Whistleblower to Receive $2.66 Million Reward for Bringing Medicare Fraud Allegations to Government

Sixteen hospitals and their parent companies will pay over $15 million to resolve whistleblower allegations claiming the hospitals submitted claims for Medicare services that were inappropriate and medically unnecessary. The Justice Department announced that the whistleblower who brought the alleged fraud to the government’s attention will receive a $2.66 million reward.

This case centered on Intensive Outpatient Psychotherapy (IOP) services, which are continued outpatient psychiatric services and treatments for individuals with mental disorders. Medicare will pay for IOP treatment if it is medically reasonable and necessary for diagnosing and treating a patient’s condition.

Starting in 2005 and in some cases continuing into 2013, the Justice Department claims that the hospitals in question billed Medicare for services even though patient conditions did not qualify for IOP. In other cases, the care provided was deemed inappropriate for patients, or not therapeutic. Allegiance Health Management—a post-acute healthcare management company based in Louisiana—typically provided IOP services on the hospitals’ behalf. Nonetheless, it was the hospitals that billed Medicare for the services.

Below are the providers that were included in the settlement agreement:

–    Health Management Associates Inc. and 14 other hospitals the company owns and operates in Mississippi, North Carolina, Georgia, Arkansas, Florida, Texas and Oklahoma will collectively pay $15 million.

–    North Texas Medical Center in Texas will pay $480,000.

–    Community Health Systems and subsidiary Wesley Medical Center in Mississippi will pay $210,000.

Similar charges against LifePoint Hospitals Inc. were settled for $4.67 million in 2013.

This case was initially brought to the government’s attention after a whistleblower filed a qui tam lawsuit under the False Claims Act, which allows individuals (known as relators) to file a lawsuit on the government’s behalf and share in any money recovered. If the government intervenes in a qui tam claim, the relator is typically entitled to between 15 and 25 percent of the recovered damages. In successful cases where the government does not intervene, that percentage can reach as high as 30 percent.

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