2015 Ends with Additional Qui Tam Hospital Settlements, Including the Largest Civil Fraud Recovery by the U.S. Attorney's Office for the Southern District of Georgia

HCA Holdings Inc. Settlement

In December 2015, HCA Holdings Inc. (HCA), the largest operator of health care facilities in the United States, entered into an agreement with the federal government and the State of Georgia to pay $2 million to settle a false claims lawsuit filed in 2010. In that suit, the qui tam relator alleged that two physicians at HCA’s Fairview Park Hospital performed unsafe, medically unnecessary cardiology procedures and misled patients by overstating the severity of their conditions in order to obtain the patients’ consent. The relator alleged that as a result of this conduct, false claims for reimbursement for those procedures were submitted to and paid by Medicare and Medicaid.

The qui tam relator, who was a physician, served as the Executive Medical Director of Cardiovascular Services for Fairview Park Hospital and alleged that he had informed officials at Fairview Park Hospital and HCA about these unsafe and unnecessary procedures. The relator further alleged that his attempts to review the relevant medical charts were consistently met with resistance by the defendants, and that rather than intervening, the defendants concealed the records of the cardiac procedures. The defendants denied liability.

Under the terms of the settlement, the federal government received $1,934,590.34 and the State of Georgia received $65,409.66. The relator received $541,685.30 from the federal government’s share of the settlement and $18,314.70 from the state’s share of the settlement. The defendants also paid $625,000 to the relator’s counsel for attorney’s fees, costs, and expenses.

Memorial Health Inc. Settlement

Also announced in December 2015 was a settlement reached by the federal government with Memorial Health Inc. (Memorial Health), based out of Savannah, GA, and its related entities, to pay more than $9.8 million to resolve False Claims Act (FCA) allegations brought by a qui tam relator. As part of the settlement, Memorial Health also entered into a five-year corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General.

In a sealed complaint filed in March 2011, the relator alleged that he had served as the president and chief executive officer of defendants Memorial Health Inc. and Memorial Health University Medical Center from June 1, 2009 until he was discharged on January 5, 2011. The relator alleged that the defendants terminated his employment in retaliation for concerns that he raised about the:

• Fair market value of the defendants’ physician compensation model;

• Inappropriate consideration of downstream revenue from admission and referrals used when developing the compensation model; and

• Potential conflicts of interest on the part of board members who were related or married to physicians affected by the arrangements, or who were themselves physicians affected by the arrangements.

Further, the relator alleged that after his termination, Memorial Health failed to pay compensation and severance due under his employment agreement and conditioned the payment of benefits upon his execution of a release of all claims, including the qui tam provisions of the FCA.

The defendants denied liability.

Per the December 23 release announcing the $9,895,043.04 settlement with Memorial Health, this is the largest civil health care fraud recovery in the history of the U.S. Attorney’s Office for the Southern District of Georgia. According to syracuse.com, the relator received almost $2.3 million from Memorial Health’s settlement payment to the federal government, and Memorial Health also agreed to pay the relator’s attorney fees.

Practical Takeaway

These two settlements demonstrate that former hospital employees, whether administrators or physicians, continue to be a source of qui tam lawsuits. Hospitals and health systems should take caution when terminating one's employment after he/she has alleged potential compliance issues.