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Health Management Associates Pays $260 Million To Settle Whistleblower Lawsuits

Department of Justice settles suit filed by Goldberg Kohn Ltd.

September 25, 2018

Health Management Associates, LLC (HMA), a subsidiary of Community Health Systems, Inc. (NYSE: CYH), today agreed to pay more than $260 million to settle whistleblower lawsuits alleging wide-ranging misconduct in emergency rooms, including $62.5 million to resolve allegations that HMA forced physicians to make unnecessary admissions to its hospitals. The United States Department of Justice joined the whistleblowers’ lawsuits, filed in federal courts throughout the country, in 2013, before prosecuting the cases in federal court in Washington, D.C. and ultimately announcing the settlement earlier today.

One of the lawsuits, filed by David Chizewer and Matthew Organ of Goldberg Kohn Ltd., alleged that HMA has, for years, intentionally and systematically admitted to its hospitals emergency room patients who did not need to be admitted, and then charged the government for those unnecessary admissions.

According to that lawsuit, HMA established benchmarks for emergency room physicians regarding the percentage of patients that must be admitted to the hospital, and then enforced those benchmarks by incentivizing and pressuring physicians to meet them. The benchmarks were allegedly driven by HMA's profit projections, rather than by any health-related criteria. As a result of this scheme, according to the complaint, HMA knowingly and routinely caused patients to be admitted to its hospitals, even though an admission was not necessary. Government health care programs, including Medicare and Medicaid, overpaid HMA for these unnecessary admissions.

Chizewer and Organ filed the lawsuit in Chicago, Ill. on behalf of a well-respected emergency room physician under the qui tam or whistleblower provisions of the False Claims Act, which encourage private citizens to report fraud against the government by allowing them to sue on behalf of the government and receive a share of any recovery. The False Claims Act also allows the government to join and prosecute such lawsuits, as the Department of Justice did in this case, calling the False Claims Act "one of the most powerful tools" in the effort to combat healthcare fraud.

The United States joined the lawsuit, along with lawsuits filed by other whistleblowers, contending, among other things, that HMA pressured physicians to increase admissions without regard to medical necessity.

"Corporate interference with physician decision-making for the purpose of bolstering profits jeopardizes patient health at the expense of American taxpayers," said Matthew Organ, a principal in Goldberg Kohn’s Litigation practice. "Our client had the integrity to come forward and stop that interference, and we are proud to represent him. We are grateful that the Department of Justice took our client's allegations seriously, and diligently and skillfully prosecuted the case."

The government team was led by Department of Justice attorneys Marie Bonkowski and Laurie Oberembt.

Community Health Systems acquired HMA in 2014, adding approximately 70 hospitals to its portfolio, making Community Health Systems one of the largest hospital chains in the country.

The lawsuit is captioned United States of America ex rel. Plantz, M.D., et al. v. Health Management Associates Inc., et al., No. 13 CV 1212 (N.D. Ill.). In 2014, the case was transferred to federal district court in the District of Columbia, along with the other whistleblower suits, and was assigned case number 14 MC 00339.

To view the press release issued by the Department of Justice, please click here. 

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