Hospice owner sentenced to 6 years in $20 million SNF kickback scheme

The owner of an Illinois hospice company was sentenced to six and a half years in federal prison on Tuesday for his role in a Medicare fraud scheme that paid kickbacks to nursing homes.

Seth Gillman owned Passages Hospice LLC, which grew to be the largest hospice provider in the state before Gillman was charged in 2014 with inappropriately designating nursing home residents as hospice patients and overbilling for hospice services.

Gillman also was accused of paying kickbacks to nursing homes that participated in the scheme, as well as providing residents of his family's nursing home chain, Asta Healthcare, with fraudulent hospice services through Passages. Those residents often received services for years, far beyond the six-month cap in place for federal funding for hospice services, authorities said.

The family of some former Passages patients told the Chicago Tribune that employees told them their loved ones were terminally ill, when they actually weren't, in order to move them to hospice care or the more lucrative general inpatient care, or GIP.

For each resident bumped up to GIP — which increased their average Medicare payment from $150 per day to over $600 per day — Gillman reportedly paid himself $75 per day. These “bonuses” added up to $1.2 million in 2009 and 2010, on top of his $320,000 salary, the Tribune reported.

The skilled nursing providers who designated residents as GIP-eligible also would receive $250 per day for each patient they upgraded, according to prosecutors. The nursing home providers named by federal investigators as participants in Gillman's scheme have not been charged.

Millions of the fraudulent Medicare funds were used by Gillman to purchase airplanes for the company, luxury sports cars and a habit of “ingesting cocaine on a daily basis,” court records show.

"I am ashamed of what I did and I am sorry for it and I have no excuse," Gillman told the court on Tuesday. "I betrayed the trust of Medicare and I besmirched the integrity of hospice altogether. I was stupid and I was wrong."

Other Passages employees have also been charged in the case, including a former director of nursing who pleaded guilty last year.