Hospital Chain Agrees to Pay More Than $260 Million to Resolve False Claims Act Lawsuits

Mr. Louthian and the Louthian Law Firm provided me with excellent legal services regarding a legal issue with a major corporation.

Errick Bethel Sr.

Mr. Louthian and the Louthian Law Firm provided me with excellent legal services regarding a legal issue with a major corporation.

Errick Bethel Sr.
November 15, 2018

The federal False Claims Act (FCA) and related qui tam legal actions, as you can see from the size of the settlement, is a powerful tool that can be used to discourage healthcare providers from defrauding government health programs. A successful case can also hold accountable those who engage in fraud and other illegal acts.

Legal claims involving alleged billing for unnecessary hospital claims and illegal kickbacks to referring physicians will cost a hospital chain more than $260 million to settle, according to a Department of Justice (DOJ) press release. Health Management Associates, LLC (HMA), which was purchased by Community Health Systems Inc., resolved criminal charges and civil claims relating to a scheme to defraud the United States in September.

HMA agreed to pay $216 million for an FCA civil settlement. It ends HMA’s potential liability for submitting false claims between 2008 and 2012 as part of their scheme to increase inpatient admissions of Medicare, Medicaid and the Department of Defense’s TRICARE program beneficiaries.  The DOJ claimed the inpatient admissions of these people were not medically necessary, and the care needed by, and provided to, these beneficiaries should have been given in a less expensive outpatient or observation setting.

The issues resolved were first raised in eight lawsuits filed in various federal courts under the qui tam, or whistleblower, provisions of the FCA. The law allows private parties to sue on behalf of the government for false claims, and they can receive a share of the recovery.  A number of whistleblowers involved in the cases will receive $27.4 million, with more awards yet to be determined.

The DOJ accused HMA of knowingly billing government health care programs for inpatient services that should have been billed as less expensive outpatient or observation services. It also paid physicians for patient referrals and billed inflated claims for emergency department fees.

HMA signed onto a three-year Non-Prosecution Agreement (NPA) with the Criminal Division’s Fraud Section to resolve pending criminal charges. The charges concern a scheme to defraud federal health care programs by illegally pressuring and inducing doctors working with HMA hospitals to increase emergency department patient admissions whether or not they were medically necessary.  HMA will pay a $35 million penalty as part of the NPA.

As part of the NPA, HMA admitted it created a plan to illegally increase overall emergency department inpatient admissions at its hospitals.  It created a mandatory admission rate for patients going to emergency departments (15% to 20% of all those coming to their emergency departments, depending on the hospital, and 50% for those 65 and older (Medicare beneficiaries)) just to increase company revenue.

Company executives and hospital administrators illegally pressured, coerced and induced doctors and medical directors to meet these admission benchmarks and admit patients even if they didn’t need to be admitted. These efforts included threatening to fire physicians and medical directors if they failed to boost the number of patients being admitted.

If you know of a healthcare provider that may be engaged in fraud, contact our office so we can talk about the situation, how the FCA may apply and what we can do to help.

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