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Catch of the Week -- Health Quest Systems and Putnam Hospital Center

Posted  July 13, 2018

This week, DOJ announced a $14.7 million settlement with NY-based Health Quest Systems, Inc. (Health Quest), and its subsidiary hospital Putnam Health Center (Putnam) based on their submission of inflated and otherwise impermissible claims for payment to Medicare and Medicaid, making Health Quest and Putnam our Catch of the Week.

The settlement resolves allegations stemming from three separate lawsuits bought by former Health Quest employees under the qui tam provisions of the False Claims Act. Each whistleblower, or “relator,” will receive a share of the recovery, including a reward of nearly $2 million to one of the relators.

As part of the settlement, Health Quest and Putnam admitted to numerous bad acts that led to the submission of false claims. For example, for six years, Health Quest failed to adequately document evaluations and management services and billed for those services at two levels above what was supported by the medical record. Similarly, for over three years, Health Quest billed for home-health services that lacked adequate support.

Putnam admitted to overpaying two orthopedic surgeons that referred inpatient and outpatient services to the hospital in violation of the Physician Self-Referral Law, also known as the Stark Law. The two physicians received above-fair-market-value compensation from Putnam for the administrative services they provided the hospital.  DOJ alleged that this excessive compensation was at least partially designed to induce referrals from those physicians.

Health Quest will pay $895,427 to the State of New York to address its misconduct’s impact on the New York State Medicaid program. In addition, Health Quest and the Office of Inspector General of the U.S. Department of Health and Human Services have entered a Corporate Integrity Agreement to ensure Health Quest’s future compliance with Medicare and Medicaid’s requirements.

“Today’s settlement holds Heath Quest responsible for false billings to federally funded health care programs, as well as claims tainted by a hospital’s payments to two physicians for administrative services where it appears that one purpose of those payments was to improperly induce referrals,” said United States Attorney Grant C. Jaquith for the Northern District of New York. “Hospitals and providers must be vigilant to make sure that claims accurately reflect medical services provided and are supported by sufficient documentation. We will continue to investigate whistleblower complaints vigorously to protect public funds.”

Tagged in: Anti-Kickback and Stark, Catch of the Week, Healthcare Fraud, Home Health and Hospice, Hospital Fraud, Medicaid, Medical Billing Fraud, Medicare, Multiple Whistleblowers and First-to-File, Upcoding, Whistleblower Case, Whistleblower Rewards,