May 8, 2015

DOJ Catch of the Week — Health Management Associates

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “catch of the week” goes to Health Management Associates Inc.  Yesterday, the hospital chain and 14 hospitals it previously owned and operated, along with 2 other hospitals, agreed to collectively pay $15.69 million to settle whistleblower charges they violated the False Claims Act by seeking and receiving Medicare reimbursement for Intensive Outpatient Psychotherapy (IOP) services that were not medically reasonable or necessary.  In announcing the settlement, Principal Deputy Assistant Attorney General Benjamin C. Mizer of the DOJ’s Civil Division said: “Hospitals that participate in the Medicare program must ensure that the services they provide and bill for are based on the medical needs of patients rather than the desire to maximize profits.”  See DOJ Press Release.

IOP services consist of active treatment to individuals with mental disorders which Medicare will pay for as long as several specific requirements are met including, most notably, that the services are reasonable and necessary for the diagnosis and treatment of the patient’s condition.  According to the government, beginning as early as 2005 and in some cases continuing into 2013, the settling hospitals knowingly submitted claims for IOP services that did not qualify for Medicare reimbursement because, among other things: the patient’s condition did not qualify for IOP; the patient’s treatments were not provided pursuant to the necessary individualized treatment plan; the patient’s progress was not being adequately tracked or documented; the patient received an inappropriate level of treatment; and the therapy provided was recreational and not therapeutic.  The IOP services in question were typically performed on the providers’ behalf by Louisiana-based Allegiance Health Management.

The settling hospitals include:

  • The following 14 hospitals formerly owned and operated by Health Management Associates: Central Mississippi Medical Center (MI), Crossgate River Oaks (MI), Dallas Regional Medical Center (TX), Davis Regional Medical Center (NC), East Georgia Regional Medical Center (GA), Gilmore Regional Medical Center (MI), Lake Norman Regional Medical Center (NC), Lehigh Regional Medical Center (FL), Medical Center of Southeastern Oklahoma (OK), Natchez Community Hospital (MI), Northwest Mississippi Regional Medical Center (MI), Santa Rosa Medical Center (FL), Southwest Regional Medical Center (AK), and Summit Medical Center (AK). They will collectively pay $15 million.
  • Community Health Systems and its subsidiary Wesley Medical Center in Mississippi, which agreed to pay $210,000.
  • North Texas Medical Center in Texas, which agreed to pay $480,000.

In October 2013, the DOJ settled similar charges with LifePoint Hospitals Inc. and two of its subsidiaries, Minden Medical Center and Bolivar Medical Center.  They collectively paid $4,672,469.  The allegations in this matter were first raised in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.  The whistleblower will receive a whistleblower award of $2,667,300.

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