Feds probe Select Medical whistleblower allegations

The lawsuit concerns Select’s long-term acute care hospital in Evansville, Ind., and was filed by the hospital’s former CEO and two former case managers there.

Health care providers are subject to lawsuits under the qui tam provisions of the federal False Claims Act, which allows private parties to file the suits, which then typically remain under seal and often unknown to the defendant  for some time while the government decides whether to participate. 

“These lawsuits can involve significant monetary damages and penalties and award bounties to private plaintiffs who successfully bring the suits,” Select’s filing said, noting that the company has been a defendant in qui tam cases in the past.

The suit accuses Select, the hospital and two physicians — Dr. Richard Sloan, hospital CEO, and Dr. Jeffrey Selby, nephrologist — of “a pattern and practice of fraudulent abuse of the Medicare and Medicaid programs by defendants resulting in the submission of false or fraudulent claims to the federal health care programs and most especially Medicare.”

The suit says the practices include manipulating length of stays to maximize reimbursement, unnecessary medical procedures and upcoding, and actions “often made contrary to the interests of patient health and safety and contrary to the express wishes of patients and their families.”

The actions are not the result of rogue physicians, the suit says, but an outgrowth of Select’s corporate policy.

“Case managers are trained in Mechanicsburg, Pennsylvania, when first hired on all of Select’s techniques for ‘outlier management’ including ‘Managing Length of Stay; tips to being successful,'” it says. “Case managers who do not meet their financial objectives are sent to a remedial education program where the importance of increasing census and managing length of stay are also emphasized.”

According to Select, the suit was unsealed Jan. 8, 2013, and federal and state investigators have not yet decided whether to join the case. The court has granted repeated stays on the case while the investigations continue; the most recent extends through May 16.

Select said it has been cooperating with the investigations and is, at this time, “unable to predict the timing and outcome of this matter.”

Select is not the only local entity facing a qui tam lawsuit investigation. Nine cases against Florida-based Health Management Associates were centralized last month in a federal court in Washington, D.C., and one of them centers on Lancaster Regional Medical Center and Heart of Lancaster Regional Medical Center, both in Lancaster County.

The government has intervened in all nine of those cases but has not yet decided whether to intervene against Physicians Alliance Ltd., which is also named as a defendant in the local cases. In January, HMA was acquired by Tennessee-based Community Health Systems Inc.

Select and CHS both trade shares on the New York Stock Exchange under the ticker symbol SEM and CYH, respectively.