PHILADELPHIA—The United States filed a complaint in U.S. District Court today in a whistleblower suit against a now-defunct, for-profit Philadelphia provider of hospice services, Home Care Hospice Inc. (HCH), and its owners and operators, announced First Assistant United States Attorney Louis D. Lappen. In its complaint, the government alleges that HCH, its executive director and owner Alex Pugman, its Development Executive Svetlana Ganetsky, and its de facto owner Matthew Kolodesh violated the False Claims Act when they falsely claimed and received millions of taxpayer dollars intended for dying Medicare recipients in need of hospice care. The government further alleges that Pugman, Ganetsky, Kolodesh, and HCH Chief Executive Officer Malvina Yakobashvili thereby unjustly enriched themselves at the expense of the United States. Pugman and Ganetsky, who have pleaded guilty to related criminal charges, are husband and wife, as are Kolodesh and Yakobashvili. In October 2013, a federal jury in the Eastern District of Pennsylvania found Kolodesh guilty of related criminal charges.

The Medicare hospice benefit is available for a patient who elects palliative treatment (medical care focused on providing relief from pain, stress, and symptoms of terminal illness) and has a life expectancy of only six or fewer months, if the patient’s disease runs its normal course. A Medicare patient receiving hospice services no longer receives services designed to cure the patient’s terminal illness. Medicare reimburses for different levels of hospice care, including continuous home care (also called crisis care), which is available only for a patient who is experiencing acute medical symptoms resulting in a brief period of crisis and who requires the immediate, short-term provision of skilled-nursing services in order to remain at home. The reimbursement rate for crisis care services is the highest daily rate a hospice can bill Medicare, and hospices are paid hundreds of dollars more on a daily basis for each patient they certify as having received crisis care services rather than routine home hospice services.

The government’s complaint alleges that HCH, Pugman, Ganetsky, and Kolodesh knowingly submitted false claims and records (including fabricated records) to Medicare for purported hospice care for patients who were not terminally ill and thus not eligible for the Medicare hospice benefit. The government further alleges that these defendants knowingly submitted or caused the submission of false claims and records (including fabricated records) to Medicare for crisis care services that were not necessary or not actually provided. The government contends that, as a result of the conduct alleged in the complaint, these defendants violated the False Claims Act and cost the Medicare Program millions of dollars.

Under qui tam (whistleblower) provisions of the False Claims Act, certain private citizens may bring civil actions on behalf of the United States and may share in any recovery. If the United States intervenes in an action and proves that a defendant has knowingly submitted false claims, it is entitled to recover three times the damage that resulted and a penalty of $5,500 to $11,000 per claim. This suit was originally filed on behalf of the United States by Maureen Fox and Cathy Gonzales, former HCH employees who discovered the alleged fraud. After they internally reported the alleged fraud, HCH fired Ms. Fox, and Ms. Gonzales quit her position. The qui tam action remained in civil suspense for seven years while the United States criminally investigated and prosecuted the perpetrators. In 2012, while the case was still in suspense, and without filing its own complaint at that time, the United States intervened in Ms. Fox’s and Ms. Gonzales’ False Claims Act claims against HCH, Pugman, Ganetsky, and Kolodesh. In a related action in the Eastern District of Pennsylvania, filed in 2008, the United States obtained injunctive relief restraining financial accounts of HCH, Pugman, Ganetsky, Kolodesh, and Yakobashvili that the United States contends resulted from the alleged fraud.

The case is being investigated by the Office of Inspector General of the U.S. Department of Health and Human Services, and the Organized Crime Section of the Federal Bureau of Investigation and has been assigned to Assistant United States Attorneys Gerald B. Sullivan and Eric D. Gill. The civil claims asserted against HCH, Pugman, Ganetsky, Kolodesh, and Yakobashvili are allegations only, and there has been no determination of civil liability.