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More Charged In Passages Hospice Fraud Scandal


More high-level employees of shuttered Passages Hospice LLC have been charged with health care fraud, according to an indictment released by the U.S. Attorney’s office.

Fraud charges have been brought against Gwen Hilsabeck, who served as a co-administrator; Carmen Velez, who served as the director of clinical services and director of nurses for the Chicago region; and Angela Armenta, who served as director of certified nursing assistants for the Chicago region, according to an indictment filed in the U.S. District Court of the Northern District.

Seth Gillman, 45, a partial owner who founded the company in 2005, was charged in January with health care fraud. According to prosecutors, Passages knowingly over-billed the government by millions of dollars on unnecessary hospice care for seniors.

According to the indictment, Gillman, Hilsabeck, Velez and Armenta participated in an elaborate scheme “to cause Passages Hospice LLC to submit false claims to Medicare and Medicaid for medically unnecessary hospice care, namely, hospice care for patients who were not terminally ill and hospice care that did not qualify for general inpatient care.”

Seth Gillman
Passages Hospice Founder Seth Gillman. Honorable Mention in the 2013 Torch Awards for Marketplace Ethics, hosted by the Better Business Bureau. Credit: YouTube.

Between August 2008 and January 2012, Medicare paid the for-profit hospice company more than $90 million for hospice services, including more than $20 million for general inpatient services. From 2006 to late 2011, Passages submitted claims for about 4,700 patients to Medicare and Medicaid.

“Give patients everything they need, even that little extra that makes life worth living,” Gillman told Life Matters Media in November during the unveiling of an end of life care initiative backed by the National Institute for Nursing Research.

However, federal prosecutors allege Gillman was not so selfless.

Gillman, Hilsabeck, and Passages allegedly paid bonuses to nursing directors and certified nursing assistant directors employed at the company in order to increase the number of patients receiving general inpatient care. In 2012, Medicare’s daily reimbursement for general inpatient care was $671.84; the daily payment for routine care was much lower, $151.23.

According to the FBI, federal agents have interviewed patients, family members and more than 30 former and current Passages employees. Several reported the allegedly fraudulent billing and marketing practices to Medicare and law enforcement.

In February, Passages closed in light of the allegations against Gillman. The hospice operated in four states, yet the majority of services were provided to Illinois seniors. Earlier that month, employees told LMM that they vowed to continue operating for patients’ sake.

All four individual defendants, and Passages, are scheduled to be arraigned June 2 in U.S. District Court. The defendants were charged in an 18-count indictment.

Each count of health care fraud carries a maximum penalty of 10 years in prison and a $250,000 fine. Conspiracy to obstruct a federal audit and making false statements regarding a health care benefit program each carry a maximum sentence of five years in prison and a $250,000 fine. Restitution is mandatory.

Gillman, an attorney who told LMM he founded Passages after witnessing his grandmother’s poor end of life care in a south Florida hospice, was the corporate agent, administrator and one-fourth owner of Lisle-based company. Passages did not operate its own inpatient facility, instead deploying nurses to visit hospice patients in nursing homes and private residences.

Hospice is generally care provided in a patient’s home, but it can also be provided in a center, hospital, nursing home or other long-term care facility for people facing illness near the end of life. The number of hospice patients served has risen more than 25 percent during the last five years from 1.25 million in 2008, according to figures published by the National Hospice and Palliative Care Organization.