Former San Diego Hospice employees have reached a $3 million settlement with their past employer, according to documents filed in bankruptcy court last week.
The employees sued the now defunct San Diego Hospice after losing their jobs between November 2012 and this past April, claiming they weren’t given adequate notice, the documents read.
San Diego Hospice began downsizing in 2012 and eventually filed for bankruptcy while under federal investigation into patient eligibility.
About one third of the settlement will be paid in legal fees, the remainder split among as many as 637 employees.
The deal still has to be approved by the bankruptcy court and former employees can also opt out of the settlement.
Negotiations are ongoing with the federal government, according to a source close to the case.
In June, the U.S. Department of Justice filed a $112 million claim against San Diego Hospice for submitting “false claims,” among other things, for payments made in 2009 and 2010.
At the time, the federal government indicated it was conducting a criminal investigation “to determine whether any federal health care offenses...have been committed.”
At issue is whether all the patients San Diego Hospice admitted into care were actually eligible for the specialized care or, if they were, whether they had their prognoses properly documented. To be eligible for hospice, a patient must have a terminal illness – which means less than six months to live.
The federal government is not likely to see much of the $112 million, given the hospice’s remaining assets amount to about $16 million in cash.
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. Negotiations about how much of it can be used to pay creditors is also ongoing, according to a source.
