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Feds intervene in 8 lawsuits against HMA, including local case

By - Last modified: January 14, 2014 at 9:52 AM

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The U.S. Department of Justice has intervened in eight False Claims Act lawsuits against Health Management Associates Inc., including one focusing on two Lancaster County hospitals.

The government also has joined in the allegations in one of these lawsuits that Gary Newsome, 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," a news release says.

HMA, based in Florida, currently operates 71 hospitals in 15 states, including three local facilities: Carlisle Regional Medical Center, Lancaster Regional Medical Center and Heart of Lancaster Regional Medical Center. Its shareholders recently voted in favor of being acquired by Tennessee-based Community Health Associates Inc., which currently owns, leases or operates 135 hospitals in 29 states, including one local facility, Memorial Hospital in York. The transaction is expected to be completed this month.

The lawsuits allege that HMA's corporate officers, at the direction of Newsome, 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, Fla., in exchange for referrals to two HMA hospitals in Florida. HMA is also accused of paying kickbacks to physicians in Lancaster, Pa., by paying inflated prices for physician-owned assets, providing sham medical directorship contracts and selling assets to physicians for below fair market value.

"The Department of Justice is committed to ensuring that health care providers who attempt to misuse federal health care programs for their own profit are held accountable," said Assistant Attorney General for the Justice Department's Civil Division Stuart F. Delery. "Schemes such as this one can contribute significantly to the rising cost of delivering health care and create needless patient risk."

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.

Since January 2009, the Justice Department has recovered a total of more than $17 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.

CHS and HMA are listed for trading on the New York Stock Exchange under the symbols CYH and HMA.

Heather Stauffer

Heather Stauffer

Heather Stauffer covers Lancaster County, nonprofits, education and health care. Have a tip or question for her? Email her at heathers@cpbj.com. Follow her on Twitter, @StaufferCPBJ.

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