Auditor: 15-bed Missouri hospital at heart of $90M billing fraud scheme

Putnam County Memorial Hospital, a 15-bed hospital in Unionville, Mo., received $90 million in insurance payments in less than a year for lab services that were performed at other facilities across the country, according to The St. Louis Post-Dispatch, which cited a report released Wednesday by Missouri State Auditor Nicole Galloway.

According to Ms. Galloway's report, Putnam County Memorial Hospital contracted with Hospital Laboratory Partners in September 2016 to operate a clinical laboratory on behalf of the hospital.

"Immediately upon signing the management contract with the hospital, the CEO and his associates began billing significant amounts of out-of-state lab activity through the hospital," according to the auditor's report.

Putnam County Hospital allegedly acted as a shell company by submitting claims for other labs and funneling the insurance payments through the hospital.

"Based on our review of hospital accounts, the vast majority of laboratory billings are for out-of-state lab activity for individuals who are not patients of hospital physicians," states the auditor's report.

Ms. Galloway has turned her findings over to the Missouri attorney general, the FBI and the Putnam County prosecuting attorney, according to KCUR.

On Thursday, Hospital Laboratory Partners said the auditor's report mischaracterizes the payments. The company said Putnam County Hospital, a critical access hospital, is authorized to bill for off-site lab work. 

"The assignment of non-patient lab specimens has been standard practice for rural and critical access hospitals for many years," Hospital Laboratory Partners attorney Mark Thomas said in a statement to The Kansas City Star. "The purpose of the rural/critical access exceptions is to give rural healthcare facilities a fighting chance to survive and serve their local communities."

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