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DOJ Catch of the Week -- Prime Healthcare

Posted  May 27, 2016

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “Catch of the Week” goes to Prime Healthcare Services.  On Wednesday, the Justice Department announced its decision to intervene in a whistleblower lawsuit filed under the False Claims Act against Prime, its founder and CEO Dr. Prem Reddy, and 14 Prime hospitals in California.  The government alleges that at Dr. Reddy’s direction, these hospitals engaged in unnecessary inpatient admissions from their emergency rooms.  See DOJ Press Release.

Specifically, the government claims that Dr. Reddy pressured Prime’s Emergency Department physicians and hospital administrators to raise inpatient admission rates regardless of medically necessity.  According to the government, at Reddy’s direction, Prime’s corporate officers exerted immense pressure on these doctors to admit patients who could have been placed in observation, treated as outpatients or discharged.  As a result of these medically unnecessary admissions, Prime hospitals allegedly submitted false claims to Medicare and other federal health care programs.

In announcing the government’s intervention decision, DOJ Civil Chief General Benjamin C. Mizer emphasized that “[s]chemes such as this one can contribute significantly to the rising cost of health care delivery and create needless patient risk.”  Special Agent Christian J. Schrank of the U.S. Department of Health and Human Services Office of Inspector General echoed this sentiment, noting that “[c]harging for medically unnecessary services, as alleged in this case, raises costs in government health programs and remorselessly passes that bill along to taxpayers.”

The whistleblower lawsuit, United States ex rel. Berntsen v. Prime Healthcare Services, was filed in Los Angeles by relator Karin Bernsten, who worked at one of the Prime hospitals targeted in the action.  The lawsuit was filed under the qui tam provisions of the False Claims Act which allows private parties to sue on behalf of the United States and share in any government recovery that follows.  The False Claims Act also allows the government to intervene in the case, as it has decided to do here.

Tagged in: Catch of the Week, FCA Federal, Lack of Medical Necessity, Whistleblower Case,