Physician groups to pay $33M to settle kickback allegations tied to HMA hospitals

Two physician groups will pay more than $33 million to resolve allegations they received kickbacks from Naples-based Health Management Associates Inc. for patient referrals to its hospitals.

The settlements stem from a series of whistleblower lawsuits filed against the now defunct HMA.

The U.S. Department of Justice joined eight suits brought under the False Claims Act against HMA, including one contending former CEO Gary Newsome pushed unnecessary admissions for false billings.

The suits were filed before Tennessee-based Community Health Systems purchased HMA in 2014. The multimillion-dollar acquisition involved more than 20 hospitals, including the two Physicians Regional campuses in Collier County. 

Tomi Galin, a spokeswoman for Community Health Systems, declined to comment.

The Department of Justice has reached settlements with Dallas-based EmCare Inc. and Physician's Alliance Ltd., which has headquarters in Lancaster, Pennsylvania. 

EmCare, which provides physicians to hospital emergency rooms, will pay $29.6 million to resolve allegations it received kickbacks from HMA to illegally recommend patients be admitted to its hospitals when they didn't need to stay overnight.

On average, Medicare pays at least three times as much for inpatients as it does for outpatients, who are at hospital for less than 24 hours.

HMA allegedly paid bonuses to EmCare physicians from 2008-12 and based its decision on new contract awards and renewals with EmCare on increased admissions of emergency room patients. 

As a result of another lawsuit, Physician's Alliance and three of its executives — Lee Meyers, Michael Warren and Wallace Longton — will pay $4 million, plus a percentage of the money the company received from the sale of its interest in a joint venture with HMA. The physicians' group allegedly accepted illegal kickbacks to refer patients to two of HMA's hospitals, Lancaster Regional Medical Center and Heart of Lancaster Medical Center. 

"These settlements demonstrate our commitment to ensuring that physician judgment is not compromised by illegal inducements," said Chad Readler, acting assistant attorney general for the Justice Department's civil division.

"Patient care decisions should be based on the needs of patients rather than the financial interests of physicians," Readler said.

The EmCare settlement resolved a whistleblower lawsuit brought by Thomas Mason and Stephen Folstad, whose medical practice, Mema, once supplied emergency room physicians to HMA hospitals in North Carolina. In connection with the settlement, the doctors will receive more than $6.2 million. 

Former HMA hospital executives George Miller and Michael Metts filed the suit alleging the scheme involving Physician's Alliance. Their payout has yet to be determined.

The settlements are results of a coordinated effort involving the Department of Justice and U.S. attorney's offices in North Carolina and Pennsylvania.

The False Claims Act allows whistleblowers to sue companies on behalf of the federal government to recover taxpayers' money paid out based on fraud.

The Office of Inspector General of the U.S. Department of Health and Human Services and the FBI handled the investigations.

"Since 2011 the FBI and our partners have returned over $1.25 billion to private and public health care programs from these 'whistleblower' investigations," FBI Assistant Director Stephen Richardson said.

"The FBI is committed to safeguarding the public's trust in a health care system that places patient care, not financial gain, as their primary focus," Richardson said.

Neither physician group admitted any wrongdoing as part of the settlements.

In a statement provided to Reuters, Physician's Alliance said its “first priority has always been and will continue to be to provide the best care for our patients.”

These aren't the first big False Claims Act settlements involving HMA.

In May 2015, 14 of HMA's former hospitals, including the Lehigh Regional Medical Center in Lehigh Acres, agreed to pay $15 million to resolve allegations they inappropriately billed Medicare for intensive outpatient psychotherapy services.

Other suits are pending.

A federal judge has agreed to allow the remaining cases to be tried in the District of Columbia but has ordered a stay until March to give time for more potential settlements.