Ex-CEO of Florida hospital chain will pay $3.5M to end false billing case

The former CEO of Naples, Fla.-based Health Management Associates has entered into a settlement agreement with the federal government that resolves allegations that he caused HMA to submit false claims to Medicare and pay illegal kickbacks to physicians, according to the Department of Justice.

Federal prosecutors alleged Gary Newsome, who served as CEO of HMA from September 2008 through July 2013, caused HMA to pressure emergency room physicians to increase admissions without regard to medical necessity. As a result, Medicare beneficiaries were admitted to HMA hospitals on an inpatient basis when they should have been treated in an outpatient setting, according to the Justice Department.

The government claimed the medically unnecessary admissions boosted HMA's finances because hospitals generally receive significantly higher payments from Medicare for inpatient admissions than outpatient treatment.

Federal prosecutors further alleged that Mr. Newsome caused HMA to pay kickbacks to emergency room physicians to recommend admission when patients should have been treated on an outpatient basis.

Mr. Newsome agreed to pay the federal government $3.46 million to resolve the allegations, which were originally brought under the whistleblower provision of the False Claims Act.

"Mr. Newsome is pleased that this matter is now behind him," said Latham & Watkins partner Barry Sabin, who represented Mr. Newsome in this matter. "In reaching a settlement, Mr. Newsome continues to emphatically deny the government's claims. He is pleased to now end the uncertainty and high expense of protracted litigation." 

Franklin, Tenn.-based Community Health Systems acquired HMA in January 2014, after the alleged fraud scheme ended.

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