Hospital System Settles Medicare Overbilling Case for $65 Million

AP News reported on August 4, 2018, that Prime Healthcare Services, one of the biggest hospital systems in the country and the company CEO agreed to pay $65 million to resolve claims the California based company overbilled Medicare. The lawsuit that forced the settlement was a whistleblower lawsuit. Prime will pay $61.75 million and the CEO will pay $3.25 million. The Prime defendants included Prime Healthcare Services, Inc.; Prime Healthcare Foundation, Inc.; and Prime Healthcare Management, Inc. according to the U.S. Justice Department. 10 individual hospitals were also named as defendants.

The U.S. Attorney’s office alleged that the defendants committed several false claims including:

  • Upcoding the diagnoses of patients
  • Admitting patients when they should have just been placed under observation. Hospitals can charge more if they admit a patient rather than observe him/her – but the admission must be based on what’s best for the patients. Observation is usually billed as an outpatient service.
  • Exaggerating the illness

Prime Healthcare operates hospitals in 14 states. 17 of its hospitals are based in California.

Prime, as part of its settlement, stated that the government didn’t’ actually find that there was improper conduct – but the size of the settlement indicates the government was likely going to prevail if the lawsuit proceeded to trial.

First U.S. Attorney Track Wilkison said that “Patients and taxpayers who finance health care programs such as Medicare deserve to know that doctors are making decisions solely based on medical need – and not based on a corporate desire to increase billings.”

Prime also agreed to significant compliance requirements over the next five years including using an independent review organization to determine how accurate its Medicare-related claims are

The whistleblower claim

The whistleblower claim was brought by Karin Bernsten, a former director of performance improvement at one of Prime’s hospitals. Ms. Bernsten claimed that patients were being treated for the ability to generate revenue and profit instead of giving the patient the best services. The lawsuit was started in 2011. The allegations date back to 2006.

Ms. Bernsten’s whistleblower claim is based on the False Claims Act. As part of the whistleblower provisions of the FCA, whistleblowers are entitled a percentage of any recovery. Often, but not always, the government will take over an FCA claim. Experienced whistleblower lawyers help convince the government to take these challenging cases. In this case, Mr. Bernsten will receive $17,225,000.

Whistleblower claims help protect the public from fraud. The experienced whistleblower, qui tam, lawyers at Stephen Danz & Associates understand how to begin these claims and protect the rights of whistleblowers. If you are aware of any fraudulent billing or fraud of any kind against the government, please phone Stephen Danz & Associates at 877-789-9707 to arrange a free consultation.