Settlement Over False Medicare Claims At Lower Bucks Hospital Announced

The owner of Lower Bucks Hospital and organization founder and CEO Dr. Prem Reddy has settled allegations late last week that it knowingly submitted false claims to Medicare.

Prime Healthcare Services, which owns hospitals across the country, and Reddy settled the allegations that Lower Bucks Hospital in Bristol Township and Roxborough Memorial Hospital in Philadelphia admitted patients who required only less costly outpatient care for overnight stays and billed patients for more costly diagnoses, a scheme known as “up-coding,” according to the U.S. Attorney’s office for the Eastern District of Pennsylvania.

From the U.S. Department of Justice:

Specifically, from the date that Prime acquired Roxborough and Lower Bucks through September 30, 2013, under Prime management, Roxborough and Lower Bucks hospitals admitted emergency room Medicare patients for costly and medically unnecessary one- and two-day overnight hospital stays, instead of treating the patients in less costly outpatient service or keeping them under observation. In addition, from the dates of acquisition through December 31, 2014, the hospitals upcoded inpatient diagnoses (for example, billed Medicare for more serious medical conditions than the patients actually had) to increase Medicare payments.

As part of a separate lawsuit in the Central District of California, Prime and Dr. Reddy paid the United States $65 million dollars in August 2018 to settle similar Medicare fraud allegations arising out of 14 Prime hospitals in California.

Also in August 2018, Prime, Roxborough Memorial Hospital, Lower Bucks Hospital, and Dr. Reddy entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General requiring the company to engage in significant compliance efforts over the next five years. Under the agreement, Prime is required to retain an independent review organization to review the accuracy of the company’s claims for services furnished to Medicare beneficiaries.

This settlement resolves a lawsuit filed under the False Claims Act in the U.S. District Court for the Eastern District of Pennsylvania by an employee and former employee of Roxborough Memorial Hospital.  Under the whistleblower provisions of the False Claims Act, private citizens are permitted to bring lawsuits on behalf of the United States and obtain a portion of the government’s recovery.  The False Claims Act also permits the government to intervene and take over the lawsuit.

“We are committed to ensuring that hospitals, companies that own and operate them, and their executives appropriately bill Medicare,” said U.S. Attorney McSwain.  “Charging the government for more costly services than what the patient actually needs and billing the government for more serious diagnoses than what the patient actually has is a waste of taxpayer dollars.  Those who engage in these practices will be held accountable.”

Federal authorities said that tips and complaints of potential fraud, waste, abuse, and mismanagement involving federal health care funds can be reported to the U.S. Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).