Consumer Fraud

Whistleblower Awarded $17 Million for Exposing Medicare Fraud

Pills Stethascope on Money 435x289 Whistleblower Awarded $17 Million for Exposing Medicare FraudA whistleblower who filed a False Claims Act lawsuit against Prime Healthcare Services, one of the nation’s largest hospital chains, and its founder and chief executive officer, has received an award of $17,225,000 for helping the U.S. recover $65 million in Medicare funds.

The U.S. Department of Justice said that Karin Berntsen, the former Director of Performance Improvement at Alvarado Hospital Medical Center in San Diego, brought the suit under the whistleblower provisions of the False Claims Act.

Ms. Berntsen alleged that Prime Healthcare Services, Prime Healthcare Foundation, Prime Healthcare Management, and CEO Dr. Prem Reddy routinely admitted Medicare patients for costly in-patient treatment when the patients should have been treated as outpatients.

Federal Prosecutors alleged that Prime Healthcare and 14 of its California hospitals, including the one that employed Ms. Berntsen, engaged in false billing schemes designed to wring as much money out of Medicare as possible. In addition to unnecessarily admitting Medicare beneficiaries, the defendant hospitals also “upcoded” patient billings, meaning they charged Medicare for costlier services by falsifying and exaggerating patient diagnoses, the whistleblower complaint alleged.

Prime Healthcare agreed to pay the U.S. $65 million to resolve the False Claims Act charges. The settlement also requires that Prime Healthcare enter a five-year Corporate Integrity Agreement with the Health and Human Services Office of Inspector General. The agreement requires the Prime Healthcare companies to take significant compliance efforts, including retaining an independent review organization to oversee the accuracy of the company’s claims for services provided to Medicare beneficiaries.

“Those who engage in health care fraud, including corrupt doctors and medical professionals driven by greed, exploit helpless or unwitting patients in violation of the oath they took to protect us – and often American taxpayers are the victims,” said Paul Delacourt, Assistant Director in Charge of the FBI’s Los Angeles Field Office, who helped investigate the whistleblower case. “By reaching this settlement, the FBI and our partners are holding Prime Healthcare accountable for exaggerating patients’ needs and inflating the severity of their symptoms while handsomely lining their pockets. This case should send a clear message to others who intend to engage in similar schemes that rout the American healthcare system.”

Headquartered in Ontario, California, Prime Healthcare is one of the largest hospital systems in the nation, with 45 acute-care hospitals 14 states.

Dr. Reddy will pay $3,250,000 of the settlement and Prime Healthcare will pay $61,750,000, the Justice Department said. Ms. Berntsen’s whistleblower award accounts for about 26 percent of the total recovery.