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Hospital chains sued over alleged kickback scheme

By Gustavo Valdes, CNN
updated 7:56 PM EDT, Thu August 1, 2013
Health Management Associates and Tenet Healthcare are accused of paying clinics to recruit undocumented pregnant women, then filing fraudulent Medicaid claims.
Health Management Associates and Tenet Healthcare are accused of paying clinics to recruit undocumented pregnant women, then filing fraudulent Medicaid claims.
STORY HIGHLIGHTS
  • A lawsuit says hospitals paid kickbacks to get undocumented immigrant patients
  • Georgia's attorney general accuses the hospitals of filing fraudulent Medicaid claims
  • Former CFO: "It was pay for patients, pure and simple"
  • One hospital chain says the contracts were legitimate, helped underserved patients

Atlanta (CNN) -- Two major hospital chains paid illegal kickbacks to clinics in order to treat undocumented immigrants at their facilities, a federal whistle-blower lawsuit alleges.

Health Management Associates and Tenet Healthcare are accused of paying clinics to recruit undocumented pregnant women, then filing fraudulent Medicaid claims after treating them.

The lawsuit was filed by HMA's former chief financial officer and unsealed Wednesday in federal court in Athens, Georgia. It alleges violations of anti-kickback statutes by the hospital companies, pointing to contracts between them and Hispanic Medical Management, which operates clinics around the Atlanta metropolitan area known as "Clinica de la Mama."

"By knowingly entering these contracts with the purpose of receiving patient referral services, defendant hospitals violated federal and state law and submitted false certification to the State Medicaid program that they were in compliance with such federal and state laws, including the Anti-Kickback Statue," the lawsuit says.

That, according to the lawsuit, led to the state paying "tens of thousands of ineligible Medicaid claims over the course of a decade."

The state of Georgia has joined the lawsuit. Georgia Attorney General Sam Olens said he wants to recover state Medicaid funds.

"These hospitals allegedly paid Clinica kickbacks camouflaged as interpreter service payments to funnel emergency Medicaid patients their way and increase their bottom line," he said in a written statement.

The alleged scheme came to light after former HMA CFO Ralph Williams flagged the contracts with Clinica to his supervisors.

"To me it was pay for patients, pure and simple. I said, 'This is an illegal agreement. It is a kickback situation,'" Williams told CNN affiliate WSB-TV in Atlanta. He said he was eventually fired and filed a whistle-blower lawsuit.

Tenet Healthcare operates 49 hospitals nationwide, five of which are in Georgia. Health Management Associates operates more than 70 hospitals, three of which are located in Georgia.

In a statement, Tenet Healthcare defended the contracts.

"We believe the agreements...were appropriate and provided substantial benefit to women in underserved Hispanic communities served by those hospitals. The services provided under these agreements included translation, determination of Medicaid eligibility, and other services designed to improve the delivery of obstetric care and increase the likelihood of a safe birth and a healthy baby," the statement said. "These services are important to addressing the healthcare gaps that affect many Hispanic patients and other minority communities."

Heather Vizena from the marketing department of HMA said the company does not comment on pending litigation.

Calls to one number listed for Hispanic Medical Management were answered by a person claiming the clinic had new ownership and a new name. Calls to other numbers were unanswered.

Hospitals can file Medicaid claims for emergency services provided to undocumented immigrants, including childbirth. Kickbacks for patient referrals are prohibited under the Medicare and Medicaid Patient and Program Protection Act.

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