News and Press Releases

Parkway Hospital Agrees to Settle Civil Fraud Allegations

August 13, 2007

Roslynn R. Mauskopf, United States Attorney for the Eastern District of New York, and Gary Heuer, Special Agent-in-Charge for the Health and Human Services Office of Inspector General, Office of Investigations (HHS), announced today that the United States reached a settlement with Parkway Hospital, Inc., located in Forest Hills, New York (Parkway), resolving claims that Parkway defrauded the Medicare Program. Under the terms of the settlement, the United States received a payment of $1,075,000 for damages caused to Medicare by Parkway. As a further part of the settlement, Parkway has agreed to institute a compliance program in accordance with the terms of a Corporate Integrity Agreement entered into with the Department of Health and Human Services.

The settlement followed an investigation by the United States Attorney’s Office and HHS of allegations made by Anthony Fullington, a former Director of Finance at Parkway. Fullington’s allegations were contained in a complaint filed pursuant to the civil False Claims Act, which authorizes persons who have uncovered fraud against the government to file claims on behalf of the United States. If the United States is successful in resolving or litigating those claims, the person who originally made the allegations may share in part of the recovery. The government’s investigation established that for the years 1992 through 1998, Parkway fraudulently included costs in annual filings with Medicare, known as Hospital Costs Reports, that were not covered by Medicare, including costs associated with clinics owned by Parkway’s physician owners and operated by Queens Medical Management, Inc.

Under the terms of the Corporate Integrity Agreement, Parkway is obligated to establish and maintain a Compliance Program that includes the appointment of a Compliance Officer, creation of a Compliance Committee comprising key members of senior management, and the adoption of a Code of Ethics. Parkway must also engage an independent auditor to conduct annual audits of cost report submissions to the federal health care programs. The express purpose of the Compliance Program is to ensure that Parkway will meet all requirements of Medicare and other federally-funded health care programs.

In settling the case, Parkway has denied the government’s allegations.

“At a time of rapidly rising medical costs, we cannot and will not tolerate the misuse of our nation’s scarce health care resources,” stated United States Attorney Mauskopf. “We are determined to protect the integrity of Medicare and to hold health care providers who violate the rules for participation in the program accountable.” Ms. Mauskopf thanked the Department of Health and Human Services, Office of Inspector General, for its assistance in the case.

“It is critical that hospitals such as Parkway understand that including illicit expenses on Medicare Cost Reports inflates Medicare costs and the cost of health care generally,” stated HHS Special Agent-in-Charge Gary Heuer. “It is important for the public to realize that this type of conduct will be vigorously investigated by the Office of the Inspector General and through strategic alliances with other investigative agencies.”

The government’s case was prosecuted by Assistant United States Attorney Richard K. Hayes, with audit assistance provided by Emily J. Rosenthal. The Corporate Integrity Agreement was negotiated by Senior Counsel Gregory Wellins of the Office of Counsel to the Inspector General for the Department of Health and Human Services.