Prime Healthcare Services will pay $65 million to settle a federal whistleblower lawsuit that accused the fast-growing California hospital chain of engineering a wide-ranging Medicare fraud scheme.
The settlement, announced Friday by federal prosecutors in Los Angeles, requires Dr. Prem Reddy, Prime’s founder and the alleged architect of a scheme to pump up its Medicare billings, to pay $3.25 million of the settlement out of his own pocket.
Prime also must abide by a five-year “corporate integrity agreement” that requires the company to hire independent consultants to verify its Medicare billings, records show.
Federal scrutiny of Prime’s billing practices began after a 2011 investigation by The Center for Investigative Reporting that highlighted multimillion-dollar anomalies in the chain’s billings to the federal Medicare program.
Prime, headquartered in San Bernardino County, is among the nation’s largest hospital chains. With an affiliated nonprofit foundation, it runs 45 hospitals in 14 states. In agreeing to the settlement, the company did not admit wrongdoing.
“There was no finding of improper conduct or wrongdoing of any kind by Prime Healthcare,” the company said in a statement.
“Prime Healthcare’s exemplary record of clinical quality care was never in question. This matter dealt with the technical classification of the category under which patients were admitted and billed.”
The whistleblower lawsuit was filed in 2011 by Karin Berntsen, a nurse and risk management director at Prime’s Alvarado Hospital in San Diego County. She claimed personal knowledge of the chain’s efforts to boost its bottom line with false billings and improper hospital admissions. In 2016,... Read More >