A Mississippi public hospital has agreed to pay the U.S. more than $1.1 million to settle a whistleblower lawsuit alleging it unlawfully billed Medicare for services patients didn’t need.
Grenada Lakes Medical Center, which is operated by the University of Mississippi Medical Center, agreed to settle the government’s False Claims Act allegations accusing the hospital of falsely billing Medicare for medically unnecessary and unreasonable psychotherapy services it provided to beneficiaries of the government health care program.
According to the U.S. Justice Department, starting in January 2005 and continuing until April 2013, the Grenada Lakes Medical Center submitted claims for intensive outpatient psychotherapy services that weren’t qualified for Medicare reimbursement. The services in question were performed at Grenada Lakes Medical Center by Allegiance Health Management, a post-acute health care management company based in Shreveport, Louisiana. Grenada Lakes billed Medicare directly for the services provided by Allegiance.
The government’s complaint against Grenada Lakes was triggered by a lawsuit filed by Ryan Ladner, who formerly worked for Allegiance as a program manager at the Inspirations Outpatient Counseling Center in Hattiesburg, Mississippi.
Mr. Ladner filed the lawsuit under the False Claims Act’s whistleblower provisions, which allow private parties to sue on behalf of the U.S government in cases of fraud targeting federal agencies and programs.
Allegiance set up Inspirations Outpatient Counseling Centers at several hospitals throughout the Southeast starting in 2005. These counseling centers were owned and staffed by Allegiance and provided intensive outpatient psychotherapy services to Medicare beneficiaries. They also identified potential patients and created patient treatment plans.
Based on their investigations of Mr. Ladner’s whistleblower claims, federal prosecutors alleged that the services Allegiance provided through its Inspirations counseling centers were not eligible for Medicare reimbursement for several reasons.
Intensive outpatient psychotherapy services were not a necessary course of treatment for many patients, and the treatments were not designed to help individual patients address specific mental health needs and reach achievable goals, federal prosecutors alleged.
The government also claimed that Inspirations failed to adequately track and document patient progress. Many patients also received an inappropriate level of treatment and, in other cases, the therapy provided was primarily recreational or diversional in nature, and not therapeutic.
In June, the U.S recovered more than $1.7 million from Allegiance Health Management, Inc., a Shreveport, Louisiana-based hospital owner and manager, thanks to Mr. Ladner’s whistleblower lawsuit. Mr. Ladner received a whistleblower award of $300,000 for his role in the case.
The U.S. Justice Department said that Mr. Ladner will receive an additional $195,000 as an award for bringing the whistleblower suit against Grenada Lakes Medical Center and aiding the U.S. in reaching the $1.1 million settlement with the hospital.
“Hospitals that participate in the Medicare program are responsible for ensuring that the services performed at their facilities or on their behalf reflect the medical needs of patients rather than the desire to maximize profit,” said Acting Assistant Attorney General Chad A. Readler for the Civil Division. “The Department of Justice will continue to hold accountable those who misspend taxpayer funds by providing medically inappropriate services.”