The woman who blew the whistle on Prime Healthcare will reportedly receive $17.2 million for her efforts—which involved wearing a hidden microphone—after the health care provider agreed to settle a lawsuit filed under the False Claims Act. The lawsuit, which was filed 7 years ago, alleged Prime Healthcare overbilled the government for Medicare services at more than a dozen hospitals in California. In all, the company and its CEO will pay approximately $65 million to settle the allegations.
Prime Healthcare Allegedly “Up-Coded” Patients to Overbill Medicare
According to the Department of Justice, Prime Healthcare allegedly up-coded and improperly admitted patients to 14 of its California hospitals so it could increase the money it received from Medicare. Up-coding refers to a practice in which patients whose conditions require less costly treatment or outpatient services are coded as having more severe conditions that require more expensive treatments.
Medicare payments are typically higher for patients who receive inpatient treatment. The Department of Justice alleged that from 2006 through 2013, Prime Healthcare deliberately admitted some ER patients to its hospitals for inpatient treatment even though they had less serious conditions that could have been managed on an outpatient basis. As a result, according to the lawsuit, Prime Healthcare was able to increase its reimbursement from Medicare.
The Department of Justice further alleged that from 2006 to 2014, Prime Healthcare falsified patient diagnoses to make them appear more serious than they were so the company could bill Medicare for additional reimbursements.
According to reports, Dr. Prem Reddy, Prime Healthcare CEO, allegedly threatened emergency department physicians with termination if they failed to admit enough patients to the hospital. Witnesses also told investigators that Reddy gave increased work hours to doctors that admitted more patients and pushed doctors to only allow uninsured patients to stay in the ER long enough to get results before they were discharged.
A 2011 series called “Decoding Prime” recounted an investigation by the Center for Investigative Reporting (CIR) into Prime Healthcare’s admissions practices. One of the claims made in the series was that a Prime Healthcare hospital—Shasta Regional Medical Center in Redding, California—allegedly billed Medicare for more than 1,000 senior citizens who were treated for kwashiorkor, a condition associated with children living through a famine in Africa.
“Patients and taxpayers who finance health care programs such as Medicare deserve to know that doctors are making decisions solely based on medical need—and not based on a corporate desire to increase billings,” said First Assistant United States Attorney Tracy Wilkison for the Central District of California. “The Justice Department is committed to preserving the integrity of public health programs and preventing improper billing practices.”
Registered Nurse Brought Forward Information in Prime Healthcare Whistleblower Lawsuit
The Prime Healthcare whistleblower is a registered nurse named Karin Berntsen, who was also the former Director of Performance Improvement at Alvarado Hospital Medical Center in San Diego. Bernsten brought the whistleblower allegations to the government’s attention in 2011.
“The patients were becoming commodities,” Berntsen said in a statement. “They were becoming dollar signs, not people. Everything being done seemed to be solely to increase profit.”
In a statement, Berntsen said she became ill and endured multiple surgeries and hospital stays during the government’s investigation of Prime Healthcare. During that time, she wore a microphone so she could obtain evidence against her employer.
Prime Healthcare, CEO to Pay $65 Million to Settle Whistleblower Allegations
Without admitting liability, Prime Healthcare and its CEO agreed to pay $65 million to settle the whistleblower allegations. Prime Healthcare—including Prime Healthcare Services, Inc., Prime Healthcare Foundation, Inc., and Prime Healthcare Management, Inc.— will pay more than $61 million, while Reddy will pay more than $3 million.
Berntsen will receive a whistleblower reward of more than $17 million for her role in bringing the allegations to the government’s attention.
Along with the financial settlement, Prime Healthcare agreed to enter into a Corporate Integrity Agreement, which requires the healthcare provider to undergo compliance efforts and to have an independent review of its Medicare claims.
Whistleblowers Pivotal in Fighting Medicare Fraud
Medicare is a vital government program that millions of Americans depend on. When healthcare practitioners engage in Medicare fraud, they are not just stealing from the government; they are putting patient care at risk.
Whistleblowers like Karin Bernsten are the tip of the spear in the fight against fraud because they bring allegations to light that would otherwise remain in the dark.
If you have firsthand knowledge or information on Medicare fraud, we encourage you to come forward and speak to one of our highly-experienced whistleblower attorneys. We can answer any questions you may have and help you decide if filing a whistleblower lawsuit is the right decision for you and your family. If your lawsuit results in a successful enforcement action, you could receive a substantial whistleblower reward.