US Intervenes in False Claims Act Lawsuit Against Prime Healthcare Services Inc. Alleging Unnecessary Inpatient Admissions from Emergency Rooms
Often the Justice Department’s ongoing effort to root out fraud against its agencies reveals illegal activity on a massive scale that involves several entities. This was demonstrated when last week it intervened in a lawsuit against Prime Healthcare Service, Inc (Prime)., the company’s CEO, Dr. Prem Reddy; and 14 Prime hospitals in California alleging that emergency departments at Prime’s facilities improperly admitted patients to their hospitals and that Prime submitted false claims to Medicare. The suit alleges that Dr. Reddy pressured Prime’s Emergency Department physicians and hospital administrators to raise inpatient admission rates regardless of whether it was medically necessary to admit the patients. The suit also alleges that Prime’s corporate officers were pressured by Reddy to admit patients into the Emergency Departments who could have been observed, treated as outpatients or discharged. Finally, the government contends that Prime hospitals submitted false claims to Medicare in an effort to justify these medically unnecessary admissions.
“Charging for medically unnecessary services, as alleged in this case, raises costs in government health programs and remorselessly passes that bill along to taxpayers,” said Special Agent in Charge Christian J. Schrank of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Our investigation into the allegations in this case, along with our law enforcement partners, led to the government’s decision to intervene.” The lawsuit was originally filed in the Los Angeles District court by relater Karin Bernsten who worked at one of the Prime hospitals where the alleged fraudulent activity took place. The lawsuit was filed under the qui tam provisions of the False Claims Act, which permits private parties to sue on behalf of the United States when they believe that a party has submitted false claims to governmental agencies. The Act also permits those same parties to receive a share of any recovery.
The government’s intervention in this lawsuit is an example of its ongoing efforts to combat health care fraud through its Health Care Fraud Prevention and Enforcement Action Team (HEAT). The initiative began back in 2009 and is being spearheaded by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has resulted in the recovery of more than $29 billion through False Claims Act cases. More than $17 billion of that amount has been recovered in cases involving fraud against federal health care programs.