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Justice News

Department of Justice
U.S. Attorney’s Office
Middle District of Florida

Tuesday, September 25, 2018

Former Naples-Based Hospital Chain Will Pay Over $260 Million To Resolve

Fort Myers, FL – Health Management Associates, LLC (HMA), formerly a major U.S. hospital chain headquartered in Naples, Florida, will pay over $260 million to resolve criminal charges and civil claims relating to a scheme to defraud the United States, the Justice Department announced today. The government alleged that HMA knowingly billed government health care programs for inpatient services that should have been billed as outpatient or observation services; inflated claims for emergency department facility fees; and operated hospitals, including two in Port Charlotte, which paid illegal remuneration to physicians in return for patient referrals. 

Assistant Attorney General Brian A. Benczkowski, head of the Justice Department’s Criminal Division; Assistant Attorney General Joseph H. Hunt, head of the Justice Department’s Civil Division; U.S. Attorney Maria Chapa Lopez of the Middle District of Florida; U.S. Attorney Charles E. Peeler for the Middle District of Georgia; U.S. Attorney John R. Lausch, Jr. for the Northern District of Illinois; U.S. Attorney William M. McSwain for the Eastern District of Pennsylvania; U.S. Attorney Sherri Lydon for the District of South Carolina, Assistant Director Robert Johnson of FBI’s Criminal Investigative Division, and Acting Assistant Inspector General for Investigations Derrick L. Jackson for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.

Federal laws, including the Anti-Kickback Statute and the Stark Law, prohibit hospitals from providing financial inducements to physicians for referrals. These provisions are designed to ensure that physician decision-making is not compromised by improper financial incentives.

“Billing for unnecessary hospital stays wastes federal dollars,” said AAG Hunt. “In addition, offering financial incentives to physicians in return for patient referrals undermines the integrity of our health care system. Patients deserve the unfettered, independent judgment of their health care professionals.”

The civil settlement resolves, among other allegations, that during the period from 2003 through 2011, two HMA hospitals in Florida, the Charlotte Regional Medical Center and the Peace River Medical Center, billed federal health care programs for services referred by physicians to whom HMA provided remuneration in return for patient referrals. To induce patient referrals, Charlotte Regional provided a local physicians’ group with free office space and staff, as well as direct payments, which purportedly covered overhead and administrative costs incurred by the group for its management of a Charlotte Regional physician. HMA also provided another local physician with free rent and upgrades to his office space.

The civil allegations were initially made as part of a qui tam lawsuit captioned United States ex rel. Nurkin v. HMA, Inc., 2:11-cv-14-FtM-29DNF (M.D. Fla.). In January 2014, after the conduct alleged by the government had occurred, HMA was acquired by another hospital company.  

HMA has agreed to pay $93.5 million to resolve these civil allegations, with the United States receiving $87.96 million, and the State of Florida receiving $5.54 million. The whistleblower in United States ex rel. Nurkin will receive approximately $15 million as his share of the recovery in that case.

“The payment of kickbacks in exchange for medical referrals undermines the integrity of our healthcare system,” said United States Attorney for the Middle District of Florida Maria Chapa Lopez. “Today’s resolution should remind healthcare providers of their duty to comply with the law, and the heavy price to be paid for corrupt practices committed by their executives. Our Civil Division will continue to invest itself in the pursuit of health care providers who violate the law for personal gain.” 

The Nurkin investigation was investigated by the Civil Division’s Commercial Litigation Branch; the Criminal Division’s Fraud Section; the U.S. Department of Health and Human Services Office of Inspector General; the FBI Healthcare Fraud Unit Major Provider Response Team; and by the U.S. Attorneys’ Offices for the Middle District of Florida. Assistant U.S. Attorney Kyle Cohen handled the Nurkin case locally with assistance from Assistant U.S. Attorneys Jay Trezevant and David Lazarus. 

“Compliance with government healthcare rules requires that patients only receive treatment they actually need,” said HHS-OIG Acting Assistant Inspector General for Investigations Jackson. “Then government programs must be billed just for those services. No more, no less. Let there be no doubt, we will continue to protect federal healthcare programs and beneficiaries by holding provider organizations fully accountable.”   

“This settlement is a result of the FBI’s hard work and dedication to hold companies accountable for their role in healthcare fraud and abuse,” said FBI Assistant Director Johnson. “The FBI will not stand by when there are allegations that a company operates a corporate wide scheme to increase their financial gain at the expense of the U.S. government. We appreciate those who come forward with allegations of criminal misconduct and recognize the importance of the public’s assistance in our work.”

HMA was acquired by Community Health Systems Inc. (CHS), a major U.S. hospital chain, in January 2014, after the alleged conduct at HMA occurred.  Since July 2014, HMA has been operating under a Corporate Integrity Agreement (CIA) between CHS and the HHS-OIG.

 The government’s resolution of this matter illustrates the government’s 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 800-HHS-TIPS (800-447-8477).

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

False Claims Act
Health Care Fraud
Updated September 26, 2018