Ex-CEO of HMA Is Now A Target As Justice Department Joins Suits Alleging Fraud
The U.S. Department of Justice says it is joining eight whistle-blower lawsuits against Naples-based Health Management Associates, including one contending former CEO Gary Newsome pushed unnecessary admissions for false billings.
Newsome, who resigned as chief executive officer July 31, directed “HMA’s corporate practice of pressuring emergency department physicians and hospital administrators to raise inpatient admissions rates, regardless of medical necessity,” the federal agency said in a statement.
The lawsuit naming Newsome said he exerted significant pressure on doctors in emergency rooms to admit patients who instead could have been put under observation, treated as outpatients or discharged. They were admitted to obtain inflated or false medical claims paid by the federal government, the agency said.
Besides setting targeted admission rates in emergency rooms at all HMA hospitals, directors of emergency rooms and physicians found their employment contingent on increasing admissions, Justice Department officials said.
Hospital executives were threatened with firing if they didn’t coerce physicians to admit more patients, according to one of the lawsuits. Another suit says patients were improperly admitted for scheduled surgical procedures when they should have been treated as outpatients, the agency said.
HMA owns 71 hospitals in 15 states, including Lehigh Regional Medical Center in Lehigh Acres.
The whistle-blower complaints contend HMA paid kickbacks to other physician groups to induce referrals, which included improper direct payments and free office space to Primary Care Associates, a practice in Port Charlotte, the agency said.
“This intervention decision marks the culmination of a lengthy and comprehensive investigation into a variety of serious fraud allegations against one of our district’s largest health-care providers,” A. Lee Bentley III, Acting U.S. Attorney for the Middle District of Florida, said Monday in a statement.
Newsome’s resignation came while the Justice Department and the U.S. Securities and Exchange Commission were conducting probes of HMA’s billing practices for at least two years.
Newsome became CEO in 2008. He resigning after he said he was tapped by The Church of Jesus Christ of Latter-Day Saints to serve as president of its Uruguay-Montevideo Mission in South America.
When asked Monday about the allegations against Newsome, HMA spokeswoman MaryAnn Hodge said in a statement: “While our legal team addresses these matters and continues to cooperate with the Department of Justice’s ongoing investigation, HMA associates and physicians who practice at our facilities are focused on providing the highest quality patient care in all our hospitals.”
HMA is to be acquired by Tennessee-based Community Health Systems Inc. after 98 percent of votes cast by shareholders last week approved the $7.6 billion sale. That includes Community Health assuming $3.7 billion of HMA’s debt.
The Federal Trade Commission still has to approve the acquisition, which would make Community Health the largest hospital system in the U.S. based on the number of hospitals. Community Health would operate 206 hospitals with 31,000-plus beds.