Gary D. Newsome, the former CEO of Florida-headquartered hospital chain Health Management Associates LLC, has agreed to pay $3.46 million to resolve allegations about his role in a large-scale fraud scheme that cost Medicare millions of dollars.
According to the whistleblower lawsuit resolved by the settlement, Newsome conspired to increase the number of admissions of Medicare beneficiaries into Health Management-controlled hospitals. The physicians also received illegal bonuses in exchange for admissions.
The hospital admissions mentioned in the lawsuit were medically unnecessary, as the patients did not require a hospital stay to be efficiently treated. The scheme was allegedly designed to increase Medicare billings.
According to court documents, Health Management Associates had implemented mandatory admission rate benchmarks. Executives threatened to fire doctors and administrators unless they ensured that at least 15 percent of all emergency department patients were admitted into the chain’s hospitals. The benchmark was as high as 50 percent for emergency room patients over 65 years of age.
Medicare and Medicaid fraud have caused massive losses for American taxpayers over the last few years. Under the False Claims Act, a whistleblower who files a lawsuit on behalf of the government is entitled to receive a share of any recoveries resulting from the ensuing fraud investigation. The two individuals who blew the whistle on Newsome, Jacqueline Meyer, and J. Michael Cowling, will receive a $725,000 award.
This is not the first time Health Management has paid millions to settle fraud allegations. Seven months earlier, the company paid the government $262 million to settle related claims, including criminal charges.
Assistant Attorney General Jody Hunt said in a statement that fraudsters who overbill Medicare and squander taxpayer money on unnecessary medical services will continue to be held accountable. Prosecutors “will pursue those who cause hospitals to offer financial incentives to physicians in return for improper patient referrals that undermine the integrity of our health care system,” Hunt said.
A spokesperson for the defendant commented, "In reaching a settlement, Mr. Newsome continues to emphatically deny the government's claims. He is pleased to now end the uncertainty and high expense of protracted litigation."
Upon the announcement of the settlement, a spokesperson for the Office of the Inspector General concluded, “Taxpayer money wasted is money stolen from vital government health programs.”