Hospital Chain Paying More Than a Quarter BILLION Dollars to Resolve False Billing and Kickback Allegations

When my kids were small, we spent many a lazy Sunday afternoon watching monster versus monster movies, you know, like Godzilla versus Mothra.

Although today’s post doesn’t feature any Japanese creatures from Monster Island, it does feature a similar, two-monsters-in-one tale, drawing from, and compounding on, violations previously featured on the blog.

And, although Tokyo wasn’t destroyed, the U.S. government picked up close a quarter billion dollar settlement from the evil creature, oh, hospital company.

The first monster compounds on the crime of turning outpatient services into fraudulent inpatient claims. See my earlier post, Alchemist Can’t Turn Outpatients Into Inpatients For Less Then $18.3 Million.

The second monster is a chimera of sorts, a continuation of the “lay entity practices medicine via kickback and other pressure on physicians” undertow that pervades healthcare today. Although, to my knowledge, no one died. But see my previous post on this in which some are alleged to have been knocked off, Far Too “Friendly Physician” To Plead Guilty In $60 Million Healthcare Fraud. Will Murder Charges Follow?

Last week, the U.S. Department of Justice announced that Health Management Associates, LLC (HMA), formerly a U.S. hospital chain headquartered in Naples, Florida, will pay a total of over $260 million to resolve criminal charges and civil claims relating to an alleged scheme in which HMA knowingly billed government health care programs for inpatient services that should have been billed as outpatient or observation services, paid remuneration to physicians in return for patient referrals, and submitted inflated claims for emergency department facility fees.

According to admissions made in the resolution documents, in which HMA agrees to pay a $35 million monetary penalty in regard to criminal allegations, HMA instituted a formal and aggressive plan to improperly increase overall emergency department inpatient admissions at all HMA hospitals, including at Carlisle Regional Medical Center.

As part of the plan, HMA set mandatory company-wide admission rate benchmarks for patients presenting to HMA hospital emergency departments – a range of 15 to 20 percent for all patients presenting to the emergency department, depending on the HMA hospital, and 50 percent for patients 65 and older (i.e. Medicare beneficiaries) – solely to increase HMA revenue. HMA executives and HMA hospital administrators executed the scheme by pressuring, coercing and inducing physicians and medical directors to meet the mandatory admission rate benchmarks and admit patients who did not need impatient admission through a variety of means, including by threatening to fire physicians and medical directors if they did not increase the number of patients admitted.

HMA also agreed to pay $216 million as part of a related civil settlement. The civil settlement resolves several allegations:

1. HMA’s liability for submitting false claims between 2008 and 2012 as part of its corporate-wide scheme to increase inpatient admissions of Medicare, Medicaid and the Department of Defense’s (DOD) TRICARE program beneficiaries over the age of 65. The government alleged that the inpatient admission of these beneficiaries was not medically necessary, and that the care needed by, and provided to, these beneficiaries should have been provided in a less costly outpatient or observation setting.
2. That during the period from 2003 through 2011, two HMA hospitals in Florida, Charlotte Regional Medical Center and Peace River Medical Center, billed federal health care programs for services referred by physicians to whom HMA provided remuneration in return for patient referrals. To induce patient referrals, Charlotte Regional provided a local physician group with free office space and staff, as well as direct payments, which purportedly covered overhead and administrative costs incurred by the group for its management of a Charlotte Regional physician. HMA also provided another local physician with free rent and upgrades to his office space. HMA agreed to pay $93.5 million to resolve these civil allegations, with the United States receiving $87.96 million, and the State of Florida receiving $5.54 million.
3. That two former HMA hospitals, Lancaster Regional Medical Center and Heart of Lancaster Medical Center in Pennsylvania, billed federal health care programs for services referred by physicians with whom the facilities had improper financial relationships. These relationships stemmed from HMA’s excessive payments to (1) a large physician group in return for two businesses owned by the group and for services allegedly performed by the group, and (2) a local surgeon that exceeded the value of the services provided. The government alleged that these arrangements were structured in this manner to disguise payments intended to induce the referral of patients. HMA agreed to pay $55 million to the United States to resolve these civil allegations.
4. That Crossgates Hospital, an HMA facility in Brandon, Mississippi, leased space to a local physician from Jan. 15, 2005 through Jan. 14, 2007, but required the physician to pay rent for only half of the space he was actually occupying, in return for patient referrals to Crossgates Hospital. HMA agreed to pay $425,000 to the United States to resolve these civil allegations.
5. That from September 2009 through December 2011, certain HMA hospitals submitted claims to Medicare and Medicaid seeking reimbursement for falsely inflated emergency department facility charges. HMA agreed to pay $12 million to resolve these civil allegations, with $11.028 million being paid to the United States and $972,000 being paid to participating states.

The allegations resolved by the settlement were originally brought in eight whistleblower lawsuits filed under the False Claims Act. One whistleblower will receive approximately $15 million as a share of the recovery, and two others were reported to be sharing approximately $12.4 million. Other whistleblower shares are to be determined.

The next time a hospital, ASC, or other facility tells you that the deal it proposes is valid and that its attorneys have vetted it:

(1) Remember HMA;

(2) Think again and for yourself; and

(3) Get your own advice on the compliance risk.

[Thank you, Jay, for bringing the HMA settlement to my attention!]