Federal prosecutors have intervened in a whistleblower lawsuit against Prime Healthcare Services Inc. and the system's CEO that alleges emergency department physicians were pressured to admit patients who did not need inpatient care, according to the Justice Department.
The lawsuit targets 14 hospitals in California owned and operated by Ontario-based Prime Healthcare Services. The whistleblower lawsuit was brought by Karen Berntsen, the former director of quality and risk management at Alvarado Hospital in San Diego, who estimated that improper short-stay admissions accounted for more than $50 million in false claims.
Along with Prime and the 14 California hospitals, the lawsuit specifically names Prem Reddy, M.D., the company's founder and CEO, alleging Reddy directed the corporate practice of pressuring ED physicians to admit patients even in cases where it was medically unnecessary. Since the release of the Yates memo last September, the DOJ has made a point of emphasizing individual accountability during fraud investigations.
The DOJ investigation discovered Reddy tried to fire physicians who did not admit Medicare beneficiaries and adjusted work schedules based on each physician's admission rate, according to the Los Angeles Times.
In a statement to the LA Times, Prime pointed to a "lack of clarity" between federal regulations and a physician's perspective of medical necessity, but indicated it was confident the company "will prevail and ultimately be exonerated."
Other hospitals have faced similar claims, including Sacred Heart Hospital in Chicago, where three executives were sentenced for unnecessarily admitting nursing home patients through the ED and performing unnecessary intubations. In 2014, the DOJ joined another whistleblower suit against Florida-based Health Management Associates, alleging the provider used software, threats and monetary incentives to drive admissions through the emergency department.