Former Hospital Chain CEO to Pay Nearly $3.5 Million to Settle False Billing and Kickback Allegations

The former CEO of a hospital chain that was headquarted in Naples, Florida has agreed to pay $3.46 million to settle allegations that he caused the hospital to knowingly submit false claims to government health care programs. Gary D. Newsome was the CEO of Health Management Associates (HMA) from September 2008 to July 2013, during which time he caused patients to be admitted who could have been treated on a less costly, outpatient basis, according to the Department of Justice’s release. Allegations that Newsome caused HMA to pay remuneration to Emergency Department (ED) physicians in exchange for referrals are also resolved by this settlement.

“A physician’s health care decisions should be driven by what is in the patient’s best interest, not by what helps line a provider’s pockets,” said Barbara Bowens, the Acting U.S. Attorney for South Carolina for purposes of this case. “The U.S. Attorney’s Office will not tolerate false claims based on unnecessary hospital admissions, which drive up health care costs and can harm patients.”

The allegations against Newsome that are resolved by this settlement payment include:

• Causing HMA to pressure ED physicians to increase inpatient admissions without regard to medical necessity;
• Causing HMA to pay remuneration to EmCare, a physician staffing company, to recommend admission when outpatient care would have been sufficient;
• Causing HMA to make certain bonus payments to EmCare ED physicians; and
• Causing HMA to tie EmCare’s retention of existing contracts and receipt of new contracts to increased admission of patients.

Both HMA and EmCare have previously made settlement payments in order to resolve these allegations. EmCare paid $29.6 million in December of 2017 while HMA paid a total of over $95 million in September of 2018. This included a $61.8 million civil settlement and a $35 million penalty paid after HMA entered into a Non-Prosecution Agreement. A $3.25 million fine was also paid by a former HMA subsidiary who pled guilty to a single count of conspiracy to commit health care fraud.

This lawsuit, originally filed in the U.S. District Court for the District of South Carolina, was brought by a former EmCare employee and a former HMA employee under the qui tam, or whistleblower, provisions of the False Claims Act.

“Providers are expected to closely follow rules and bill properly,” said Derrick L. Jackson, Special Agent in Charge of the Office of Inspector General of the U.S. Department of Health and Human Services. “Further, in this case, the government contended that Newsome directed illegal payments for referrals.”

In January 2014, following the alleged conduct at HMA, the hospital was acquired by Community Health Systems.