September 20, 2014
Lori Rachac was a nurse at what was then one of the largest and best-respected hospices in the United States in 2011. Her tenure at San Diego Hospice came to an abrupt end when Rachac blew the whistle on fraudulent practices.
According to the law, a patient must have a life expectancy of no more than six months and must have a terminal illness to be admitted into a federally funded hospice. Rachac stated that at San Diego Hospice, she and the rest of the staff were encouraged to “get creative” in finding ways to admit patients who were not actually terminally ill and should not have qualified for the benefits provided by the hospice.
When Rachac blew the whistle on the illegal and immoral activities, she was fired from her position at San Diego Hospice. Rachac filed a lawsuit against the hospice.
Hundreds of Millions in Fraudulent Federal Funds
The federal government conducted a two-year audit. In that time, San Diego Hospice shut its doors and declared bankruptcy.
According to the federal government’s findings, the San Diego Hospice had racked up over $112 million in false claims money. The process began when Rachac filed her suit under the federal and state False Claims Act. After two years of research and proceedings, the federal government officially intervened and joined her suit.
When Doing the Right Thing Pays Off
To give a more concrete idea of how much money San Diego Hospice was pilfering from the federal government, hospices receive approximately $150/day for each of their patients. A patient with a terminal illness who lives 6 months in hospice will cost the US government just over $27,000.
Under the federal False Claims Act, the US government may impose damages up to $11,000 per each false claim. With the government claiming that the hospice owes $112 million, this sets the number of false claims somewhere around 10,000.
After two years of audits, the US government has officially and legally claimed a stake in prosecuting Lori Rachac’s False Claims Act lawsuit and in reclaiming damages from San Diego Hospice.