Passages Hospice owner, nursing director plead guilty to $7M health fraud

CHICAGO (WLS) -- An attorney and founder of the now-shuttered Passages Hospice has pleaded guilty to falsifying health care claims in an elaborate, multi-year Chicago scam.

Seth Gillman 47, was accused of using sick people near the end of their lives as props to line his own pockets. Gillman put patients on hospice care when they didn't need it and over-billed the government for procedures they didn't require.

Federal prosecutors in Chicago say the loss to the taxpayers through Medicare being bilked was more than $7 million.

Gillman, a Lincolnwood resident who founded the Illinois company in 2005, faces up to 10 years in prison, according to the U.S. Attorney. The scheme ran between August of 2008 and January 2012, investigators found. During that time, Passages received more than $90 million in Medicare payments for hospice services, including more than $20 million billed as general inpatient services.

Gillman was indicted in May 2014 along with three other Passages employees, including former nursing director Carmen Velez, who also pleaded guilty to one count of conspiracy to defraud the U.S. government.

Velez, 39, admitted to altering patient records to reflect a need for general inpatient care before the records were handed over to an auditor working on behalf of the Centers for Medicare and Medicaid Services.

Federal agents questioned patients, family members and nearly three dozen former Passages employees. Several reported the allegedly fraudulent billing and marketing practices to Medicare and law enforcement.

Hospice care is usually arranged for patients with a life-expectancy of six months or less. Hospice is frequently provided in a patient's home, but can be in hospital, nursing home or long-term care facility.