Sixteen Hospitals Agree to Pay the United States Nearly $16 Million to Resolve False Claims Act Allegations of Submitting Claims for Medically Unnecessary Psychiatric Procedures

Written May 7, 2015 by Robert Lu

On May 7, 2015, the U.S. Justice Department announced that 16 separate hospitals (as well as their respective corporate parents) have agreed to collectively pay nearly $16 million to resolve allegations that they sought and received reimbursement from Medicare for medically unnecessary or unreasonable services in violation of the False Claims Act.

This case involves a procedure called Intensive Outpatient Psychotherapy (IOP). IOP services represent a continuation of ambulatory psychiatric services and provide active treatment to individuals with mental disorders. Medicare generally pays for an appropriate course of IOP treatment provided a number of specific requirements are satisfied including, most notably, that the services in question are reasonable and necessary for the diagnosis and treatment of the patient’s condition.

These settlements resolve allegations that, beginning as early as 2005 and in some cases continuing into 2013, the hospitals knowingly submitted claims for IOP services that did not qualify for Medicare reimbursement. The settlements announced today arose from a lawsuit filed under the qui tam provisions of the False Claims Act. The Act allows private individuals known as “relators” to sue on behalf of the United States and to share in the proceeds of any settlement or judgment that may result. The relator in this case will receive approximately $2.5 million. The claims settled by these agreements are allegations only, and there has been no determination of liability.

The settlement agreements announced today with the United States include the following providers:

  • Health Management Associates Inc. (HMA), and the following 14 hospitals formerly owned and operated by HMA: Central Mississippi Medical Center in Mississippi, Crossgate River Oaks in Mississippi, Dallas Regional Medical Center in Texas, Davis Regional Medical Center in North Carolina, East Georgia Regional Medical Center in Georgia, Gilmore Regional Medical Center in Mississippi, Lake Norman Regional Medical Center in North Carolina, Lehigh Regional Medical Center in Florida, Medical Center of Southeastern Oklahoma in Oklahoma, Natchez Community Hospital in Mississippi, Northwest Mississippi Regional Medical Center in Mississippi, Santa Rosa Medical Center in Florida, Southwest Regional Medical Center in Arkansas, and Summit Medical Center in Arkansas, which agreed to collectively pay $15 million;
  • Community Health Systems and its subsidiary Wesley Medical Center in Mississippi, which agreed to pay $210,000; and
  • North Texas Medical Center in Texas, which agreed to pay $480,000.

For additional information about the False Claims Act, and the Firm’s resources and services for whistleblowers under the Act, please visit the Robbins Geller Rudman & Dowd LLP Whistleblower page.