The federal government has chosen to intervene in a whistleblower lawsuit against Prime Healthcare Services, substantially bolstering the False Claims Act complaint that accuses the Ontario, Calif.-based company of rampant fraud in more than a dozen of its California hospitals.
The U.S. Department of Justice (DOJ) said in a court filing that its investigation of the whistleblower’s claims “yielded sufficient evidence” that 14 Prime Healthcare hospitals “submitted or caused the submission of claims to Medicare for unnecessary patient stays.”
The lawsuit also names the company’s founder and chief executive officer, Dr. Prem Reddy, as a defendant, accusing him of orchestrating a companywide practice of pressuring ER physicians and hospital administrators to raise inpatient admission rates regardless of whether the patient needed to be admitted.
“Prime’s corporate officers, at Reddy’s direction, exerted immense pressure on doctors in the Emergency Departments to admit patients who could have been placed in observation, treated as outpatients or discharged,” the Justice Department said in a statement.
This practice led Prime hospitals to submit false claims to Medicare and other taxpayer-funded health care programs, federal prosecutors allege.
“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 Christian J. Schrank, U.S. Department of Health and Human Services investigator.
The False Claims Act complaint was filed in federal court in Los Angeles by whistleblower Karin Bernsten, who worked at one of the Prime hospitals where the dubious inpatient admissions allegedly took place.
Ms. Bernsten filed the lawsuit under the qui tam provisions of the False Claims Act, which allows private parties to sue on behalf of the United States when they believe that false claims for funds are being submitted to the government.
Federal False Claims Act lawsuits are usually settled before they go to trial. Either way, the whistleblower who originated the case receives 15-30 percent of any settlement or judgement as an award.
Source: U.S. Department of Justice