Two employees of a Philadelphia hospital who filed a whistleblower lawsuit against the hospital’s parent company and its founder have helped the U.S. government recover $1.25 million in Medicare funds.
Prime Health Care Services and Dr. Prem Reddy, the company’s founder and CEO, agreed to settle the whistleblower lawsuit Feb. 14, resolving allegations that two of its hospitals, Lower Bucks Hospital in Bristol Township, Pennsylvania, and Roxborough Memorial Hospital in Philadelphia, engaged in schemes to increase their Medicare billings.
According to federal prosecutors, the whistleblowers alleged that the hospitals admitted Medicare beneficiaries who visited the ER when they should have been treated as outpatients.
Instead of discharging the patients, the Prime hospitals would often keep them for one- and two-night hospital stays and provide medically unnecessary treatments, then bill Medicare for those services, federal prosecutors alleged.
They also claimed that the hospitals billed Medicare for costlier diagnoses than patients actually had, all to increase their Medicare billings.
Prime is one of the largest hospital systems in the U.S., with 45 acute-care hospitals in 14 states. Federal prosecutors who investigated the whistleblower allegations and chose to intervene in the suit alleged that Prime began cheating Medicare from the time it acquired the two hospitals in 2012.
“We are committed to ensuring that hospitals, companies that own and operate them, and their executives appropriately bill Medicare,” said U.S. Attorney William McSwain. “Charging the government for more costly services than what the patient actually needs and billing the government for more serious diagnoses than what the patient actually has is a waste of taxpayer dollars.”
The hospital employees filed the lawsuit under the whistleblower provisions of the False Claims Act, which allows private parties to file suit on behalf of the U.S. government in cases of suspected fraud against federal programs and agencies.
As part of a separate lawsuit in the Central District of California, Prime Health Care and Dr. Reddy paid the U.S. $65 million in August 2018 to settle similar Medicare fraud allegations arising out of 14 Prime hospitals in California.
“We thank the [whistleblowers] for their invaluable contribution in this case. Together with their lawyers, they provided vital assistance to the government throughout this case. Without information from citizens like the relators, detecting fraud and conserving government program funds would be far more difficult,” said U.S Attorney McSwain.