The VITAS segment of the Company’s business operates in a heavily-regulated industry. As a result, the Company is subjected to inquiries and investigations by various government agencies, which can result in penalties including repayment obligations, funding withholding, or debarment, as well as to lawsuits, including qui tam actions. The following describes the material lawsuits and investigations of which the Company is currently aware.

Regulatory Matters and Litigation

VITAS was one of a group of hospice providers selected by the Office of the Inspector General’s (“OIG”) Office of Audit Services (“OAS”) for inclusion in an audit of the provision of elevated level-of-care hospice services, which reviewed 100 out of a total population of 50,850 inpatient and continuous care claims.

On August 29, 2022, VITAS received a demand letter from its Medicare Administrative Contractor (“MAC”) seeking repayment of $50.3 million. VITAS appealed the overpayment decision and deposited $50.3 million under the “Immediate Recoupment” process.

On February 3, 2025, an Administrative Law Judge (“ALJ”) ruled that VITAS’ care met Medicare’s hospice standards for the applicable higher level of care as originally billed for all but one of the claims appealed, and therefore VITAS was entitled to receive payment for all such claims. With respect to the one claim that the judge did not fully side with VITAS, the judge found that four of the five days billed met the applicable standard and only one day did not.

In a letter dated March 18, 2025, VITAS’ MAC provided notice that due to the ALJ’s ruling the total overpayment amount was reduced to a de minimis amount, and on April 1, 2025 refunded VITAS all previously unreturned deposited amounts in excess of that dollar figure.

As a result of the previously disclosed cybersecurity incident and data breach on October 24, 2025, multiple class action lawsuits were filed against VITAS alleging various causes of action and seeking damages resulting from the breach. All outstanding cases have been consolidated and the Company has reached an agreement to settle them for a non-material amount fully covered by VITAS’ cybersecurity insurance.

Regardless of the outcome of the preceding matters, dealing with the various regulatory agencies and opposing parties can adversely affect us through defense costs, potential payments, withholding of governmental funding, diversion of management time, and related publicity.