A settlement has been reached to resolve False Claims Act allegations against Prime Healthcare Services and Prime’s Founder and Chief Executive Officer.
The allegations arose from a lawsuit that claimed Prime Healthcare Services and CEO, Dr. Prem Reddy knowingly submitted false claims to Medicare by admitting patients who only needed cheaper, outpatient care.
As part of the settlement, CEO Dr. Prem Reddy, will pay $3.25 million, while Prime Healthcare Services will pay $61.75 million.
Reportedly, the settlement involves the following 10 Prime Healthcare Services-owned hospitals and four Prime Healthcare Foundation-owned hospitals in California:
- Alvarado Hospital Medical Center
- Garden Grove Medical Center
- La Palma Intercommunity Hospital
- Desert Valley Hospital
- Chino Valley Medical Center
- Paradise Valley Hospital
- San Dimas Community Hospital
- Shasta Regional Medical Center
- West Anaheim Medical Center
- Centinela Hospital Medical Center
- Sherman Oaks Hospital
- Montclair Hospital Medical Center
- Huntington Beach Hospital
- Encino Hospital Medical Center
According to the government, allegedly, from 2006 through 2013, Prime engaged in a deliberate corporate-driven scheme to increase inpatient admissions of Medicare beneficiaries who originally presented to the Emergency Departments at 14 Prime hospitals in California. The government claimed that the inpatient admission of these beneficiaries was not medically necessary because their symptoms and treatment needs should have been managed in a less costly outpatient or observation setting. Hospitals generally receive significantly higher payments from Medicare for inpatient admissions as opposed to outpatient treatment; therefore, the admission of beneficiaries who do not need inpatient care, as alleged here, can result in substantial financial harm to the Medicare program. The settlement also resolves allegations that, from 2006 through 2014, Prime engaged in up-coding by falsifying information concerning patient diagnoses, including complications and comorbidities, in order to increase Medicare reimbursement.
“This settlement reflects our ongoing commitment to ensure that health care providers appropriately bill Medicare,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Charging the government for higher cost inpatient services that patients do not need, and for higher-paying diagnoses than the patients have, wastes the country’s valuable health care resources.”
As part of the agreement, Prime Healthcare Services must abide by a five-year “corporate integrity agreement” that requires the company to hire independent consultants to verify its Medicare billings, records show.
The Whistleblower, Karin Berntsen, a former Director of Performance Improvement at Alvarado Hospital Medical Center in San Diego, will receive $17,225,000 as her portion of the settlement amount.
