Health Organization Sued for Kickbacks and Unnecessary Admissions in Six States

The government has intervened in eight False Claims Act lawsuits against Health Management Associates Inc. (HMA) alleging that HMA billed federal health care programs for medically unnecessary inpatient admissions from the emergency departments at HMA hospitals and paid remuneration to physicians in exchange for patient referrals. The government also has joined in the allegations in one of these lawsuits that HMA’s former CEO directed HMA’s corporate practice of pressuring emergency department physicians and hospital administrators to raise inpatient admission rates, regardless of medical necessity. HMA operates 71 hospitals in 15 states: Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, Missouri, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Washington and West Virginia.


The lawsuits allege that HMA’s corporate officers, at the direction of the CEO, exerted significant pressure on doctors in the emergency department to admit patients who could have been placed in observation, treated as outpatients or discharged, and that this resulted in the submission of inflated or false claims to federal health care programs. One lawsuit also alleges that patients were improperly admitted for scheduled surgical procedures that should have been done on an outpatient basis. The complaints further allege that HMA paid kickbacks, either in the form of bonuses or awarded contracts, to physician groups staffing HMA emergency rooms to induce the physicians to admit patients unnecessarily.


In addition, the lawsuits allege that HMA paid kickbacks to other physician groups to induce referrals. For example, HMA allegedly provided improper remuneration, both through the provision of free office space and staffing and through direct payments, to Primary Care Associates, a physician practice group in Port Charlotte, Florida, in exchange for referrals to two HMA hospitals in Florida. HMA also allegedly paid kickbacks to physicians in Lancaster, Pennsylvania, by paying inflated prices for physician-owned assets, providing sham medical directorship contracts and selling assets to physicians for below fair market value.


The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. The Stark Statute prohibits a hospital from submitting claims for patient referrals made by a physician with whom the hospital has an improper financial arrangement. Both the Anti-Kickback Statute and Stark Statute are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.


“Investigations such as these are a very high priority for the FBI because of the potential impact to the nation’s health care system and to the public,” said FBI Assistant Director Ron Hosko. “Because of the priority nature of these cases as well as their complexity, we have created a centralized team to provide nationwide support to our field offices called the Major Provider Response Team.”


The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to receive a share of any recovery. The False Claims Act also permits the government to intervene in such lawsuits, as it has done in these cases. The eight lawsuits are pending in the Southern and Middle Districts of Florida, Middle District of Georgia, Northern District of Illinois, Western District of North Carolina, Eastern District of Pennsylvania and District of South Carolina.


The claims asserted against HMA and the CEO are allegations only, and there has been no determination of liability.


See the DOJ Announcement