Federal Government Joins Medicare Fraud Lawsuit Against Prime Healthcare

[May 24, 2016] OAKLAND, Calif.– The U.S. Department of Justice announced yesterday it had joined a Medicare fraud lawsuit against Prime Healthcare Services, Inc., saying it found merit to the claims brought by a Prime employee who said the company jacked up corporate revenue by wrongly admitting Medicare patients for overnight stays while trying to get rid of patients with no insurance.

“Time after time we’ve seen Prime Healthcare’s shady practices at hospitals across the country, and we’re glad the federal government is getting involved to put a stop to the company’s conduct,” said Dave Regan, president of SEIU-United Healthcare Workers West (SEIU-UHW). “To manipulate doctors so they admit more people into a hospital is immoral and disgraceful.”

In the federal government’s May 23 filing, it cited numerous witnesses who corroborate the employee’s fraud case, which was brought in 2011. According to the Department of Justice filing, these witnesses said that Prime Healthcare CEO Prem Reddy engaged in the following deceptive conduct:

  • Tell emergency department doctors to find ways to admit all patients over 65 because they have insurance (Medicare);
  • Demand the termination of emergency department doctors if they passed up opportunities to admit Medicare beneficiaries;
  • Tell doctors that insured patients who would be in the emergency department for more than two hours awaiting test results should be admitted; and
  • Instruct doctors that uninsured patients could stay in the emergency department no more than eight hours awaiting test results and then be discharged.

Attempts to settle the Prime employee’s lawsuit have been exhausted and the prospect of a trial is now likely. With the federal government’s involvement, it means the Department of Justice will bring its full resources to pursue the company; the government has been investigating Prime Healthcare since December 2013. If the case goes to trial and Prime Healthcare is found guilty of violating the law, it could be barred under federal law from receiving Medicare funding, a huge financial blow to the company.

The government’s action marks the third setback for Prime Healthcare in the last six months. In February 2016, the National Labor Relations Board ordered Prime Healthcare to honor a union contract agreement affecting 1,100 of its employees at three hospitals in Southern California that the company had refused to implement for more than a year. In November 2015, theNLRBissued a separate decision requiring PrimeHealthcareto reimburse 630 employees at Centinela Medical Center in Inglewood, Calif. an estimated $1.6 million for illegally cutting workers’ healthcare benefits over a five-year period.

 SEIU-UHW and Prime Healthcare Services are involved in a labor dispute.

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