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Health Quest to Pay $15.6M in False Claims Settlement

By John Commins  
   July 09, 2018

A former corporate compliance officer at the four-hospital health system in Upstate New York blows the whistle on his old employers and collects a $1.9 million share of the settlement.

Health Quest Systems, Inc. and affiliated Putnam Hospital Center will pay $15.6 million to settle False Claims Act allegations that it submitted inflated and ineligible bills to Medicare, the Department of Justice announced.

In the settlement announced Monday, DOJ said that Health Quest and PHC admitted that:  

  • From April 2009 through June 2015, Health Quest did not sufficiently document claims for evaluation and management services, which were billed two levels higher than justified by the medical records.
  • From April 2011 through August 2014, Health Quest submitted insufficiently documented claims for home health services.
  • From March 2014 through December 2014, Putnam Hospital submitted false claims for inpatient and outpatient services referred by two orthopedic physicians, a violation of the Physician Self-Referral Law.

    The physicians received compensation from the hospital that prosecutors said exceeded the fair market value for the services to induce referrals to the hospital, a violation of the Anti-Kickback Statute.

LaGrangeville, NY-based Health Quest includes four hospitals and provides surgical, medical and home healthcare services in the Hudson Valley and Northwest Connecticut. Putnam Hospital Center is located in Carmel Hamlet, NY. 

The settlement resolves three whistleblower lawsuits brought by former employees of Health Quest, who will share a portion of the recovered money. Whistleblower Tim Cleary, the former corporate compliance officer at Health Quest will receive nearly $1.9 million, DOJ said.

The health system issued a statement saying that it "cooperated fully with the government's investigation."

"We appreciate the opportunity to work with and finally resolve the matter with all relevant parties, including the U.S. Department of Justice," Health Quest President and CEO Robert Friedberg said. “Our intent is always to comply with government regulations."

"Today, with this matter settled, we can focus on what means the most to us: providing superior quality care for our patients," he said.

Health Quest will pay $14.7 million to the federal government, and $895,427 to the State of New York's Medicaid program, and the health system will enter into a Corporate Integrity Agreement with the Department of Health and Human Services.

John Commins is a senior editor at HealthLeaders.

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