HMA Whistleblower Lawsuits Allege Hospital Chain Pushed Admissions

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Health Management Associates (HMA), a for-profit hospital chain, is accused of a strategy that involved pushing admissions and paying kickbacks.

The Justice Department just announced that it has joined eight whistleblower lawsuits filed against HMA that describe a wide-ranging plan that included the use of threats, a sophisticated software system, and financial incentives. The strategy was meant to increase HMA’s Medicare and Medicaid payments, according to a recent The New York Times report.

Among the accusations, which go as high up as the office of the former chief executive, include the development and implementation of a physician-ranking scorecard system meant to push hospital admissions, even if hospital care was not deemed necessary, The New York Times reported. Many of the whistleblowers allege that it was the former chief who drove the money-making scheme, The New York Times wrote.

HMA also faces shareholder lawsuits and a federal securities investigation, The New York Times reported. And, last year, a former HMA executive was indicted on an obstruction charge associated with these investigations.

Meanwhile, The New York Times reports that Gary D. Newsome, the former chief at the heart of many of the accusations, created the strategy meant to inflate admissions, several of the lawsuits—which were brought by a number of physicians, individual hospital administrators, and compliance officers—allege.

One federal lawsuit filed by former division vice president and chief executive of an HMA-owned North Carolina hospital, Michael Cowling, alleges that, just after joining HMA in 2008, Newsome met with local NC hospital officials, advising them that he was implementing new protocols and using customized software, meant to “drive admissions” at hospitals. The administrators were told to closely, and daily, monitor the number of patients being admitted and to use the Pro-Med software for this purpose. It was through this scheme that physician progress was updated on the daily scorecard. Cowling confronted Newsome telling him that physicians were concerned these protocols were clinically inappropriate and would lead to high testing and admissions and that his physicians “won’t do it.” Newsome replied, “Do it anyway,” according to the lawsuit, wrote The New York Times.

Generally, when executives questioned HMA’s strategy, they were fired. For example, Jacqueline Meyer, a regional administrator for EmCare, an emergency room physician provider, refused to follow HMA’s protocols and fire doctors performing under HMA goals, she was terminated, according to the lawsuit she filed with Cowling, The New York Times reported. Also, Ralph D. Williams, an accountant with 30 years’ experience in hospital management, was hired as the chief financial officer for an HMA hospital in Georgia. Soon after joining HMA, he asked an external consulting firm to take a look at the hospital’s inpatient admission rate. Williams showed the report that confirmed the high admission rates to a higher-level HMA division executive. He was told to “burn it,” and was later fired, according to his federally filed whistleblower lawsuit.

Earlier this month, The Wall Street Journal wrote that the Justice Department was investigating HMA for alleged kickback payouts to doctors that were made in exchange for hospital referrals, according to a recently unsealed whistleblower case in federal court in Philadelphia. Court records filed by two former HMA executives indicate that HMA signed bogus contracts with physicians who served as compensated medical directors and overpaid doctors. In exchange, physicians would push patients to HMA’s facilities for treatment, the complaint alleges.

The complaint also alleges that HMA arranged joint ventures that involved HMA sharing hospital ownership with doctors who were allowed to purchase discounted shares and who later referred patients to the facilities, according to The Wall Street Journal. In addition to alleging federal anti-kickback violations, the complaint alleges violations of the False Claims Act. This case was filed in 2010 by two former executives at HMA hospitals in Pennsylvania: George Miller, former chief executive of HMA’s Heart of Lancaster Regional Medical Center and Michael Metts, former chief financial officer and chief compliance officer of HMA’s Lancaster-area facilities.

HMA regulatory filings also indicate that it has been the subject of attorneys general investigations as far back as nearly two years, The New York Times indicated.