Whistleblowers Get More than $16M in $122M FCA Settlement with Mental Healthcare Provider

A major provider of psychiatric services agreed to pay $122 million to settle alleged violations under the False Claims Act. The Department of Justice announced the settlement in July with Universal Health Services (UHS), which has more than 300 acute care inpatient psychiatric hospitals and residential psychiatric and behavioral treatment facilities nationwide. UHS was accused of billing for medically unnecessary inpatient behavioral health services, failing to provide adequate and appropriate services, and paying illegal inducements to federal healthcare beneficiaries.

The settlement agreement

UHS was investigated by the Department of Justice (DOJ) and several other governmental agencies for alleged violations from 2006 through 2018. The healthcare provider was scrutinized after several whistleblowers came forward and the news organization Buzzfeed ran an investigative report on the healthcare provider’s practices in 2016.

The UHS case, which was settled in the Eastern District of Pennsylvania, was brought by the DOJ under the FCA, which prohibits fraud against governmental programs. The healthcare provider will pay $117 million of the total settlement to the United States and participating states to resolve allegations that its hospitals and facilities knowingly submitted false claims to Medicare, Medicaid, TRICARE, Department of Veterans Affairs, and Federal Employee Health Benefit programs. In a separate settlement, a UHS facility, Turning Point Care Center, in Georgia will pay $5 million to the United States and the State of Georgia for allegedly providing free or discounted transportation services to induce Medicare and Medicaid beneficiaries to seek treatment in its inpatient detoxification and rehabilitation program or outpatient program.

UHS allegedly admitted patients to its inpatient facilities or residential treatment programs when their conditions did not require that level of care. The healthcare provider also failed to discharge patients when they no longer required inpatient care and billed for services that it did not provide, the DOJ alleged. The organization failed to provide adequate staffing, training and staff supervision and utilized physical and chemical restraints and seclusion improperly, the DOJ said. The government’s laundry list of allegations also said UHS’s facilities failed to develop and/or update individual assessments and treatment plans for patients, failed to provide adequate discharge planning, and failed to provide required individual and group therapy services in accordance with federal and state regulations.

UHS denied the allegations, stating that the settlement “does not constitute a finding of improper conduct or failure to provide appropriate care and treatment.”

Whistleblowers share in the proceeds

Under the FCA’s qui tam provision, individuals who are not affiliated with the government, called relators, can file actions on behalf of the government and receive a portion of the recovered damages. Whistleblowers, who are most often employees or former employees of the organization being investigated, initiated 81 percent of the 782 FCA cases in FY 2019.

The UHS case settled 18 cases initiated by whistleblowers in various jurisdictions. The whistleblowers’ share of the federal portion of the settlement exceeds $15.8 million, while the whistleblower in the Turning Point settlement will take home more than $860,000.

DOJ seeks to protect “vulnerable patient populations”

The vast majority of FCA cases brought by the DOJ involve the healthcare sector. In FY 2019, the DOJ recovered more than $3 billion in FCA cases, and about 85 percent of the total recovery – $2.6 billion – came from healthcare organizations. Several major cases each year involve providers of mental health services.

“The Department of Justice is committed to protecting patients and taxpayers by ensuring that the treatment provided to federal healthcare beneficiaries is reasonable, necessary, and free from illegal inducements,” Acting Assistant Attorney General Ethan P. Davis for the Department of Justice’s Civil Division said in a statement announcing the settlement. “The Department will continue to be especially vigilant when vulnerable patient populations are involved, like those served by behavioral healthcare providers.”

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