Prime Healthcare, CEO settle billing fraud allegations

Ontario, Calif.-based Prime Healthcare Services and its founder and CEO Prem Reddy, MD, have agreed to pay the federal government $1.25 million to settle false claims allegations, according to the Department of Justice.

The settlement resolves allegations that two Prime hospitals — Roxborough Memorial Hospital in Philadelphia and Lower Bucks Hospital in Bristol, Pa. — violated the False Claims Act. The hospitals allegedly admitted patients for overnight stays who required less costly outpatient care. The hospitals also billed for more expensive patient diagnoses than the patients had, the Justice Department alleged.  

Prime acquired Roxborough Memorial Hospital on Feb. 22, 2012, and acquired Lower Bucks Hospital on Oct. 3, 2012. From the dates Prime acquired the hospitals until Sept. 30, 2013, the two hospitals allegedly admitted Medicare patients for medically unnecessary short-stay admissions. The hospitals allegedly upcoded inpatient diagnoses from the dates of acquisition until Dec. 31, 2014, according to the Justice Department.

"Prime Healthcare is pleased to have resolved this lawsuit," Joel Richlin, Prime Healthcare's deputy general counsel, said in an emailed statement. "This settlement allows Prime Healthcare to continue to focus on its mission of providing quality, compassionate healthcare while saving hospitals, savings jobs, and saving lives."

The allegations against Prime were originally brought by a former employee of Roxborough Memorial Hospital under the qui tam, or whistle-blower, provisions of the False Claims Act.

The claims resolved by the settlement are allegations only and there was no determination of wrongdoing. According to a Prime Healthcare spokesperson, the quality of clinical care provided at the hospitals was never in question. 

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