Federal court refuses to dismiss false claims suit against Prime Healthcare

A California federal court has denied three motions brought by Prime Healthcare Services in a lawsuit alleging the Ontario, Calif.-based hospital chain violated the False Claims Act.

Karin Bernsten, RN, filed the whistle-blower suit against Prime in 2011. She serves as director of performance improvement at Prime's Alvarado Hospital in San Diego. A judge ordered the lawsuit unsealed in December 2013, and the Department of Justice intervened in the case in May 2016.

The lawsuit alleges Prime defrauded the federal government of millions of dollars by billing Medicare for medically unnecessary inpatient short-stay admissions, which should have been classified as outpatient or observation cases.

Prime asked the court to dismiss the government's complaint last year, arguing that even if the government proved a physician mistakenly admitted a patient who should have only been observed, that still would not rise to the level of a false claim. On Jan. 13, the court denied Prime's motion to dismiss, holding that the government had alleged sufficient facts to support its false claims case against Prime.

The court also denied a motion filed by Prime last September to exclude statistical sampling evidence. In addition, the court denied a request by the American Hospital Association and the California Hospital Association to file friend-of-the-court briefs in the case. The court said the briefs were "untimely and unhelpful."

Regarding the court's denial of the motion to dismiss, Prime issued the following statement to Becker's

"Together with the American Hospital Association and the California Hospital Association, Prime Healthcare believes that this case represents the need to protect patients' access to the medical care they deserve and reform the process of governmental regulation of Medicare hospital admissions, which inappropriately challenges the clinical decisions of physicians and is unjust to patients, hospitals and doctors.

As in cases across the country, the government retrospectively determined that patients should have been provided a lower level of care, rather than the care determined necessary by their physician — a position that places patients at medical and financial risk. The court's ruling on the motion to dismiss is not unexpected as dismissals are rare at the pleading stage, however the court noted that the Government's case and burden appeared difficult to prove. Prime Healthcare will continue this case to defend the right of patients to receive the quality care they deserve and is confident that the evidence will show that thousands of independent physicians provided the care they deemed necessary for their patients."

More articles on healthcare industry lawsuits:

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Editor's Note: This story was updated Jan. 19 to include Prime Healthcare's statement. 


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