August 5, 2014

National hospital chain settles whistleblower lawsuits for $98 million

Federal prosecutor thanks Charlotte doctor for key assistance in the government’s case

The nation’s largest operator of acute care hospitals has agreed to pay $98.15 million to resolve seven whistleblower lawsuits, including one by the former medical director of the emergency department at Lake Norman Regional Medical Center in Mooresville.

The federal government called Charlotte Dr. Thomas Mason’s assistance integral to the settlement announced this week involving Community Health Systems Inc.

“He and his lawyers have been available to assist the United States multiple times in this case,” U.S. Attorney Anne Tompkins said in a statement. “Information from citizens like Dr. Mason and the work of their legal representation is essential to detecting and stopping fraud against government health care programs and recovering public funds.”

The lawsuits contended that Community Health Systems knowingly billed government health care programs for inpatient services that should have been billed as outpatient or “observation” services, according to the U.S. Justice Department.

Community Health Systems is based in Franklin, Tenn., and has 206 affiliated hospitals in 29 states, including Lake Norman Regional and Statesville-based Davis Regional Medical Center.

The government contended that from 2005 through 2010, CHS engaged in “a deliberate, corporate-driven scheme” to increase inpatient admissions of Medicare, Medicaid and Department of Defense TRICARE program beneficiaries at its hospitals.

The admissions were medically unnecessary and patients should have received the care elsewhere, the federal government contended.

As part of the settlement, CHS entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services. The company must retain independent review organizations to monitor the accuracy of the company’s claims for inpatient services furnished to federal health care program beneficiaries.

CHS said in a statement the settlement reflects the company’s desire to end the investigation, which began in 2011, and “to avoid the significant expense and distraction of litigation. Under the terms of the agreement, there is no finding of improper conduct by Community Health Systems or its affiliated hospitals, and the Company has denied any wrongdoing.”

The settlement doesn’t include hospitals CHS acquired from Health Management Associates in January, including Lake Norman Regional and Davis Regional.

But prosecutors singled out Mason, a physician at Mid-Atlantic Emergency Medical Associates in Charlotte, for providing key help to the federal government.

“We thank Dr. Mason for his insight and assistance in this case,” Tompkins said.

The settlement resolves lawsuits that Mason and eight other whistleblowers nationwide filed under provisions of the False Claims Act, which permits private parties to sue on behalf of the government and obtain part of the money the government recovers. The whistleblowers’ share of the settlement hasn’t been determined, prosecutors said.

Mason didn’t reply to an Observer request for comment Tuesday. In a statement, his lead lawyer, Marc Raspanti of Philadelphia, Pa., said Mason and his legal team are glad to have assisted “in the government’s efforts to halt fraud, waste and abuse. … Dr. Mason took the risks necessary to come forward and help expose this scheme.”

In 2010, Mason and Dr. Steven Folstad filed their original lawsuit in U.S. District Court in Charlotte against Lake Norman Regional Medical Center, Davis Regional Medical Center and the then-owner of the hospitals, Health Management Associates of Naples, Fla.

The doctors claimed their group’s longstanding contracts to provide emergency care at the hospitals were terminated in 2010 because they refused to accept “illegal cash inducements” and resisted pressure to meet “corporate benchmarks” to maximize profits.

Mason was medical director of Lake Norman’s emergency department from 1997 to 2010. Folstad was medical director at Davis Regional’s emergency department from 2000 to 2008, when he became CEO of the Mid-Atlantic group, which continues to provide emergency services for three Charlotte-area hospitals owned by Novant Health.

The lawsuit was sealed while federal investigators looked into the doctors’ complaints. The suit was unsealed in December after the U.S. Department of Justice decided to join the suit in connection with some of the doctors’ claims against HMA. The Justice Department also joined seven other lawsuits against HMA in other states.

HMA denied the lawsuits’ assertions but said it was cooperating with the Justice Department.

Mason’s Charlotte lawyer, James Wyatt, said Tuesday the lawsuit against HMA remains active. Staff writer Karen Garloch contributed.

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