Health Management Associates will pay more than $260 million to resolve criminal charges and civil claims relating to a scheme to defraud the United States.  

The government alleged that HMA knowingly billed government healthcare programs for inpatient services that should have been billed as outpatient or observation services, paid remuneration to physicians in return for patient referrals, and submitted inflated claims for emergency department facility fees. 

HMA was acquired by a U.S. hospital chain, Community Health Systems (CHS), in 2014, after the alleged conduct at HMA occurred.  Since July 2014, HMA has been operating under a corporate integrity agreement between CHS and the Department of Health and Human Services Office of Inspector General (HHS-OIG).

As part of the criminal resolution, HMA entered into a three-year non-prosecution agreement (NPA) with the Criminal Division’s Fraud Section in connection with a corporate-driven scheme to defraud federal healthcare programs by unlawfully pressuring and inducing physicians serving HMA hospitals to increase the number of emergency department patient admissions without regard to whether the admissions were medically necessary. 

“Hospital operators that improperly influence a physician’s medical decision-making in pursuit of profits do so at their own peril,” Assistant Attorney General Brian Benczkowski said in a statement.  “Where we find such conduct, the Criminal Division’s Health Care Fraud Unit, together with our Civil Division and law enforcement colleagues, will aggressively prosecute those responsible to the fullest extent of the law.”

The scheme involved HMA hospitals billing and obtaining reimbursement for higher-paying inpatient hospital care, as opposed to observation or outpatient care, from federal healthcare programs, increasing HMA’s revenue. Under the terms of the NPA, HMA will pay a $35 million monetary penalty.  

Under the terms of the NPA, HMA and CHS, the current parent company, agreed to cooperate with the investigation, report allegations or evidence of violations of federal healthcare offenses, and ensure that their compliance and ethics program satisfies the requirements of an amended and extended agreement between CHS and HHS-OIG.

Civil settlement 

HMA also agreed to pay $216 million as part of a related civil settlement. The civil settlement resolves HMA’s liability for submitting false claims between 2008 and 2012 as part of its corporate-wide scheme to increase inpatient admissions of Medicare, Medicaid, and the Department of Defense’s TRICARE program beneficiaries over the age of 65.  

The government alleged that the inpatient admission of these beneficiaries was not medically necessary, and that the care needed by, and provided to, these beneficiaries should have been provided in a less costly outpatient or observation setting. HMA agreed to pay $62.5 million to resolve these allegations, with $61.8 being paid to the United States and $706,084 being paid to participating states.

The civil settlement also resolves allegations that during the period from 2003 through 2011, two HMA hospitals in Florida—Charlotte Regional Medical Center and Peace River Medical Center—billed federal healthcare programs for services referred by physicians to whom HMA provided remuneration in return for patient referrals. To induce patient referrals, Charlotte Regional provided a local physician group with free office space and staff, as well as direct payments, which purportedly covered overhead and administrative costs incurred by the group for its management of a Charlotte Regional physician.  

HMA also provided another local physician with free rent and upgrades to his office space. HMA agreed to pay $93.5 million to resolve these civil allegations, with the United States receiving $87.96 million and the state of Florida receiving $5.54 million.

The civil settlement also resolves allegations that between 2009 and 2012, two former HMA hospitals—Lancaster Regional Medical Center and Heart of Lancaster Medical Center in Pennsylvania—billed federal healthcare programs for services referred by physicians with whom the facilities had improper financial relationships. These relationships stemmed from HMA’s excessive payments to a large physician group in return for two businesses owned by the group and for services allegedly performed by the group; and a local surgeon that exceeded the value of the services provided. 

The government alleged that these arrangements were structured in this manner to disguise payments intended to induce the referral of patients.  HMA agreed to pay $55 million to the United States to resolve these civil allegations.

Finally, the civil settlement will also resolve claims that Crossgates Hospital, an HMA facility in Mississippi, leased space to a local physician from 2005 through 2007 but required the physician to pay rent for only half of the space he was occupying in return for patient referrals to Crossgates Hospital. HMA agreed to pay $425,000 to the United States to resolve these civil allegations.

This resolution should remind healthcare providers of the “heavy price to be paid for corrupt practices committed by their executives,” said U.S. Attorney Maria Chapa Lopez. “Our Civil Division will continue to invest itself in the pursuit of healthcare providers who violate the law for personal gain,” she warned.

The government further alleged that from September 2009 through December 2011, certain HMA hospitals submitted claims to Medicare and Medicaid seeking reimbursement for falsely inflated emergency department facility charges. HMA agreed to pay $12 million to resolve these civil allegations, with $11 million being paid to the United States and $972,000 being paid to participating states.

Guilty plea

In addition, an HMA subsidiary, Carlisle HMA, formerly doing business as Carlisle Regional Medical Center, has agreed to plead guilty to one count of conspiracy to commit healthcare fraud. The plea agreement remains subject to acceptance by the court.  

Up until 2017, Carlisle HMA owned and operated Carlisle Regional Medical Center, an acute care hospital located in Carlisle, Pa.  Carlisle HMA was charged in a criminal information filed Sept. 25, 2018, in the District of Columbia with conspiracy to commit healthcare fraud.

Whistleblower shares

The allegations resolved by the settlement were originally brought in eight lawsuits filed under the whistleblowerprovisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery.  

The whistleblower inUnited States ex rel. Nurkin will receive approximately $15 million as a share of the recovery, and the whistleblowers inUnited States ex rel. Millerwill receive approximately $12.4 million as their share of the recovery. The whistleblower shares to be awarded in the remaining cases have not yet been determined.

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