Chemed Corporation
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U.S. sues Cincinnati-based corporation under False Claims Act

Chemed Corporation accused of Medicare fraud

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CINCINNATI - The United States government is suing a Cincinnati-based company alleging they committed Medicare fraud.

The U.S. Justice Department says Chemed Corporation, and the hospice company it owns, misspent tens of millions of taxpayer dollars from the Medicare program.

Chemed (CHE) operates Vitas Hospice Services (VITAS), the nation's largest for-profit hospice provider. The government is suing the companies under the False Claims Act, saying they billed Medicare for ineligible patients and submitted false claims for crisis services that proved to be unnecessary.

Chemed said it will vigorously defend itself against the lawsuit.

"Chemed and Vitas have made significant investments in controls, systems and procedures to uphold the highest industry standards and to maintain compliance with all regulatory requirements. Our compliance efforts are designed to ensure our services are provided only to eligible patients," the company said in a press release Friday.

Chemed shares were down about 17 percent to $68.10 in heavy trading Friday.

Vitas is the largest for-profit hospice chain in the United States and provides hospice services to patients in 18 states, including Ohio and Indiana. Chemed acquired Vitas in 2004.

According to a press release , the U.S. is saying the companies used, "aggressive marketing tactics and pressured staff to increase the numbers of crisis care claims submitted to Medicare, without regard to whether the services were appropriate or were actually being provided."

The case against Vitas will be "fairly difficult for the government to make," said Glenn Whitaker, a Cincinnati attorney who has defended companies against False Claims Act charges but is not involved in the Chemed case.

"This case is about services rendered but not necessary," said Whitaker, a partner in the downtown firm Vorys, Sater, Seymour and Pease. "It's about medical judgment and documentation. Failure to document doesn't necessarily mean somebody committed fraud."

Whitaker said the Obama administration has been aggressive in prosecuting health care fraud. Most companies settle instead of going to trial because "the downside risk is substantial," he added.

Medicare covers hospice benefits for patients who elect palliative treatment for a terminal illness and have a life expectancy of six months of less.

Since January 2009, The U.S. Justice Department has used the False Claims Act to recover more than $10.3 billion in cases involving health care fraud.

Chemed hasn't returned calls to 9 On Your Side for comment.

Chemed Corporation is based in downtown Cincinnati and also owns Roto-Rooter Group, Inc. According to the company's 2013 First-Quarter results , Chemed's revenue increased 3.9 percent to $367 million. Vitas had a net patient revenue of $271 million, an increase of 4.0 percent.

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