Tenet, HMA Named in Federal Kickback Suit

A Department of Justice complaint alleges that for more than 10 years, four hospitals in Georgia and one in South Carolina paid kickbacks to Georgia-based Hispanic Medical Management, which operated an obstetric care clinic serving mostly undocumented aliens.

The federal government said it will intervene in False Claims Act suits leveled against hospitals owned by Tenet Healthcare Corp. and Health Management Associates Inc., which have been named in an alleged kickback scheme involving obstetrics services for undocumented aliens.

The Department of Justice complaint alleges that starting in 2000 and continuing for more than 10 years, four hospitals in Georgia and one in Hilton Head, SC paid kickbacks to Georgia-based Hispanic Medical Management, which operated the Clinica de la Mama. The clinic was paid for obstetrics care to mostly undocumented Hispanic women in return for labor and delivery referrals to the hospitals, who then billed the Medicaid programs in Georgia and South Carolina.

In some cases, prosecutors allege, the hospitals obtained Medicare reimbursements based on the influx of low-income patients. Undocumented aliens are not eligible for Medicaid benefits in Georgia and South Carolina under most circumstances. However, some emergency labor and delivery care is reimbursed. The whistleblower suit alleges that false reimbursement claims were made to the Georgia Medicaid's emergency medical assistance program for newborn care.

The three Tenet hospitals in Georgia and one hospital in South Carolina that were named in the whistleblower suit are: Atlanta Medical Center, North Fulton Regional Hospital, Spalding Regional Hospital, and Hilton Head Hospital.

"My office has made the investigation of healthcare fraud a priority," Michael J. Moore, US Attorney for the Middle District of Georgia, said in prepared remarks. "In a time when too many people were struggling to get healthcare for themselves and their children, Tenet and these hospitals plundered a system set up for those truly in need. This kind of scheme drives up costs for everyone, not just the vulnerable patients and groups like those targeted in this case."

Tenet issued a statement strongly denying the government's accusations.

"… the agreements between Hispanic Medical Management and Atlanta Medical Center, North Fulton Hospital, Spalding Regional Hospital and Hilton Head Hospital provided substantial benefits to women in underserved Hispanic communities," the statement said. "By ensuring that pregnant women received prenatal care and appropriate treatment during birth, these programs increased the likelihood of a safe birth and a healthy baby while reducing the overall cost to state Medicaid programs. We will continue to vigorously defend against these allegations."

The fifth hospital named in the suit, HMA's Walton Regional Medical Center, in Monroe, GA, was renamed Clearview Regional Medical Center when Community Health Systems finalized its $7.6 billion acquisition of HMA last month.

Calls Wednesday to HMA, and CHS were not immediately returned. It's not clear how CHS's acquisition of HMA will affect the federal suit and who will be held accountable if a settlement is reached.

The whistleblower suit was brought forward in 2009 by Ralph D. Williams, the former CFO at HMA who claims that he was fired after he discovered the payments. Williams said in his complaint that HMA paid Clinica between $15,000 and $20,000 each month for the referrals, and that the payments were disguised as "translation services" and "eligibility determination services."

Williams said that executives at HMA Monroe anticipated a 56.2% rate of return on a $1.8 million investment in Clinica's "Hispanic Maternity Program."

Williams alleged in the suit that he was told by HMA executive Gary Lang that a similar arrangement with Clinica existed at Tenet's Hilton Head Hospital, where Lang once worked as a marketing executive. The suit also alleges that HMA "cloned its kickback model from Tenet in order to receive additional Medicaid patient referrals and revenues."
Under the whistleblower provisions of the False Claims Act Williams could be eligible for a portion of any settlement money. The lawsuit is being heard in the Middle District of Georgia.

HMA and its former CEO Gary Newsome are also defendants in a separate whistleblower lawsuit out of South Carolina that alleges that the Naples, FL-based company orchestrated a "massive scheme to boost company profits and defraud Medicare and Medicaid by unlawfully inducing and pressuring hospital emergency room doctors to increase the rate of ER-to-hospital admissions over a period of at least four years."

The Justice Department said that since January 2009 it has recovered more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal healthcare programs.