Consumer Fraud

Whistleblower complaint leads to $15.69 million recovery for Medicare

whistleblower 5 370x210 Whistleblower complaint leads to $15.69 million recovery for MedicareSixteen U.S. hospitals and their parent companies have agreed to pay the U.S. $15.69 million collectively to resolve allegations brought by a whistleblower under the False Claims Act that they fraudulently billed Medicare for services that were not medically reasonable or necessary.

The case concerns claims for reimbursement the hospitals made to Medicare for Intensive Outpatient Psychotherapy services. Medicare pays for an appropriate course of the psychotherapy services when a number of specific requirements are met, the most notable being that the services provided are needed for the diagnosis and treatment of the patient’s condition.

The whistleblower lawsuit alleged that from 2005 to 2013, the hospitals submitted claims to Medicare for psychotherapy services that did not meet the requirements for reimbursement because the patient’s condition did not require the services or the services provided did not follow a custom treatment plan designed to address the patient’s individual needs.

In some cases, the patient’s progress was not adequately tracked or documented; the patient received an inappropriate level of treatment; or the therapy provided was primarily recreational instead of therapeutic.

The psychotherapy services typically were performed for the hospitals by Allegiance Health Management, a post-acute healthcare management company based in Shreveport, La. While Allegiance performed the questionable services, the hospitals were technically the providers of those services and billed Medicare for them.

“Hospitals that participate in the Medicare program must ensure that the services they provide and bill for are based on the medical needs of patients rather than the desire to maximize profits,” said Principal Deputy Assistant Attorney General Benjamin Mizer of the Justice Department’s Civil Division.

The whistleblower who filed the complaint on behalf of the U.S. government will receive $2,667,300 of the recovery.

The Justice Department said that Health Management Associates Inc. and 14 hospitals it formerly owned and operated collectively will pay $15 million of the total settlement. Those hospitals are:

  • Central Mississippi Medical Center
  • Crossgate River Oaks in Mississippi
  • Dallas Regional Medical Center in Texas
  • Davis Regional Medical Center in North Carolina
  • East Georgia Regional Medical Center
  • Gilmore Regional Medical Center in Mississippi
  • Lake Norman Regional Medical Center in North Carolina
  • Lehigh Regional Medical Center in Florida
  • Medical Center of Southeastern Oklahoma in Oklahoma
  • Natchez Community Hospital in Mississippi
  • Northwest Mississippi Regional Medical Center
  • Santa Rosa Medical Center in Florida
  • Southwest Regional Medical Center in Arkansas
  • Summit Medical Center in Arkansas

Community Health Systems and its subsidiary Wesley Medical Center in Mississippi, which agreed to pay $210,000, and North Texas Medical Center in Texas, agreed to pay $480,000.


U.S. Department of Justice