Prime Healthcare

Paul Sisson
May 26, 2016

The U.S. Justice Department has joined a whistle-blower case against Prime Healthcare Services, adding significant weight to allegations of widespread Medicare overbilling at 14 of the company’s hospitals in California.

A Los Angeles magistrate judge granted the agency’s request to intervene in the case Tuesday, one day after the government declared in a court filing that its investigation of the Ontario- hospital operator has “yielded sufficient evidence” that the facilities “submitted or caused the submission of claims to Medicare for unnecessary inpatient stays.”

Prime finds itself under federal scrutiny because of a whistle-blower complaint submitted in 2011 by Karin Berntsen, a registered nurse and director of quality and risk management at Alvarado Hospital in San Diego. Berntsen’s lawsuit accuses Prime of routinely making Medicare patients’ illnesses seem more severe than they really were in order to justify billing for additional services and increasing hospital admissions.

Berntsen alleged that this practice occurred not only at Alvarado but also at 13 other Prime properties. Most of these hospitals are in Southern California, including Centinela Hospital Medical Center in Inglewood, Encino Hospital Medical Center, Sherman Oaks Hospital and Huntington Beach Hospital.

Berntsen’s litigation estimates the total amount of overbilling at $50 million, an amount that now could result in a significant financial payoff for her — and potentially large damages against the company.

Anti-fraud statutes allow fines of $5,500 to $11,000 — plus triple damages under certain circumstances — for each false or inaccurate bill submitted by hospitals and other healthcare companies. Whistle-blowers are entitled to 15% to 25% of the money recovered in cases involving the Justice Department.

In 2012, for example, pharmaceutical giant GlaxoSmithKline agreed to pay $2 billion to the federal government to resolve accusations that it overbilled for the prescription drugs Paxil, Wellbutrin and Avandia. In 2006, Tenet Healthcare was crippled after paying $900 million in a case involving alleged Medicare bill-padding, kickbacks and changing of billing codes to obtain higher reimbursements.

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