Since 2013, various hospitals have been caught allegedly defrauding the taxpayers to the tune of millions of dollars a year.  In an effort to avoid full exposure, they have paid millions of dollars to settle allegations of False Claims Act (FCA) violations that stemmed from a single whistleblower’s lawsuit in Arkansas. Last week the latest of these settlements was announced by the Justice Department.

In a statement June 5, The Justice Department said Allegiance Health Management, Inc., (Allegiance), a post-acute healthcare management company based in Shreveport, Louisiana, and four hospitals it owned and operated, have agreed to pay more than $1.7 million to resolve False Claims Act allegations that it submitted claims for reimbursement from Medicare for medically unreasonable or unnecessary services.

Since 2005, Allegiance arranged with numerous hospitals throughout the Southeastern United States to provide Intensive Outpatient Psychotherapy (IOP) services to patients on their behalf.  Allegiance established an Inspirations Outpatient Counseling Center in each of these hospitals where its employees and those under its direction and control identified potential patients, created patient treatment plans, and performed IOP services, among others.

This settlement resolves allegations that at each of the Inspirations Outpatient Counseling Centers, Allegiance provided IOP services to Medicare beneficiaries that did not qualify for Medicare reimbursement because 1) the patients’ medical condition(s) did not call for IOP treatment; 2) the patients’ treatments were not provided through an individualized treatment plan designed to help individual patients address specific mental health needs and reach achievable goals; 3) the patients’ progress was not being adequately tracked or documented; 4) the patients received an inappropriate level of treatment; or 5) the therapy provided was primarily recreational or diversional in nature, and not therapeutic.

The Allegiance hospitals that entered the settlement are: Allegiance Health Management, Inc.; Allegiance Behavior Health Center of Plainview, LLC; Allegiance Specialty Hospital of Kilgore, LLC; North Metro Medical Center a/k/a Allegiance Hospital of North Little Rock, LLC, and Sabine Medical Center a/k/a Allegiance Hospital of Many, LLC.

Before this, more than 20 other hospitals reached settlements to resolve the same False Claims Act allegations. Sixteen of these hospitals and their respective corporate parents collectively agreed to pay $15.69 million in May 2015. Two years before that, in October 2013, LifePoint Hospitals Inc. and two of its subsidiaries, PHC-Minden L.P., doing business as Minden Medical Center, and PHC-Cleveland Inc., doing business as Bolivar Medical Center, collectively paid more than $4.67 million.

As the whistleblower who brought the fraud to the federal government’s attention, he reportedly receives 17 percent of the settlement. Ladner filed a lawsuit in the Eastern District of Arkansas under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery.  The individual commencing the action on behalf of the government is known as the relator and individuals must file a qui tam lawsuit with whistleblower counsel.

In this $1.7 million settlement, the awarded whistleblower stands to receive around $300,000. In the previous settlements, he has already received more than $3 million. The qui tam relator used to work for Allegiance. He was Program Manager at the Inspirations Outpatient Counseling Center located at Wesley Medical Center in Hattiesburg, Mississippi.

All in all, the string of settlements combine amounted to more than $22 million payments from various hospitals in at least seven states. Though these payments resolved the FCA cases, the allegations involved still remain as allegations.

Acting Assistant Attorney General Chad D. Readler for the Civil Division said they will continue to hold accountable “those who waste taxpayer dollars and place profit above the legitimate needs of patients.”

“Entities that bill for needless services – as alleged here – cheat taxpayers and threaten the integrity of government health programs,” said Special Agent in Charge CJ Porter for the Office of Inspector General of the U.S. Department of Health and Human Services.

The claims settled by the current agreement are allegations only, and there has been no determination of liability.  The lawsuit is captioned U.S. ex rel Ladner v. Allegiance Health Management, Inc., et al, No. 4:10-CV-170 (E.D. Ark.). #

If you have knowledge of Medicare Fraud, Medicaid Fraud, or any other fraud against the government, don’t hesitate to Call Toll Free (877) 561-0000.

Whistleblower Receives Award in latest string of False Claims Act Settlements

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