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Press Release

Phoenixville Hospital and Firstsource Solutions Agree to Pay $325,000 to Resolve False Claims Act Allegations of Submitting Altered Government Forms

For Immediate Release
U.S. Attorney's Office, Eastern District of Pennsylvania

PHILADELPHIA – United States Attorney William M. McSwain announced that Phoenixville Hospital and Phoenixville Hospital Co., LLC (“Phoenixville Hospital”) has agreed to pay $100,000 to resolve alleged violations of the False Claims Act by causing the submission of altered forms to the Pennsylvania Department of Human Services, which administers Medicaid in Pennsylvania. Additionally, Firstsource Solutions, Ltd., Firstsource Solutions USA, LLC, and its predecessor Medassist, Inc. (collectively “Firstsource Solutions”), a revenue cycle management services provider operating in Pennsylvania, has agreed to pay $225,000 for processing the alleged false claims on Phoenixville Hospital’s behalf.

Phoenixville Hospital, a community healthcare provider, delivers comprehensive medical services, including emergency room care and inpatient admissions. Phoenixville Hospital accepts patients whose hospital stays are paid for by the Medicaid program. The United States contends that Phoenixville Hospital caused the submission of false claims to Medicaid for inpatient treatment and/or emergency room visits billed by Phoenixville Hospital. On certain occasions, Phoenixville Hospital allegedly caused to be altered one of the standard Pennsylvania Department of Public Welfare General Assistance Forms, the Employability Assessment Form (PA Form 1663), to exclude the option for the medical provider to certify that the self-pay patient was “Employable.” The United States contends that, in some cases, the patient was therefore not disabled and not entitled to Medicaid coverage for the treatment being billed by the hospital. The United States further contends that Phoenixville Hospital caused to be submitted such forms from January 2008 through February 2012 and that some of these claims for Medicaid beneficiaries were false in light of Phoenixville Hospital’s conduct.

Firstsource Solutions provides revenue cycle management services to hospitals, assisting with the submissions for determination of eligibility of self-pay (uninsured) patients to the Medicaid program. The government alleges that from August 2009 through February 2012, Firstsource Solutions knowingly submitted or caused the submission of false claims to Medicaid for inpatient treatment and/or emergency room visits billed by the client, Phoenixville Hospital.

The allegations that are the subject of today’s settlement were originally alleged in two cases filed under the whistleblower, or qui tam, provision of the False Claims Act. The Act permits private parties to sue for fraud on behalf of the United States and to share in any recovery. The Act also permits the government to intervene in such actions, as the government previously did in the two whistleblower cases. The whistleblowers in these cases will receive a total of approximately $60,000 of the settlement.

“My Office will continue to investigate credible allegations of fraud against federal healthcare programs, especially when the alleged conduct has potential implications for patient treatment,” said U.S. Attorney McSwain. “Hospitals that treat Medicaid patients and the entities that process Medicaid claims must know the billing and payment rules required by those programs, and abide by them. We would also like to thank the citizens and their lawyers who initially brought this case to our attention.”

“Investigating allegations of the False Claims Act is a top priority,” said Maureen R. Dixon, Special Agent in Charge for the Office of the Inspector General, U.S. Department of Health and Human Services. “We will continue to work with the U.S. Attorney’s Office to ensure the integrity of the Medicare and Medicaid Programs.”

The government’s pursuit of these matters illustrates its emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 1-800‑HHS‑TIPS (1-800-447-8477).

This case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General. For the U.S. Attorney’s Office, the investigation and settlement were handled by Assistant U.S. Attorneys Viveca D. Parker and Scott W. Reid, with assistance from auditor George Niedzwicki. The lawsuits are captioned United States ex rel. Daniel Dimarzio v. Firstsource Solutions, LTD, Firstsource Solutions USA, LLC, and Medassist, Inc., Civil Action No. 12-1464 and United States ex rel. Susan Wilson v. Phoenixville Hospital, et al., Civil Action No. 15-596.

The claims resolved by this settlement are allegations only and there has been no determination of liability.


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Updated August 20, 2020

False Claims Act