PE-owned home health & hospice giant pays to settle federal billing fraud allegations

Private equity-owned home healthcare and hospice giant Gentiva (formerly Kindred at Home) has agreed to pay $19.4 million to settle allegations by the US Department of Justice (DOJ) and the Tennessee Attorney General of billing fraud.[1]

The settlement resolves allegations that between 2010 until February 2020, certain entities owned by Gentiva fraudulently billed Medicare and Medicaid for hospice services provided to patients who were not terminally ill and then improperly concealed or avoided their obligation to repay those claims.[2]

The allegations cover hospice locations in Tennessee, Rhode Island, Texas, Missouri, Alabama, Indiana, and Ohio.[3]

In addition, the settlement resolves allegations that between 2016 and 2022, the company’s Alabama segment, SouthernCare New Beacon, paid kickbacks to a consulting physician to induce referrals.[4]

Gentiva is a national provider of home healthcare, personal care, palliative care, and hospice services, operating at over 590 locations in 38 states.[5] It is currently owned by private equity firm Clayton, Dubilier & Rice (CD&R),[6] though it is the product of multiple private equity mergers and spinoffs over at least 14 years. The Gentiva entities named in the lawsuit, including Avalon, SouthernCare, and SouthernCare New Beacon, trace their ownership back to Curo Health Services.[7]

Curo was founded as a platform in 2010 by private equity firm GTCR and grew through a series of acquisitions.[8]  In 2015 GTCR sold Curo to Thomas H Lee Partners,[9] which then sold it to the consortium of Humana, TPG, and Welsh, Carson, Anderson & Stowe (WCAS) in mid 2018. The new ownership group then combined Curo with home health giant Kindred at Home, creating the biggest hospice company in the US.[10]

Gentiva was formed in 2022 through the spin-off and rebrand of Kindred at Home’s hospice, palliative, and personal care business (which included the former Curo entities)[11] and acquisition by its current owner, CD&R.[12]

This is not the first time Curo’s entities have been accused of healthcare billing fraud. In 2017, Curo paid $12.2 million to settle allegations that violated the False Claims Act by paying kickbacks in exchange for patient referrals at its facilities in Texas.[13]

PESP has found that there is substantial overlap between the risks associated with private equity ownership of health care companies and the activities targeted by the False Claims Act, which establishes penalties for companies that defraud government programs such as Medicare or Medicaid.

See our report: Money for Nothing: How private equity has defrauded government health programs (2021)

The home health and hospice industries, which are heavily dependent on Medicare and Medicaid, have been identified by federal regulators for increased scrutiny and oversight.[14] In addition, the DOJ has indicated that it will pay special attention to private equity’s role in healthcare. In a February 2024 speech, the DOJ’s head of the civil division noted that private equity firms are “providing express direction for how a provider should conduct their business, or more indirectly by providing revenue targets or other indirect benchmarks intended to prioritize reimbursement.”[15]

Resources

[1] US Department of Justice press release, “Kindred and Related Entities Agree to Pay $19.428M to Settle Federal and State False Claims Act Lawsuits Alleging Ineligible Claims for Hospice Patients,” July 17, 2024. https://www.justice.gov/opa/pr/kindred-and-related-entities-agree-pay-19428m-settle-federal-and-state-false-claims-act

[2] US Department of Justice press release, “Kindred and Related Entities Agree to Pay $19.428M to Settle Federal and State False Claims Act Lawsuits Alleging Ineligible Claims for Hospice Patients,” July 17, 2024. https://www.justice.gov/opa/pr/kindred-and-related-entities-agree-pay-19428m-settle-federal-and-state-false-claims-act

[3] US Department of Justice press release, “Kindred and Related Entities Agree to Pay $19.428M to Settle Federal and State False Claims Act Lawsuits Alleging Ineligible Claims for Hospice Patients,” July 17, 2024. https://www.justice.gov/opa/pr/kindred-and-related-entities-agree-pay-19428m-settle-federal-and-state-false-claims-act

[4] US Department of Justice press release, “Kindred and Related Entities Agree to Pay $19.428M to Settle Federal and State False Claims Act Lawsuits Alleging Ineligible Claims for Hospice Patients,” July 17, 2024. https://www.justice.gov/opa/pr/kindred-and-related-entities-agree-pay-19428m-settle-federal-and-state-false-claims-act

[5]https://www.gentivahs.com/about/. Accessed July 22, 2024.

[6] Clayton, Dubilier & Rice website, https://www.cdr-inc.com/investments#portfolio/nid=3477. Accessed July 30, 2024.

[7] Settlement Agreement for United States ex rel. Pence, et al. v. Curo Health Services Holdings, Inc., et al., Civil Action No. 3:13-00672 (M.D. Tenn.). https://www.justice.gov/opa/media/1360821/dl?inline pg. 1-2.

[8] Olivia Oran and Soyoung Kim, “GTCR looking to sell U.S. hospice firm Curo Health Services -sources,” Reuters, August 12, 2014. https://news.yahoo.com/news/gtcr-looking-sell-u-hospice-212919722.html

[9] Adam Lewis, “PE to pour billions into pair of US healthcare deals,” Pitchbook, April 23, 2023. https://finance.yahoo.com/news/pe-pours-billions-pair-us-050000031.html

[10] Press release by Humana and WCAS, “Humana, Together with TPG Capital and Welsh, Carson, Anderson & Stowe, Announce Agreement to Acquire Curo Health Services,” April 23, 2018. https://www.sec.gov/Archives/edgar/data/49071/000119312518126812/d575440dex991.htm

[11] “Kindred at Home’s hospice, palliative and personal care services rebrand to Gentiva,” Gentiva press release, August 11, 2022. https://www.gentivahs.com/articles/news-and-press/kindred-at-homes-hospice-palliative-and-personal-care-services-rebrand-to-gentiva/

[12] “CD&R Completes Acquisition of Gentiva Health Services,” Clayton, Dubilier & Rice, August 11, 2022. https://www.cdr-inc.com/news/press-release/cdr-completes-acquisition-gentiva-health-services

[13] “Hospice Companies To Pay $12.2 Million To Settle Kickback Claims,” U.S. Attorney’s Office, Northern District of Texas, April 18, 2017. https://www.justice.gov/usao-ndtx/pr/hospice-companies-pay-122-million-settle-kickback-claims

[14] Holly Vossel, “US Justice Department’s Spotlight on Hospice Sends ‘Powerful Message’ to Fraudulent Operators,” Hospice News, June 13, 2023. https://hospicenews.com/2023/06/13/u-s-justice-departments-spotlight-on-hospice-sends-powerful-message-to-fraudulent-operators/

[15] Ben Penn, “US to Prioritize Private Equity’s Role in Healthcare Fraud,” Bloomberg Law, February 22, 2024. https://news.bloomberglaw.com/us-law-week/us-to-prioritize-private-equitys-role-in-healthcare-fraud