally in health care fraud cases since the strike force began operating in Chicago.
To report health care fraud to learn more about the Health Care Fraud Prevention & Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.