FOR IMMEDIATE RELEASE CIV
FRIDAY, JANUARY 16, 1998 (202) 616-2765
TDD (202) 514-1888
WASHINGTON, D.C. -- A hospital company will pay the United States and Tennessee a total of $3 million to settle allegations it billed and sought to defraud the Medicaid and Medicare programs for outpatient services that were not supervised by a physician and for inpatient rehabilitation care for which there was inadequate physician involvement, the Department of Justice announced today.
Assistant Attorney General Frank W. Hunger of the Civil Division and U.S. Attorney Carl K. Kirkpatrick of Knoxville, Tennessee, said the settlement resolves a qui tam suit brought against Paracelsus Healthcare Corporation, which is based in Houston, Texas.
"We want all health care providers who participate in Medicaid and Medicare programs to understand that we will take action against those who try to defraud these vital programs for America's senior citizens and the poor," said Hunger.
The suit claimed the company violated Medicare and Medicaid regulations by admitting, treating and discharging outpatients undergoing alcohol and drug rehabilitation at the company's clinics in middle and eastern Tennessee without any physician involvement. It also said that patients treated in the hospital's inpatient substance abuse rehabilitation unit failed to receive the number of physician visits required under Tennessee's Medicaid regulations.
The settlement also resolves claims that the hospital deceived Tennessee regarding the frequency of inpatient physician visits being performed, the Department said.
As part of the settlement, Fentress County General Hospital, the Paracelsus facility in Jamestown, Tennessee, where the violations occurred, has reached an agreement with the Office of the Inspector General of the Department of Health and Human Services to implement a corporate integrity program to ensure that the hospital will comply with federal and state law.
The agreement settles a suit originally brought as a qui tam case in U.S. District Court in Knoxville as United States ex rel. Mays v. and State of Tennessee ex rel. James C. Mays, III v. Paracelsus-Fentress County General Hospital, Inc., Paracelsus Healthcare Corporation and Jack C. Smith, M.D., (E.D. of Tenn., Civil No. 3:94-cv-0134). As part of the settlement, Mays, a former counselor who filed the suit on behalf of the United States and Tennessee, will receive $599,817.21 of the recovery.
The case was conducted jointly by the Civil Division and the U.S. Attorney's office in Knoxville with the assistance of the Tennessee Bureau of Investigation and the Tennessee Bureau of TennCare in Knoxville and Nashville, Tennessee.
98-013