Chemed Corporation (CHE), a provider of hospice and plumbing services, has been ordered to repay $50.3 million after a federal audit found the company had recently overbilled Medicare for hospice services.

In November 2021, Chemed warned its hospice unit VITAS had been selected by the Office of Inspector General’s (OIG’s) Office of Audit Services (OAS) for an audit aimed at identifying service providers that may be overcharging the federal government.

The penalty is significantly lower than the overbilling uncovered in the audit.

In July 2022, Chemed disclosed it had received the final audit report from OAS which included a recommendation the company repay $140 million VITAS had previously received from Medicare. Three months prior we published an Exclusive Report, available only to paid DuDil+ members, warning Chemed faced a penalty of up to $147 million.

In its latest quarterly filing, Chemed chose its words carefully when protesting the demand for payment. The company argued certain claims under audit were time barred from being challenged— or ineligible to be reopened— and that the audit methodology was flawed.

Chemed says it paid the $50.3 million demand to remain compliant with Medicare and reserve its right to appeal.

The repayment is 88.5% of Chemed’s net income in the latest quarter and 26.8% of net income for the last nine months. Notably, the repayment is also 16.9% of VITAS’s revenue in the latest quarter.

Chemed did not impair VITAS’s goodwill after testing it October 1st.

The matter comes five years after Chemed paid $75 million to settle a Department of Justice (DOJ) lawsuit alleging the company committed fraud by wrongfully billing for patients who were not terminally ill between 2002-13.

The Exclusive Report we published also uncovered at least a dozen new instances in which VITAS potentially violated the Corporate Integrity Agreement (CIA) Chemed signed in connection with the 2017 DOJ settlement. The potential violations could result in VITAS being barred from participating in federal healthcare programs.

Notably, Chemed’s hospice billing practices have been under federal scrutiny for nearly a quarter of a century.

In addition to a separate DOJ investigation of VITAS’s Florida operations, we’ve also confirmed Texas is investigating Chemed for Medicaid fraud. The Texas investigation has not been disclosed in Chemed’s filings.