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Whistleblower Nurse Awarded Damages In San Diego Hospice Suit

The nurse who filed a whistleblower lawsuit nearly two years ago, claiming San Diego Hospice admitted people into care who weren’t eligible, will be awarded damages, according to her attorney.

Lori Rachac could receive as much as a $1 million depending on the final settlement between the federal government and the now defunct hospice, Mark Schlein, a Los Angeles attorney, told inewsource late Tuesday.

“She had the courage to step forward and object to a process going on for many years, spending federal hospice moneys inappropriately,” Schlein said, adding his client feels vindicated.


San Diego Hospice, formerly one of the largest and most respected hospices in the country, declared bankruptcy and closed its doors in early 2013, amid a two-year federal audit and allegations it accepted people into care who weren’t imminently dying.

The federal government claimed it was owed more than $112 million in false claims.

Rachac, a registered nurse who was fired from the hospice in 2011, alleged staff were encouraged to find creative ways to admit people into care who weren’t eligible. A patient must have a terminal illness — less than six months to live —  to qualify for the benefit.

Rachac filed the lawsuit under the state and federal False Claims Act. Tuesday, the federal government officially “intervened,” joining Rachac’s lawsuit. It allows her to collect a portion of the settlement between the hospice and the government. The bankruptcy court is in the final stages of calculating how much of that will be based on the hospice’s remaining assets.

inewsource reported last year, the hospice’s assets amount to about $16 million, but $3 million has since been awarded to former employees. Other creditors and attorneys are also in line for their share, so it’s difficult to know what’s left over for the federal government and Rachac.


The government already received $1 million under terms agreed to earlier.

Under the law, Rachac is entitled to as much as 25 percent of the settlement, but will receive 17 percent, Schlein said.

“It’s realistic the government will be receiving several million dollars,” Schlein said.

An additional $15 million remains in a separate San Diego Hospice Foundation account, but much of that money was received as endowments or as gifts for specific causes. A motion to release less two million from those funds to creditors is now before the courts.