Louisiana hospital company pays $1.7 million to settle whistleblower’s False Claims Act allegations

by Ben Vernia | June 7th, 2018

On June 5, the Department of Justice announced that Shreveport, Louisiana-based Allegiance Health Management, Inc., and its affiliated hospitals have agreed to pay $1.7 million to settle allegations, originally brought by a whistleblower, that the company submitted false claims to Medicare. According to DOJ’s press release:

WASHINGTON – The Justice Department announced today that Allegiance Health Management, Inc., (Allegiance), a post-acute healthcare management company based in Shreveport, Louisiana, and four hospitals owned and operated by Allegiance (collectively, the Allegiance Defendants), have agreed to pay more than $1.7 million to resolve False Claims Act allegations that the Allegiance Defendants submitted, and caused other hospitals to submit, claims for reimbursement from Medicare for services that were not medically reasonable or necessary.

Beginning in 2005, Allegiance entered into arrangements with numerous hospitals located throughout the Southeastern United States to provide Intensive Outpatient Psychotherapy (IOP) services to patients on the hospitals’ behalf.  At each of these hospitals, Allegiance established an Inspirations Outpatient Counseling Center at which Allegiance employees and those acting under the direction and control of Allegiance were responsible for, among other things, identifying potential patients, creating patient treatment plans, and performing IOP services. This settlement resolves allegations that at each of the Inspirations Outpatient Counseling Centers, Allegiance provided IOP services to Medicare beneficiaries that did not qualify for Medicare reimbursement because: 1) the patients’ medical condition(s) did not necessitate IOP treatment; 2) the patients’ treatments were not provided pursuant to an individualized treatment plan designed to help individual patients address specific mental health needs and reach achievable goals; 3) the patients’ progress was not being adequately tracked or documented; 4) the patients received an inappropriate level of treatment; or 5) the therapy provided was primarily recreational or diversional in nature, and was not therapeutic.

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The Allegiance defendants that are party to this settlement are: Allegiance Health Management, Inc.; Allegiance Behavior Health Center of Plainview, LLC; Allegiance Specialty Hospital of Kilgore, LLC; North Metro Medical Center a/k/a Allegiance Hospital of North Little Rock, LLC, and Sabine Medical Center a/k/a Allegiance Hospital of Many, LLC.  The United States previously reached settlements with more than twenty other hospitals in this matter.

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DOJ announced that the qui tam relator, a former employee at one of the company’s facilities, will receive $300,000 (a 17.6% relator’s share).

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