Feds join executive's $50M false claims suit against Prime Healthcare

The Department of Justice has intervened in a whistle-blower lawsuit against Prime Healthcare, alleging the Ontario, Calif.-based hospital chain 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.

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 government joined the case this week.

In the suit, Ms. Bernsten accuses Prime leadership of forcing caregivers at Alvarado Hospital to avoid admitting patients for observation. The suit estimates that Alvarado's fraudulent short-stay inpatient admission billings exceed $8 million. Ms. Bernsten claims the same practices were used at Prime's other hospitals throughout California, which resulted in false billings totaling more than $50 million.

In its motion to intervene in the case filed Monday, the DOJ said multiple witnesses who have worked at various Prime hospitals alleged Prime Healthcare President and Chairman Prem Reddy, MD, would criticize emergency department physicians and demand their termination if he decided they were passing up opportunities to admit Medicare beneficiaries to the hospitals. Dr. Reddy would also allegedly increase work hours for ED physicians who had admitted more Medicare beneficiaries and decrease work schedules for those who had a relatively low rate of admission.

Prime Healthcare General Counsel Troy Schell said he's confident the hospital network will be exonerated.

"The allegations under investigation arise from complex regulation and a lack of clarity between what federal regulators and physicians believe necessary to adequately document medical necessity for hospital admission," Mr. Schell said. "Similar investigations have involved almost every major health system and hundreds of hospitals across the country."

More articles on healthcare industry lawsuits:

Whistle-blower claims 33 hospitals submitted more than $1B in fictitious costs
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