WASHINGTON — The Justice Department has filed a civil complaint under the False Claims Act against Priority Hospital Group LLC, three affiliated long term care hospitals, and a physician, alleging the submission of false claims to Medicare through medically unnecessary care and unlawful patient referrals.
According to the complaint, Priority Hospital Group (PHG), a Louisiana-based hospital management company, and its managed long term care hospitals (LTCHs) allegedly held patients longer than medically necessary to increase Medicare reimbursement. The government contends that the defendants delayed discharging patients who could have been transferred to lower levels of care because shorter stays would have resulted in reduced Medicare payments.
The suit also alleges that Riverside Hospital of Louisiana entered into improper financial arrangements with a physician, including medical directorship agreements and other remuneration, to induce patient referrals in violation of the Anti-Kickback Statute and the Stark Law. Both laws prohibit hospitals from offering or receiving payments to influence referrals of federally funded health care services.
“Medicare patients deserve to receive care based on their clinical needs, not the financial interests of a hospital or doctor,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The Department is committed to pursuing cases where financial interests have improperly influenced the medical decision-making of providers participating in federal health care programs.”
U.S. Attorney Zachary A. Keller for the Western District of Louisiana said billing federal programs for unnecessary treatment “undermines the viability of those programs and exploits our most vulnerable citizens.” Acting Deputy Inspector General for Investigations Scott J. Lampert of the Department of Health and Human Services’ Office of Inspector General said such schemes “erode the integrity of federal health care programs and betray the trust placed in providers.”
The LTCHs named in the lawsuit are Riverside Hospital LLC and Riverside Hospital of Louisiana Inc., doing business as Riverside Hospital; Post Acute Enterprises LLC, doing business as Mid Jefferson Extended Care Hospital; and New Lifecare Hospital of North Louisiana LLC, doing business as Ruston Regional Specialty Hospital.
The case originated from a whistleblower complaint filed by former Riverside Hospital employee Michaela DeVos under the False Claims Act’s qui tam provisions. The law allows private individuals to sue on behalf of the United States and share in any recovery. The government has elected to intervene in the case, which is captioned United States ex rel. DeVos v. Priority Hospital Group LLC, et al., No. 20-cv-01041 (W.D. La.).
If the defendants are found liable, the United States may recover triple damages plus penalties. The Justice Department’s Civil Division and the U.S. Attorney’s Office for the Western District of Louisiana are jointly handling the case with assistance from the HHS Office of Inspector General.
The government emphasized that the claims in the complaint are allegations only and that no determination of liability has been made.