Agape eldercare, hospice centers hit with lawsuits alleging unnecessary billings

Jan. 31--COLUMBIA, S.C. -- Agape, one of South Carolina's largest elder care businesses, is vigorously contesting an ongoing federal civil lawsuit filed by two former employees who allege, among other things, that Agape was putting patients in hospice care early to make more in Medicare payments.

The lawsuit alleges Agape and its care facilities "wrongfully obtained millions of dollars from the United States that they were not entitled to receive," according to charges by two former Agape employees, Brianna Michaels and Amy Whitesides. Both worked in the company's hospice programs in the Rock Hill area.

The federal dollars in question come from Medicare, Medicaid and Tricare, the lawsuit alleges. Allegations against Agape include that the company admitted patients to hospice to get extra Medicare federal dollars, when the patients were allegedly not in danger of dying soon and thus not qualified for federal Medicare dollars.

Agape's CEO and founder, Scott Middleton, issued a statement Friday disputing the allegations and charging they come from "two disgruntled former employees."

"Agape firmly denies all these allegations and has vigorously defended itself," said Middleton, whose Agape headquarters in downtown Columbia has played a role in revitalizing Main Street. "Agape has a strong corporate compliance program, and our policies are to comply with all state and federal laws."

Agape has some 2,486 employees who work at more than 20 care centers around South Carolina. It receives millions in reimbursement of federal healthcare dollars.

Michaels' and Whitesides' lawsuit -- originally filed in December 2012 under seal -- is what is known as a qui tam action. That is a lawsuit allowed under federal law whereby a private party can bring a civil action alleging a company is making false claims to the government to get federal dollars. The private party is usually deemed a "whistleblower" -- a person who gained knowledge of the alleged false claims by virtue of his or her association with the company.

Once a qui tam is brought, the lawsuit is kept under seal while federal authorities investigate. In some cases, prosecutors and FBI or other law agents will then take over the case. Sometimes federal prosecutors decline to take over the case. In that event, the private plaintiff can continue the lawsuit and seek to recover damages without active help from the government.

In Michaels' and Whitesides' lawsuit, the federal government and the FBI investigated but decided not to pursue the matter.

Bill Nettles, U.S. attorney for South Carolina, declined to say why.

Although the federal government is now not active in the Agape case, it still can get part of any monetary award by a jury, should a jury determine the company made false claims to get federal money. Each individual false claim is subject to a maximum $11,000 fine.

In a press statement, Middleton said his company conducts its own audits to make sure it is complying with federal regulations and pointedly noted, "The federal government did not intervene in the case after thoroughly investigating these allegations."

Although Agape's lawyers have whittled the scope of the case down, U.S. Judge Joe Anderson is allowing the case to go forward and has tentatively set a trial date in September, should a settlement not be reached. Additionally, Anderson has set May as a date for a "bellwether trial" -- when both sides would present a small number of disputed claims to a jury to see what a jury would do.

In a bellwether trial, if a jury finds a company liable, the company will often make serious settlement offers rather than to go to trial on a larger universe of disputed claims.

Exactly how many claims are in dispute is not clear from the public record of the case. Lawyers in the case would not comment.

Agape has also been hit by two somewhat related civil lawsuits in state court in Richland County, both alleging wrongful termination.

In one, ex-Agape employee Kim Stroud, who worked for Agape from 2007 to last August in Columbia, alleges the company fired her for cooperating with the FBI when it was investigating the qui tam lawsuit. Stroud's lawsuit says she held a variety positions with Agape companies, including administrative assistant to Middleton. After firing Stroud, Agape executives made false and damaging statements about her, her lawsuit says.

Ex-Agape registered nurse Birgitta Bailey alleges she was terminated from the Kathwood Assisted Living Center for recommending special nursing treatment for some clients -- outside treatment Bailey believed was warranted but Agape managers objected to because the company would lose money if the client got the outside treatment.

In legal answers to Bailey's and Stroud's lawsuits, Agape denied the allegations.

In a prepared statement, Middleton noted Stroud and Bailey are both "former, terminated employees. Agape strenuously denies each and every allegation raised in each lawsuit and looks forward to the day when it can present these cases to a jury."

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