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In what is believed to the first case of its kind, a former risk manager has filed a $50 million lawsuit against the health system that employed her and accused it of defrauding Medicare at 14 health centers.
Karin Berntsen, a former risk manager at Alvarado Hospital in San Diego, filed the suit in 2011, but it was only recently unsealed. Among other misdeeds, she alleges that Prime Healthcare Services (PHS) fraudulently increased charges by eliminating observation care and refusing to discharge patients to post-acute facilities.
"Relator estimates that PHS Alvarado’s fraudulent short-stay inpatient admission billings to government healthcare programs exceeds $4 million," the complaint says. "Considering Alvarado is a typical hospital within the (Prime) system, the probability that all other (Prime) facilities are falsely billing Medicare in the same manner as Alvarado, and that some of those hospitals have been within the (Prime) system for at least six years, relator conservatively estimates that Prime’s false billings just with regard to improper short-stay inpatient admissions alone exceed $50 million."
Prime issued a statement calling the allegations "speculative nonsense." Troy Schell, JD, Prime’s general counsel, released a statement denying the allegations. "It defies common sense that Alvarado Hospital has been engaged in a false claims scheme when the entire Prime Healthcare system has been under this type of heightened and aggressive regulatory scrutiny for years," he said.
Prime is no stranger to fraud allegations. Federal investigators in 2011 found that Prime hospitals in California, including Alvarado Hospital, systematically billed Medicare for rare medical conditions much more frequently than other hospitals in the United States. After billing Medicare for treating more than 1,100 cases of kwashiorkor, a dangerous nutritional disorder usually seen among children during famines in developing countries, a Prime hospital in Redding abruptly stopped after the investigation began. The hospital had billed Medicare for kwashiorkor at 70 times the average rate of other California hospitals, according to state health department records.
In 2012, state regulators fined Prime $95,000 for breaching patient confidentiality. In response to allegations of upcoding by a patient in the Los Angeles Times, Shasta Regional Medical Center CEO Randall Hempling and Chief Medical Officer Marcia McCampbell emailed the records of that patient to almost 800 employees and two newspapers.
The federal government has not yet joined in the False Claims Act case against Prime, but Thom Mrozek, a spokesperson for the U.S. Attorney’s Office in Los Angeles, says it might.
"Our decision not to intervene at this time should not be construed as a statement about the merits of the case," he says. "The government retains the right to intervene at a later date upon a showing of good cause"