Four hospitals pay $8.6 million to settle whistleblower case on receiving kickbacks from ambulance companies for transport rights

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Four Houston-area hospitals have agreed to pay $8.6 million to settle allegations they received kickbacks from various ambulance companies in exchange for rights to the hospitals’ more lucrative Medicare and Medicaid transport referrals. The hospitals are all affiliated with Hospital Corporation of America (HCA), which is based in Nashville, Tennessee, and include Bayshore Medical Center, Clear Lake Regional Medical Center, West Houston Medical Center and East Houston Regional Medical Center.

This is the second such announcement this office has made holding accountable medical institutions (hospitals and skilled nursing facilities) for these ambulance “swapping” arrangements. The first such settlement involved another defendant in this same investigation. Prior to these, virtually all cases focused on the actions of the ambulance companies, rather than the medical institutions they serve.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare and Medicaid. The settlement announced today resolves allegations that patients at the four hospitals received free or heavily discounted ambulance transports from various ambulance companies in exchange for the hospitals’ referral of other lucrative Medicare and Medicaid business to those same companies. If not for this kickback arrangement, the four hospitals would have been financially responsible for the patient transports at significantly higher rates.

Medicaid is funded jointly by the states and the federal government. The State of Texas paid for some of the Medicaid claims at issue and will receive more than  $300,000 of the settlement amount. Three whistleblowers, known as “relators,” filed two lawsuits under the qui tam provision of the False Claims Act which permits private parties to file suit on behalf of the government and obtain a portion of the recovery. The relators’ claims are also resolved by this settlement.

Jeffrey Newman represents whistleblowers and earlier this year represented a whistleblower who brought a case against Medstar Ambulance Inc. and four of its subsidiaries, which paid $12.7 million to resolve allegations concerning inflated Medicare claims for ambulance transports.