Health Management Associates Pays Over $260 Million in Criminal and Civil Penalties for Pervasive False Billing and Kickback Charges

Healthcare Management Associates (HMA) settled criminal and civil charges with the Justice Department for illegal fraud and kickback schemes.  HMA billed federal government healthcare programs for inpatient services that should have been billed as outpatient or observation services, paid illegal remuneration to physicians in exchange for patient referrals, and inflated charges for emergency department facility fees.  HMA was acquired by Community Health Systems (CHS) in January 2014.  Since 2014, HMA has been operating under a Corporate Integrity Agreement between CHS and HHS-OIG.

HMA entered into a three-year non- prosecution agreement.  A subsidiary, Carlisle HMA, in Carlisle, Pennsylvania, agreed to plead guilty to one count of conspiracy to commit healthcare fraud.  HMA agreed to pay a  $35 million penalty under the NPA, and CHS’ CIA was amended and extended.  HMA also agreed to a $216 million civil penalty.

HMA implemented an aggressive plan to increase overall emergency department inpatient admissions at all HMA hospitals.  Under the plan, HMA hospitals imposed mandatory company-wide admission rate benchmarks for emergency departments – 15 to 20 percent for all patients, depending on the hospital, and 50 percent for patients 65 and older (Medicare beneficiaries).  To reach these figures, HMA executives and hospital managers pressured, coerced and induced physicians and directors to meet the mandatory admission rates, including threatening to fire physicians and medical directors.

The civil settlement resolved HMA’s liability for submitting false claims during the period 2008 to 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 civil settlement also resolved various schemes occurring at specific hospital locations, including:

  • Two hospitals from 2003 to 2011 in Florida billed healthcare programs for services secured through illegal kickbacks to physicians by providing free office space and staff and direct payments to a local physician group, which purportedly covered overhead and administrative costs incurred by the group. HMA also provided another physician with free rent and upgrades to his office space.
  • Two hospitals in Lancaster, Pennsylvania, between 2009 and 2012, for physician services where HMA paid (1) the physicians excessive amounts for services allegedly provided by the physician group; and (2) a local surgeon that exceeded the value of the services provided.
  • Crossgate Hospital in Brandon, Mississippi, leased space to a local physician for two years but only required the physician to pay rent for only half the space in return for patient referrals to the hospital.

The settlement was originally brought in eight separate qui tam (whistleblower) lawsuits under the False Claims Act.  Two of the whistleblowers received $15 million and $12.4 million, respectively.  The awards for the six other whistleblowers have not been determined.

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