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Analysis

Former HMA CEO to Pay $3.46M to Resolve False Billing, Kickback Allegations

By John Commins  
   May 01, 2019

Federal prosecutors claim that, under Newsome's guidance, HMA pressured emergency department physicians to admit patients without regard to medical necessity.

Gary D. Newsome, the former CEO of now-defunct Health Management Associates LLC, will pay $3.46 million to settle kickback and false claims allegations made in a whistleblower lawsuit, the Department of Justice said.

Federal prosecutors claim that HMA, under Newsome's guidance, pressured emergency department physicians to admit Medicare patients without regard to medical necessity, and that the care provided to the beneficiaries should have been provided in a less costly outpatient or observation setting.

Prosecutors also alleged that Newsome's HMA paid EmCare, a company that provided physicians to staff HMA hospital EDs, to recommend admission when patients should have been treated on an outpatient basis. 

"A physician's healthcare decisions should be driven by what is in the patient's best interest, not by what helps line a provider's pockets," said Barbara Bowens, acting U.S. Attorney for South Carolina. "The U.S. Attorney's Office will not tolerate false claims based on unnecessary hospital admissions, which drive up healthcare costs and can harm patients."

As part of the alleged scheme, Newsome saw that HMA made bonus payments to EmCare ED physicians and tied EmCare's retention of existing contracts and receipt of new contracts to increased admissions of patients who came to the ED.

Newsome served as CEO of HMA from September 2008 through July 2013. HMA, which was based in Naples, Florida, was acquired by Community Health Systems Inc. in January 2014, after the alleged conduct at HMA occurred. 

Newsome's attorney, Barry Sabin, said his client "is pleased that this matter is now behind him."

"In reaching a settlement, Mr. Newsome continues to emphatically deny the government's claims," said Sabin, a partner at Latham & Watkins. "He is pleased to now end the uncertainty and high expense of protracted litigation."

HMA and EmCare have already settled their liabilities.

In September 2018 HMA entered into a civil settlement under which it paid $61.8 million.  Simultaneously, HMA entered into a Non-Prosecution Agreement with the Criminal Division's Fraud Section under which it paid a $35 million monetary penalty.

In addition, an HMA subsidiary that formerly owned one hospital pled guilty to a single count of conspiracy to commit healthcare fraud, and paid a $3.25 million fine. In December 2017, EmCare paid $29.6 million to resolve these allegations.   

This settlement resolves a lawsuit originally filed in the U.S. District Court for the District of South Carolina by Jacqueline Meyer, a former employee of EmCare, and J. Michael Cowling, a former employee of HMA, under the whistleblower provisions of the False Claims Act.

Meyer and Cowling will receive approximately $725,000 from the settlement.  

“A physician's healthcare decisions should be driven by what is in the patient's best interest, not by what helps line a provider's pockets.”

John Commins is a senior editor at HealthLeaders.

Photo credit: Mark Van Scyoc / Shutterstock


KEY TAKEAWAYS

Prosecutors also alleged that Newsome's HMA paid EmCare, a company that provided physicians to staff HMA hospital EDs, to recommend admission when patients should have been treated on an outpatient basis.

As part of the alleged scheme, Newsome saw that HMA made bonus payments to EmCare ED physicians and tied EmCare's retention of existing contracts and receipt of new contracts to increased admissions of patients who came to the ED.

HMA was acquired by Community Health Systems Inc. in January 2014, after the alleged conduct at HMA occurred.

Newsome's attorney said his client denies any wrongdoing and 'is pleased that this matter is now behind him.'


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