Editor's note: This story has been updated to include a response from Newsome's legal team.
The former CEO of a Naples, Florida, hospital chain has agreed to pay nearly $3.5 million to settle false billing and kickback claims.
Gary Newsome, the former chief executive of Health Management Associates (HMA), will repay the funds to the government to resolve allegations that he caused HMA to knowingly submit false claims to federal programs.
According to the allegations, Newsome caused the hospital to pressure emergency physicians into increasing the number of inpatients admitted to the hospital when they could have been treated effectively in a less-expensive outpatient setting, a Department of Justice (DOJ) release said.
The settlement will also resolve charges that Newsome paid kickbacks to emergency physicians for referrals, the DOJ said.
“Those will bill federal healthcare programs for unnecessary hospital stays will be held accountable for wasting federal dollars,” Jody Hunt, assistant attorney general for the DOJ’s civil division, said in the announcement. “Patients deserve the unfettered, independent judgment of their healthcare professionals.
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According to the DOJ, Newsome pressured emergency doctors to admit patients for inpatient care even when they didn’t need it. In exchange, he paid kickbacks to EmCare, the group that staffed his hospitals'’ emergency departments.
Newsome was CEO of HMA between September 2008 and July 2013. The hospital chain was later acquired by Community Health Systems in 2014 after Newsome’s alleged conduct ended, according to the announcement.
In a statement emailed to FierceHealthcare, Barry Sabin, partner at Latham & Watkins who represented Newsome, said the former CEO is "pleased this matter is now behind him."
"In reaching a settlement, Mr. Newsome continues to emphatically deny the government’s claims," Sabin said. "He is pleased to now end the uncertainty and high expense of protracted litigation.”
HMA and EmCare have already agreed to settlements in the case as well, the DOJ said. In September, HMA agreed to pay $61.8 million in a settlement, while EmCare settled claims against it in December 2017 for $29.6 million.
In addition, HMA entered into a non-prosecution agreement with the DOJ in which it paid a $35 million penalty in addition to a related civil settlement involving violations of the Anti-Kickback Statute and the Stark Law which prohibit hospitals from providing financial inducements to physicians for referrals.
An HMA subsidiary that owned a hospital also paid a $3.25 million fine for healthcare fraud, the DOJ said.
“Providers are expected to follow rules and bill properly,” Derrick Jackson, special agent in charge for the Department of Health and Human Services Office of Inspector General, said. “Taxpayer money wasted is money stolen from vital government health programs.”