A division at Minnetonka-based UnitedHealth Group is paying $18 million to settle allegations that it submitted false claims to Medicare for hospice patients who were not terminally ill.

The payment announced this week resolves a whistleblower lawsuit against Optum Palliative and Hospice Care that alleged the company tried to boost the number of patients for whom it could bill the federal Medicare program, without regard to whether they were eligible for and needed hospice services.

The special end-of-life care is intended to comfort the dying. The government says that only Medicare patients with a life expectancy of six months or less are considered terminally ill and eligible for the benefit.

Optum says it acted properly and did not engage in wrongdoing. The division for hospice care previously was called Evercare and is part of UnitedHealth Group’s Optum division for health care services and IT.

“Our seniors rely on the hospice program to provide them with quality care, dignity and respect when they are terminally ill and need end-of-life care,” said Benjamin Mizer, head of the civil division at the U.S. Department of Justice, in a prepared statement. “Such abuses threaten a vulnerable population and jeopardize this important benefit for others under the program.”

Optum/Evercare provides hospice care in 12 U.S. markets, including Arizona and Colorado. It does not operate in Minnesota.

“We are pleased to resolve this issue and are proud of our long record of providing high-quality, compassionate hospice care consistent with the needs of patients and supported by their doctors and family members,” Optum said in a statement. “We believe Evercare Hospice acted properly and did not engage in wrongdoing.”

The government alleged that false claims in the case were submitted to Medicare from Jan. 1, 2007, through Dec. 31, 2013. The lawsuit argued that Optum discouraged doctors from recommending that ineligible patients be discharged from hospice, and failed to ensure that nurses accurately and completely documented patients’ conditions.

The allegations were first raised by former employees in whistleblower lawsuits, which let private parties sue on behalf of the government and share in any recovery. The share to be awarded in the Optum case has not yet been determined, the Justice Department said in a news release.

Since January 2009, the Justice Department has recovered more than $30 billion through False Claims Act cases, including $18.3 billion in cases involving alleged fraud against federal health care programs. Medicare is the federal health insurance program for people ages 65 and older.

The case was being heard by a federal court in Colorado, where the settlement was announced Wednesday.

“The claims resolved by the settlement are allegations only, and there has been no determination of liability,” the Justice Department said in a news release.

In the lawsuit, whistleblowers said that Optum/Evercare does not own or manage facilities that provide hospice care, but contracts with skilled nursing facilities, hospitals and cancer centers that do. The company also provides hospice services in a patient’s home.

Whistleblowers claimed in the lawsuit that workers were pressured to maintain patient census goals and were “called on the carpet” when they discharged ineligible patients from hospice service.

As of November 2011, several of the company’s offices had about 10 percent or more of their patients on service for more than 300 days, with some patients in the program for more than 900 days, according to the lawsuit.

“Many of these types of patients were ultimately live discharged, albeit too late, in good or fair condition after having been on service for more than 300 days,” the lawsuit says, “yet defendants took no measures to report these ineligible patients and provide reimbursement to Medicare.”

 

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