Criminal charges for hospital execs in Georgia whistleblower case

Criminal charges for hospital execs in Georgia whistleblower case

A whistleblower’s allegations have sparked a wide-reaching investigation of alleged fraud by four hospitals in Georgia, and two executives have pleaded guilty to conspiracy.

The whistleblower’s civil lawsuit contends a prenatal clinic, Clinica de la Mama, was paid to refer clients to Hilton Head (SC) Hospital and four Georgia hospitals for Medicaid-paid deliveries. Tenet Healthcare Corp., which owns Hilton Head Hospital, and Health Management Associates (HMA), the Georgia hospital company, conspired with Clinica de la Mama to generate Medicaid revenue by targeting illegal immigrants, the suit said. The suit also claims Hilton Head Hospital paid the clinic for these referrals.

Gary Lang left Hilton Head in 2007 to become CEO at Clearview Regional Medical Center in Monroe, GA. The civil lawsuit and criminal charges claim he duplicated the referral practice there. "These illegal referral arrangements resulted in women being steered to deliver their babies at hospitals on the basis of Clinica’s and the hospitals’ financial self-interest, regardless of whether it was in the women’s best interest," U.S. Attorney Sally Quillian Yates, JD, said in a news release.

Lang pleaded guilty to conspiracy to violate an anti-kickback law and will enter into a plea agreement with the U.S. Attorney’s Office, according to court documents. Lang face a maximum penalty of five years in prison and a fine of $250,000. His negotiated plea deal will be issued Jan. 15, 2015.

Co-conspirator Tracey Cota, chief operations officer of Clinica de la Mama from 2000 to 2010, pleaded guilty to the same charges. In court filings, the hospitals argued they had legitimate business relationships with the prenatal clinics and the referrals were the result.

The civil lawsuit is ongoing. The state of Georgia and the federal government joined the civil case, and now the hospitals could face hundreds of millions of dollars in penalties. Tenet Healthcare has faced allegations of improper billing in the past. In 2012, it agreed to pay $42.7 million to settle a Medicare overbilling case. In 2006, it agreed to pay more than $900 million over four years to settle another federal case involving improper billing.

Marlan Wilbanks, JD, partner with the Atlanta law firm of Wilbanks & Bridges, represents whistleblower Ralph D. "Bill" Williams. Wilbanks’ firm focuses on representing whistleblowers. In another case handled by the firm, U.S. v. Halifax Hospital Medical Center et al., whistleblower Elin Balid-Kunz gained inside knowledge from more than 17 years of employment at Halifax Hospital in Daytona, FL, and is presently the Halifax director of physician services. In her whistleblower lawsuit, Kunz alleged that Halifax knowingly and intentionally submitted thousands of fraudulent claims to Medicare. Additionally, she alleges that Halifax paid kickbacks to key referring physicians to generate patient referrals to the hospital. On March 3, 2014, Halifax Health settled the Medicare kickback claims portion of this case for $85 million.

In the case involving HMA, Wilbanks says it appears the two executives awaiting sentencing are cooperating with prosecutors. Wilbanks notes that the case involves "sham contracts" to provide prenatal services to patients. "They weren’t really contracts to provide those services," Wilbanks says. "They really were cover so that referrals could be captured from these clinics as a feeder system from the clinics to these hospitals, where undocumented women would give birth and the services provided would be paid for by Medicaid. It was a ruse that would allow a steady flow of these undocumented women to the hospitals."

The scheme was profitable, Wilbanks explains, because the Medicaid reimbursement for deliveries is lucrative when the overhead is fixed.

The plan fell apart when Williams, CEO of one of the HMA hospitals, found a contract on his desk for his signature. The contract was the renewal of a previous agreement with Clinica de la Mama to pay for around-the-clock translators, Williams realized he had never seen a translator at the hospital. When he asked around, no one else had seen translators either, but he was told that the contract was a standard one that Tenet had used for years. More digging revealed that the translator contract was how the hospitals paid the clinic for referrals.

Williams expressed his concern. He said the hospital was receiving no benefits from a service that cost them $10,000 a month, and it was clearly illegal. HMA stopped the arrangement and had only been involved in it for a short time, Wilbanks says. For that reason, HMA will pay less in the end than Tenet, which had run the scheme for a decade, he says. "Tenet even ran a cost benefit analysis on this plan at some point and found that they were getting a 50% return on investment — a 50% return on what was supposed to be a cost center," Wilbanks says.

Risk managers should be on the alert for any contract that could be, in whole or in part, a method of laundering money used for kickbacks or other illegal acts, Wilbanks says. "They could have legitimately contracted for translation services or any other services from this clinic, but if even a part of that contract induces referrals for care paid with government benefits, that contract is illegal," Wilbanks says. "We’re not saying no interpretation services were provided, but the contract was set up to provide cover for the checks that were going on a monthly basis to the clinic for referrals."

The plan also called for physicians with privileges at the hospitals to see patients at the Clinica de la Mama sites just before their due dates, supposedly as a free service for an underserved population.

"What they really were doing was getting their names and saying you’re my patient now, and I have privileges at this hospital, and that’s where you go when you’re ready to deliver,’" Wilbanks explains. "The doctors benefitted with the fee to deliver the baby, and the hospitals benefitted from the Medicaid payment."

The case shows the need for a strong compliance program at the health system level and also at individual hospitals, says Andrew A. Oppenberg, MPH, CPHRM, DFASHRM, director of risk management and patient safety officer at Dignity Health Glendale Memorial Hospital and Health Center in Glendale, CA.

"Risk managers need to be working with their compliance officers on issues like this," Oppenberg says. "There is a role for both compliance and risk management in preventing these kinds of arrangements, because you’ve made it clear that fraud like this won’t be condoned, and also in spotting it if the deal is made anyway."

A solid compliance program should have uncovered a fraud scheme such as the one alleged with HMA, Oppenberg says. The whistleblower should not have been the first person to realize there were no translators in house, and there might have been others who were afraid to say anything, he says.

"An important part of a compliance program, and risk management too, is creating a culture in which this kind of activity is not tolerated," Oppenberg says. "Just
as is important is instilling a culture in which people are not afraid to speak up when they see something wrong."