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Physician groups to pay $33 million over alleged kickbacks from HMA Hospitals

Dallas-based EmCare, Pennsylvania-based Physicians' Alliance Ltd named in whistleblower lawsuits over illegal referrals to HMA hospitals, DOJ said.

Beth Jones Sanborn, Managing Editor

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Dallas-based EmCare and Physicians' Alliance Ltd. will pay more than $33 million to settle allegations they accepted kickbacks from hospitals owned by the now-defunct Health Management Associates in exchange for patient referrals, the Department of Justice announced Tuesday.

EmCare provides physicians to staff hospital Emergency Departments.  EmCare's settlement stipulates that the physician group will pay $29.6 million to resolve allegations about an alleged kickback scheme that ran from 2008 through 2012, wherein the group allegedly took kickbacks from HMA in exchange for recommending that patients be unnecessarily admitted to their hospitals on an inpatient basis when they should have been treated on an outpatient basis. 

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Medicare generally reimburses at least three times as much for inpatient admissions as it does for outpatient care. HMA also allegedly made bonus payments to EmCare ED physicians, and induced more admissions to their EDs in exchange for continuing EmCare contracts and receipt of new ones, the DOJ said.
In another settlement, Lancaster, Pennsylvania-based Physicians' Alliance and three of its executives, Lee Meyers, Michael Warren and Wallace Longton agreed to resolve similar allegations regarding a three-year alleged scheme that ran from 2009 until 2012, in which PAL allegedly accepted kickbacks from HMA in exchange for referring patients to two HMA hospitals: Lancaster Regional Medical Center and Heart of Lancaster Medical Center. PAL's settlement stipulates that the group and its executives will pay $4 million plus a percentage of proceeds from the sale of PAL's interest in a joint venture with HMA, the DOJ said.  

EmCare is a subsidiary of Envision Healthcare Corporation, and as such Envision has entered into a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General as part of the resolution.

"Improper physician inducements not only compromise sound medical decision-making, but also cost American taxpayers millions in unnecessary medical costs," said U.S. Attorney for the Western District of North Carolina Andrew Murray. "Such kickback arrangements will not be tolerated."

Both settlements stem from whistleblower lawsuits. The suit involving EmCare was filed by physicians Thomas Mason and Stephen Folstad, whose medical practice, MEMA, previously supplied ED physicians to two HMA hospitals in North Carolina. As relators in the suit, Mason and Folstad will receive $6,222,907. 

Former HMA hospital executives George E. Miller and Michael J. Metts filed suit alleging the scheme between PAL and HMA. Their portion of the recovery has not yet been determined.

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