Hospice fraud investigations now follow a recognizable set of theories, and the government builds many of them around one document: the certification of terminal illness. The Department of Justice's June 23, 2026 National Health Care Fraud Takedown charged 455 defendants nationwide, including a California hospice scheme built on enrolling patients who were not terminally ill and billing for hospice services patients had not received. For a hospice under review, the exposure can include a civil recoupment demand or criminal charges, and the theories federal investigators use to build that exposure repeat from case to case.
Eligibility and Certification Theories
Medicare's hospice benefit turns on a physician's certification that a patient's life expectancy is six months or less if the illness runs its normal course, a standard set out at 42 C.F.R. Section 418.22 and based on the certifying physician's clinical judgment. Investigators build a certification theory by testing that judgment against the medical record: vital signs, weight trends, functional decline, and the treating clinicians' own notes. A long length of stay, or a hospice whose average stay runs well beyond its peers, draws the same scrutiny, because it is a data point the government uses to select claims for review, not proof of fraud by itself.
Patient Recruitment and Medical Director Payment Theories
A second theory looks at how the hospice found its patients and who it paid along the way. Where a marketer or referral source is paid per patient enrolled, or a medical director's compensation tracks referrals rather than genuine medical-director duties, investigators treat the payment as the thing that produced the certification, not the certifying physician's independent judgment. The Anti-Kickback Statute and the civil False Claims Act both reach this pattern.
Level of Care Billed Above What Was Delivered
A hospice is paid at different daily rates depending on the level of care, and general inpatient care, the second most expensive level, pays well above the routine home care rate. A March 2016 report by the HHS Office of Inspector General found that hospices billed one-third of general inpatient care stays inappropriately in 2012, a total of $268 million, most often because the beneficiary did not have the uncontrolled pain or unmanaged symptoms the level requires. A billing pattern showing inpatient days that do not match the clinical notes is one of the clearest documentary theories investigators pursue.
The Contested Question of Clinical Judgment and Falsity
Whether a mere difference of clinical opinion about a patient's prognosis can, by itself, make a certification false under the False Claims Act is a question the federal courts of appeals do not agree on. The Eleventh Circuit held in United States v. AseraCare, Inc. that a hospice claim cannot be false if the underlying clinical judgment does not reflect an objective falsehood, meaning a reasonable difference of medical opinion is not enough on its own. The Third Circuit held the opposite in United States ex rel. Druding v. Care Alternatives, ruling that a difference of medical opinion can itself create a triable dispute over falsity. The Supreme Court denied certiorari in the Care Alternatives case in February 2021, leaving the circuits divided and the legal question unresolved.
Whether a difference of clinical opinion about prognosis can by itself make a certification false under the False Claims Act remains an open question the federal appellate courts have not resolved the same way.
The Investigation Sequence a Hospice Sees
A hospice fraud investigation can begin with a medical records request tied to a specific sample of claims, which can be followed by a civil investigative demand if the matter moves toward a civil case. A payment suspension under 42 C.F.R. Section 405.371, based on a credible allegation of fraud, can follow before the hospice has seen any of the government's evidence. Investigators then move to interviews of hospice staff, current and former; on the criminal track, those interviews can precede a grand jury subpoena for the hospice's own records. By the time civil attorneys from the Department of Justice or criminal prosecutors from a United States Attorney's Office enter the matter, the government has already begun building its documentary record.
Why Early Legal Counsel Is Critical
It is critical that hospices promptly retain experienced healthcare defense counsel upon receiving a medical records request, a payment suspension notice, or any other government inquiry tied to eligibility or certification theories. Early legal intervention can protect the hospice's rights, inform clinical staff of their rights before an interview, avoid inadvertent admissions, preserve relevant defenses, including the contested prognosis question, and allow counsel to communicate with investigators on the hospice's behalf. Delaying representation can let the government's theory harden before the hospice has had any opportunity to respond.
How Health Law Alliance Can Help
Health Law Alliance has represented 2,500+ clients nationwide.
If your hospice has received a medical records request, a payment suspension notice, or any other inquiry tied to eligibility, certification, or billing theories, contact Health Law Alliance's healthcare fraud defense attorneys for a free, confidential consultation before the government's investigation moves further.
