National Hospital Chain Will Pay Over $260 Million to Resolve False Billing and Kickback Allegations

PHILADELPHIA, PA – United States Attorney William M. McSwain today announced a $55 million civil settlement with Health Management Associates (HMA) to resolve civil allegations relating to two hospitals in Lancaster, Pennsylvania.  The resolution of these claims in the Eastern District is part of a larger $260 million settlement between the Department of Justice and HMA which arose out of HMA’s fraudulent billing practices in multiple healthcare institutions across the United States.

Between 2009 and 2012, two former HMA hospitals, Lancaster Regional Medical Center and Heart of Lancaster Medical Center in Pennsylvania, billed federal health care programs for services referred to the hospitals by individual physicians and physician groups.  According to the government, HMA compensated these physicians and physician groups through complex kickback arrangements in exchange for a patient referral stream. In one instance, HMA bought two businesses from a physician group for grossly inflated amounts.  HMA also paid that same physician group under a contract that was styled as payment for services that were never performed or that neither party ever had any intention of performing. In another instance, HMA paid a local surgeon exorbitantly more than the fair market value of his services.  According to the government, these arrangements were intentionally structured to disguise payments which were, in actuality, payments for patient referrals, not for legitimate services. 

“Our resolution of this matter and the significant recovery we have obtained show once again that no matter how complex the scheme is, we will find it, stop it, and punish it,” said U.S. Attorney McSwain.  “HMA covered up kickbacks for patient referrals with a host of sham joint venture agreements, lease payments, and management agreements.  These sorts of improper physician inducements are a form of ‘pay to play’ business practices that will not be tolerated.  Healthcare institutions cannot pad their bottom line at the expense of the American taxpayers.  And most importantly, this conduct must be rooted out because it gets in the way of providing top-notch patient care to American citizens.”

The allegations resolved by the settlement were brought in eight lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery.  The eight qui tam cases, which were filed in various districts including the Eastern District of Pennsylvania, were transferred to the U.S. District Court for the District of Columbia as part of a multi-district litigation presided over by the Honorable Reggie B. Walton. 

George E. Miller and Michael J. Metts, former HMA hospital executives in Lancaster, filed suit in the Eastern District of Pennsylvania, alleging the improper financial relationships between HMA and the physicians groups.  Mr. Miller and Mr. Metts will receive approximately $12.4 million as their share of the recovery from HMA in that case.  “We sincerely thank Mr. Miller and Mr. Metts.  Together with their lawyers, these two citizens provided essential assistance to the government throughout this case.  Without the willingness of relators to shed light on allegations, preserving government program funds would be far more challenging.  Their efforts played a vital role in the resolution of these cases,” said U.S. Attorney McSwain. 

“Compliance with government healthcare rules requires that patients only receive treatment they actually need.  Then government programs should be billed just for those services.  No more, no less,” said Derrick L. Jackson, Acting Assistant Inspector General for Investigations at the U.S. Department of Health and Human Services.  “Let there be no doubt—we will continue to protect federal healthcare programs and beneficiaries by holding provider organizations fully accountable.”    

This case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General and U.S. Office of Personnel Management Office of the Inspector General.  For the U.S. Attorney’s Office, the investigation and settlement were handled by Assistant U.S. Attorneys Charlene Keller Fullmer and Veronica Finkelstein.

The civil claims resolved by the settlement are allegations against HMA only, and there has been no determination of liability.