New York hospital, parent company settle whistleblowers’ claims for $14.7 million

by Ben Vernia | July 13th, 2018

On July 10, the Department of Justice announced that Health Quest Systems, Inc., and its Putnam Hospital Center, both based in New York, will pay $14.7 million to resolve civil allegations, originally filed by a whistleblower, that the companies submitted false claims to government healthcare programs. According to DOJ’s press release:

Health Quest Systems, Inc. and certain of its subsidiaries (Health Quest) and Putnam Health Center (PHC) have agreed to pay over $14.7 million to resolve allegations of violations of the False Claims Act by submitting inflated and otherwise ineligible claims for payment, the Justice Department announced today.  New-York based Health Quest is a family of integrated hospitals and healthcare providers that deliver surgical, medical and home health care services.  PHC is a Health Quest subsidiary hospital based in Carmel Hamlet, New York.

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In the settlement announced today, Health Quest and PHC admitted, acknowledged, and accepted responsibility for certain facts involving the submission of improper claims for various health-related services, including the following:

From April 1, 2009 through June 23, 2015, Health Quest submitted claims for evaluation and management services but did not sufficiently document the services to support the level of service billed.  As a result, the services were billed two levels higher than supported by the medical record.

From April 1, 2011 through August 2014, Health Quest submitted claims for home health services that lacked sufficient medical records to support the claim, including documentation of a face-to-face encounter with a physician.

From March 1, 2014 through December 31, 2014, Health Quest subsidiary hospital, PHC, submitted allegedly false claims for inpatient and outpatient services referred to PHC by two orthopedic physicians, in alleged violation of the Physician Self-Referral Law.  The two physicians had a direct financial relationship with PHC for providing administrative services and received compensation from PHC.  The United States alleged their compensation exceeded the fair market value for the services, and thereby violated the Physician Self-Referral Law, which prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper compensation arrangement. The United States further alleged that one purpose of the excessive compensation was to induce the above referrals to PHC, in violation of the Anti-Kickback Statute.

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New York state will receive nearly $900,000 to settle claims of its Medicaid program, the Government announced. DOJ also announced that four whistleblowers, who filed three cases consolidated for purposes of the settlement, will receive, altogether, at least $2.82 million of the federal recovery.

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