Hospice Owner and Biller Sentenced for Roles in Hospice Fraud ­and Medicare Fraud Scheme

The owner of two California-based hospice companies and his biller/consultant have been sentenced to one year and a day in prison each for their roles in a $9 million hospice fraud scheme.

In addition, Gayk Akhsharumov, the owner of San Gabriel Hospice and Palliative Care Inc. and Broadway Hospice Inc., was ordered to pay nearly $9.2 million in restitution; Karen Sarkisyan aka Kevin Sarkisyan was ordered to pay nearly $3.7 million in restitution in this hospice fraud scheme.

The Healthcare Fraud Scheme

According to court documents, Akhsharumov hid his ownership and control of the two hospices from Medicare, inserted nominee owners, paid kickbacks to patient recruiters, and profited from the scheme.

In September 2022, the two were charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit healthcare fraud, healthcare fraud, conspiracy to commit money laundering, and money laundering for their roles in an alleged scheme to submit false Medicare claims. The fraud took place between January 2018 and May 2021.

The Paycheck Protection Program Fraud

Sarkisyan and Akhsharumov also were charged with wire fraud and theft of government property for their roles in an alleged scheme to fraudulently obtain PPP funds as part of an ongoing initiative targeting pandemic relief fraud.

According to court documents, In April 2020, after San Gabriel had ceased operations, Akhsharumov used the company to fraudulently obtain COVID-19 relief funds. He submitted fraudulent loan applications to the Small Business Administration for an Economic Injury Disaster Loan and to a financial institution for a Paycheck Protection Program loan, for which San Gabriel received $50,000.

He stole approximately $91,483 deposited into San Gabriel’s bank account through the Provider Relief Fund program, a Department of Health and Human Services program that was intended to rapidly distribute pandemic-related funding to healthcare providers that met certain criteria.

In April 2023, Sarkisyan pleaded guilty to one count of conspiracy to defraud the United States by submitting false enrollment applications to Medicare that hid the real owners of a fraudulent hospice company, which then submitted more than $3.1 million in false and fraudulent claims to Medicare. In March 2023, Akhsharumov pleaded guilty to healthcare fraud conspiracy.

Hospice Oversight Strengthened in Some States, or Was it?

In July 2023, the Centers for Medicare & Medicaid (CMS) regulators announced enhanced oversight for new hospices in Arizona, California, Nevada and Texas. CMS, which pays for most of American hospice care, announced that this change was spurred by “numerous reports of hospice fraud, waste, and abuse” and “serious concerns about market oversaturation.”

However, a report from ProPublica found that the new regs have done little to slow the hospice boom in those states. “CMS data from last year shows that these four states continued to drive most of the growth of new Medicare-certified hospices in the country, with two-thirds of all certifications taking place there,” the article notes.

CMS Increases Hospice Oversight

In August 2023, CMS posted a blog outlining how it was handling issues relating to fraud and abuse in the hospice system. As part of increased oversight, CMS said it was initiating a pilot project to review hospice claims following an individual’s first 90 days of hospice care.

CMS also proposed several regulatory changes to “better tackle hospice fraud.” They include:

• Prohibit the transfer of the provider agreement and Medicare billing privileges of a new hospice for 36 months — like the existing rules for home health agencies.
• Clarify that the definition of “Managing Employee” on the Medicare enrollment application form includes the administrator and medical director of a hospice.
• Implement a hospice Special Focus Program, as required in the Consolidated Appropriations Act, 2021, that would increase oversight of poor-performing hospices that have repeated cycles of serious health and safety deficiencies.
• Include criminal background checks for owners upon initial Medicare enrollment.

How We Can Help

Hospice care operators would be well advised to create compliance programs to address in-house procedures for submitting claims to Medicare. The Health Law Offices of Anthony C. Vitale represents the interests of hospice providers and can assist with issues relating to Medicare and Medicaid.