Prime Healthcare Resolves Department of Justice Lawsuit

(Ontario, CA - August 3, 2018) – Prime Healthcare, an award-winning national hospital system, announced today that it has resolved a civil qui tam (whistleblower) lawsuit by the U.S. Department of Justice (DOJ) concerning Medicare inpatient admissions from January 2006 through September 2013 involving 14 of Prime Healthcare’s California hospitals. The lawsuit also involved certain claims related to coding by a whistleblower. However, after extensive review, the government did not find merit in these claims and declined to intervene. This settlement resolves all claims raised in the matter.

There was no finding of improper conduct or wrongdoing of any kind by Prime Healthcare. Prime Healthcare’s exemplary record of clinical quality care was never in question. This matter dealt with the technical classification of the category under which patients were admitted and billed. Physicians, not hospitals, direct the level of care needed for their patients. Prime continues to support physicians in the care they determine is best. Prime Healthcare hospitals, employees and clinicians are nationally recognized for providing clinically excellent care. Prime is committed to defending the rights of patients to receive the highest quality care, and it has always supported the clinical decision making of physicians acting in the best interests of their patients. Prime Healthcare’s Founder, Chairman, President, and CEO, Prem Reddy, M.D. stands with Prime Healthcare in support of this settlement and personally participated.

Lawsuits related to inpatient admissions have become increasingly common among hospitals and health systems nationally. In 2016, the American Hospital Association (AHA) and the California Hospital Association (CHA) filed briefs in support of Prime Healthcare, stating the government’s regulation of hospital admissions inappropriately challenged the clinical decisions of physicians. These briefs by the two largest hospital associations in the country called for reform of the government’s standards related to inpatient admissions versus outpatient observation status.

Medicare rules regarding inpatient admissions versus outpatient observation are complex. Medicare does not outline criteria for inpatient admission and instead leaves it to the sole discretion of the treating physician, the way it should be. Prime has always provided the level of care ordered by physicians for their patients. Medicare second-guesses the treating physician’s decision regarding the level of care a patient needs, arguing that patients should be placed under a lower level of care as observation rather than inpatient care. If patients are admitted under observation, Medicare beneficiaries end up paying more out-of-pocket deductibles for outpatient observation as opposed to inpatient care. In addition, patients placed under observation status are not eligible for much-needed post-hospital care such as rehabilitation and skilled nursing care. Therefore, physicians should decide what level of care patients need. Those decisions should not be retrospectively second-guessed after that care was provided in order to save costs, and patients should not be burdened with bills and denied services. Prime will remain committed to defending patients’ rights and physicians’ decisions in the delivery of excellent care.

Regarding the alleged coding issues, this is another mechanism to improperly recover monies under the pretext of “up-coding.” Again, the government did not see merit in these allegations after extensive review and did not intervene. Treating physicians document the medical conditions of patients. Certified Medicare coders transcribe what is documented by physicians. Prime Healthcare has always put people first and determined that it was in the best interest of its patients, independent physicians, and employees to resolve this matter despite not agreeing that there was any truth to the allegations related to coding.

As is customary with these types of settlements, Prime Healthcare entered a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General. “We are very pleased with the ultimate resolution of this lawsuit,” said Joel Richlin, Prime Healthcare Deputy General Counsel. “Prime Healthcare will always support independent physicians who provide quality, compassionate care while fulfilling our mission to save hospitals, save jobs and save lives.” Prime Healthcare will continue to provide services in accordance with the highest ethical, business and legal standards as it transforms hospitals across the United States. “We look forward to a strong period of growth while preserving vital community services and jobs throughout the nation,” said Richlin.

Prime Healthcare is an award-winning national hospital system with 45 hospitals providing nearly 45,000 jobs in 14 states. Fifteen of the hospitals are members of the Prime Healthcare Foundation, a 501(c)(3) public charity. Prime Healthcare and its hospitals have been recognized as among the “100 Top Hospitals” in the nation 42 times and among the “15 Top Health Systems” three times, and Prime is the only “Top 10 Health System” west of the Mississippi.

About Prime Healthcare: Prime Healthcare is an award-winning national hospital system with 45 hospitals providing nearly 45,000 jobs in 14 states. Fifteen of the hospitals are members of the Prime Healthcare Foundation, a 501(c)3 public charity. Based in California and one of the largest hospital systems in the country, Prime Healthcare is committed to ensuring access to quality healthcare. Prime Healthcare and its hospitals have been recognized as among the “100 Top Hospitals” in the nation 42 times and among the “15 Top Health Systems” three times, and Prime is the only "10 Top Health System" west of the Mississippi. For more information, please visit www.primehealthcare.com.