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Hospital Fraud

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Sutter Health – Medicare Advantage Fraud ($90 million)

Constantine Cannon represented whistleblower Kathy Ormsby in a False Claims Act litigation against Sutter Health and its affiliates that resulted in a $90 million settlement – the largest Medicare Advantage FCA settlement to date against a hospital system, and the second largest reported Medicare Advantage fraud settlement to date.  Ms. Ormsby, a former Risk Adjustment Factor Project Manager at Sutter Health affiliate Palo Alto Medical Foundation, alleged the Sutter Health defendants inflated the number and severity of Medicare Advantage patient diagnoses, manipulated patient records, ignored audit “red flags,” and engaged in other misconduct to increase patient risk scores and obtain Medicare Advantage payments to which they were not entitled.  In Spring 2019, the Government intervened in Ms. Ormsby’s case as to PAMF, and Ms. Ormsby continued to pursue her claims against the other Sutter Health affiliates on a non-intervened basis. This settlement resolves all claims and follows Sutter’s unsuccessful effort to dismiss both the complaints.  Read more: Press Release; Whistleblower Insider.

August 17, 2021

Following a voluntary self-disclosure to authorities, Blessing Hospital in Quincy, Illinois, has agreed to pay $2.82 million to resolve allegations that it submitted false claims for the facility component of medically unnecessary cardiac catheterization procedures.  The federal government will receive $2.6 million of the settlement, with the remainder going to Illinois, Iowa, and Missouri.  USAO CD IL

August 5, 2021

Ascension Michigan and related hospitals, which allegedly billed federal healthcare programs for services performed by a gynecologic oncologist that were not medically necessary or rendered as represented, has agreed to pay $2.8 million to resolve their liability under the False Claims Act.  The settlement resolves claims from a 2017 qui tam suit by whistleblowers Pamela Satchwell, Dawn Kasdorf, and Bethany Silva-Gomez, that Ascension knowingly submitted claims for medically unnecessary hysterectomies and chemotherapy, and unrendered evaluation and management services.  Spurred by patient complaints, Ascension launched an internal investigation, ultimately self-disclosing the misconduct to the government in 2018.  As part of the settlement, Satchwell, Kasdorf, and Silva-Gomez will share in a $532,000 award.  USAO EDMI

July 19, 2021

Prime Healthcare Services, one of the largest hospital systems in the nation, its founder and CEO Dr. Prem Reddy, and interventional cardiologist Dr. Siva Arunasalam have agreed to pay $37.5 million to resolve two suits filed by former executive Martin Mansukhani, and former employees Marsha Arnold and Joseph Hill.  In violation of the federal and California False Claims Acts, certain Prime hospitals had allegedly submitted inflated invoices to Medi-Cal and other government health programs, or submitted claims to Medi-Cal and Medicare under Arunasalam’s provider number for services provided by an excluded physician.  Additionally, in acquiring Arunasalam’s physician practice and surgery center, Prime allegedly paid above fair market value for referrals from Arunasalam to one of their hospitals.  For being the first to file, one of the whistleblowers, Mansukhani, will receive a relator’s share of nearly $10 million.  CA AG; USAO CDCA

July 2, 2021

An Ohio-based hospital system that has since been acquired by the Cleveland Clinic Foundation has agreed to pay over $21 million to resolve alleged violations of the Anti-Kickback Statute, Physician Self-Referral Law, and False Claims Act.  Between 2010 and 2016, Akron General Health System (AGHS) allegedly paid area physician groups far above fair market value in order to induce referrals, then submitted claims arising from those illegal referrals to federal healthcare programs.  The settlement resolves a qui tam suit brought forth by former internal audit director at AGHS, Beverly Brouse, and Ethical Solutions LLC.  DOJ

Catch of the Week: University of Miami to Pay $22 Million to Resolve Allegations of Lab Test Fraud

Posted  05/14/21
By Leah Judge
University of Miami logo
The University of Miami will pay $22 million to resolve three False Claims Act lawsuits, the first of which was filed in 2013.  The government alleged that UM, which operates a medical school out of Jackson Memorial Hospital and an extensive health system spanning four south Florida counties, fraudulently billed government health care programs to boost declining revenues.  Jackson Memorial will separately pay $1.1...

May 10, 2021

The University of Miami, which operates multiple hospitals and other healthcare facilities, will pay $22 million to resolve claims arising from allegedly fraudulent billing submitted to federal healthcare programs for laboratory services.  The university was alleged to have billed certain laboratory tests as having been provided at hospital facilities instead of at physician offices, without satisfying the requirements for that more costly hospital facility billing, including notice requirements.  In addition, the university was alleged to have performed and billed for a pre-set panel of tests for all kidney transplant patients, although not all included tests were medically necessary.  Finally, the university and Jackson Memorial Hospital, which jointly operated the kidney transplant program, were alleged to have violated related party restrictions by billing for pre-transplant laboratory tests ordered by JMH from the university, and JMH will pay an additional $1.1 million to settle these allegations.  The settlement resolves claims made in three separate qui tam lawsuits; the whistleblower's share has not yet been determined.  DOJ; USAO SD FL

April 23, 2021

Bobby Rouse, a former executive with Continuum Healthcare LLC, which owned Houston hospital Westbury Community Hospital as well as area mental health centers, was sentenced to ten years in prison following his guilty plea on charges arising from an unlawful kickback scheme.  At the direction of Rouse and co-conspirators, Continuum paid kickbacks for the referral of patients to partial hospitalization programs at Continuum facilities, many of whom did not qualify for PHP services.  In total, Continuum billed Medicare approximately $189 million for fraudulent PHP services, and Medicaid paid approximately $66 million on those clams. Fourteen individuals have been charged for the fraud.  USAO SD TX

March 5, 2021

A substance abuse treatment facility and two inpatient psychiatric hospitals in Ohio, along with their corporate parent, have agreed to pay $10.25 million to resolve claims under the Anti-Kickback Statute and False Claims Act.  According to DOJ, between 2013 and 2019, The Woods at Parkside, Cambridge Behavioral Hospital, and Ridgeview Behavioral Hospital—all owned by Florida-based Oglethorpe Inc.—allegedly provided improper inducements in the form of free long-distance transportation in order to entice patients to seek treatment at their facilities, and then submitted claims for services provided to those patients to Medicare.  The case was initiated by a former client advocate working at Cambridge, Darlene Baker.  DOJ; USAO SDOH

December 18, 2020

Texas Heart Hospital of the Southwest LLP and its affiliate THHBP Management Company LLC will pay $48 million to resolve claims brought in a whistleblower suit by two of the hospitals’ physicians alleging that the defendants violated the False Claims Act, Stark Law, and Anti-Kickback Statute.  Agreements between the hospital and its physician-owners required the doctors to have 48 patient-contacts a year in order to maintain their ownership interests.  The U.S. did not intervene in the action; the whistleblowers, Dr. Mitchell Magee and Dr. Todd Dewey, will collectively receive $13.92 million, 29% of the total settlement, as a whistleblower reward.  DOJ
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