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Catch of the Week — Florida Hospital Chain CEO Settles False Billing Allegations

Posted  May 3, 2019

This week’s Catch of the Week highlights former hospital executive Gary D. Newsome’s settlement resolving false billing and kickback allegations. From 2008 to 2013, Newsome served as CEO of Naples, Florida-based hospital chain Health Management Associates, LLC (HMA). He will pay $3.46 million to resolve federal prosecutors’ claims that HMA, under his leadership, pressured doctors in the emergency department to admit patients who did not need hospitalization and could have instead been treated on a less costly outpatient or observation basis.

The settlement also resolves allegations Newsome caused HMA to make bonus payments to contracted physicians, and to inappropriately condition the hospital’s contracts with EmCare—a company that employed HMA physicians—on increased emergency patient admissions. As a result of the scheme, the Justice Department says HMA submitted false claims for payment for beneficiaries covered by the federally funded Medicare program.

When executives orchestrate corporate fraud, prosecutors and regulators have a variety of tools available to hold both the corporation and the individuals accountable, including criminal charges, civil penalties, and exclusion from government programs.

Newsome’s resolution is the latest in a series of settlements for the fraudulent billing scheme. In September 2018, HMA agreed to pay over $96 million to resolve civil and criminal claims for the conduct. An HMA subsidiary separately agreed to pay $3.25 million. EmCare settled its claims for $29.6 million in December 2017.

“A physician’s health care decisions should be driven by what is in the patient’s best interest, not by what helps line a provider’s pockets,” said Barbara Bowens, Acting U.S. Attorney for South Carolina, in a Justice Department press release. “The U.S. Attorney’s Office will not tolerate false claims based on unnecessary hospital admissions, which drive up health care costs and can harm patients.”

Whistleblowers Jacqueline Meyer, a former EmCare employee, and J. Michael Cowling, a former HMA employee, initiated the lawsuit under the False Claims Act (FCA). The FCA empowers individuals to expose fraud on the government by filing a lawsuit on behalf of the United States. The FCA incentivizes individuals with insider knowledge by allowing successful whistleblowers to share in the government’s recovery.


Tagged in: Catch of the Week, FCA Federal, Healthcare Fraud, Hospital Fraud,