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HMA Fraud Lawsuit: How the alleged scam worked
HMA Fraud Lawsuit: How the alleged scam worked: Naples-based HMA Fraud Lawsuit. Learn how the alleged fraud worked, according to the lawsuit. Graphics by Mike Donlan Video by Cory O'Donnell/news-press.com
Naples-based Health Management Associates Inc. denied allegations Thursday of a Medicaid kickback scheme. / Andrew West/news-press.com

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Shortly into his tenure as CFO at Clearview Regional Medical Center, in Monroe, Ga., Ralph “Bill” Williams noticed something amiss with a contract with interpreter services: the hospital didn’t employ interpreters.

He dug in and discovered the contract was what he believed was an illegal kickback scheme involving Medicaid fraud and pregnant, illegal immigrants, according to a federal whistle-blower lawsuit unsealed Wednesday.

In the arrangement, Clearview, owned by Naples-based Health Management Associates, Inc. would pay Clinica de la Mama, a clinic that specializes in treating expectant mothers in the country illegally, to refer patients to the hospital, which would deliver the babies and then bill Medicaid, according to the lawsuit.

“This particular population is under control because they’re here illegally,” said Williams’ Atlanta-based attorney Susan Gouinlock. “That’s what makes this case more egregious than others. They’re (patients) being sent to the hospitals Clinica’s being paid to send them to.”

HMA denied the allegations in an emailed statement Thursday.

“The company denies the allegations contained in the complaint, which the federal government declined to intervene in, and intends to vigorously defend itself,” wrote Chief Marketing Officer Eric Waller.

Under Medicaid laws, childbirth is considered an emergency procedure and hospitals can be reimbursed for treatment, even for illegal immigrants. Federal law also prohibits hospitals for paying for referrals for Medicaid patients.

Medicaid pays between $2,800 and $4,500 for deliveries without complications. Under federal rules, HMA would have to repay three times what it received for each fraudulent claim. It’s also subject to fines of $5,500 to $10,000 for each claim. The plaintiff alleges Clearview submitted hundreds.

Williams also argues that HMA executives knew about the violations, but it is unclear how high up it went.

The case has been under seal since being filed in late 2009. Complaints made under the “False Claims Act” must be submitted to the Department of Justice, Gouinlock said

(Page 2 of 3)

Since then, federal investigators have been looking to the claims and issuing subpoenas to HMA, she said.

Authorities told

In late 2012, the plaintiff notified the Georgia Attorney General’s office about the lawsuit. The office conducted its own 10-month investigation, and decided in July to join the lawsuit. The plaintiff’s attorney’s and the AG will jointly handle the case, unless federal litigators opt to handle it, Guinlock said.

If they win, Williams would be entitled to 15-30 percent of the award, she said.

HMA and other named defendants have 21 days to answer the complaint. The case will then proceed like a normal civil lawsuit, she said.

This week Franklin, Tenn.-based Community Health Systems, Inc. announced that it had purchased HMA for $3.9 billion. The deal would make Community Health Systems the largest provider in the U.S.

Company officials declined to say whether CHS knew about the allegations prior to the sale, but they reiterated a commitment to moving the deal forward.

“We are fully committed to moving forward with the transaction,” said Tomi Galin, vice president of Corporate Communications.

HMA operates 71 hospitals in 15 states, including Lehigh Regional Medical Center in Lehigh Acres and two Physicians Regional Healthcare System hospitals in the Naples area.

None of the Southwest Florida hospitals are named in the lawsuit.

The 58-page complaint, filed on December 1, 2009, claims Williams first learned of the arrangement shortly after he began working at Clearview. He found a printed contract on his desk for interpreter services from Clinica. Contracts were usually filed in a company-wide computer system, so finding a paper contract was unusual.

Williams then began to ask hospital staff about the interpreters and found that most had never seen them, according to the lawsuit.

The lawsuit also claims the contract would have had to have been approved by the corporate office. Clearview’s CEO, Gary Lang, submitted the proposal, stating the purpose of the agreement was to grow its OB services and that two corporate officers signed off on the contract.

(Page 3 of 3)

Deal shield?

The agreement was also shielded from corporate legal review, according to the complaint.

As part of that proposal, Lang submitted a financial feasibility analysis to the corporate office that lays out the actual expectations of the payments. The analysis also stated that Clearview expected to make a 56.2 percent rate of return on its monthly payments of between $15,000 and $20,000 to Clinica.

“The projection (clearly sets forth the motive behind the bogus contractual relationship with Clinica). To defendants, the payment of kickbacks made business sense. The more referrals they bought, the more profit there was to be made,” the lawsuit states.

Shortly after Williams confronted Lang about the agreement, he was fired by an Naples-based HMA executive in retaliation, according to the lawsuit.

“It’s been difficult (for him),” Gouinlock said of her client. “But he feels good about bringing this to light and putting a stop to it.”

Representatives of the public Lee Memorial Health System, which operates about 95 percent of the hospital beds in Lee County, declined to comment at length about the lawsuit. HMA-owned Lehigh Regional Medical Center is the health system’s only hospital competition in Lee.

“We don’t have any insight into what’s happening there,” said spokeswoman Mary Briggs about the allegations against HMA.

Southwest Florida health clinics, charities and treatment centers reached Thursday said they have had no contact with HMA or its hospitals.

“HMA has not had any contact with us,” said Maribel Slabaugh, executive director of the Bonita Springs Assistance Office. “If any client needs medical attention, medical care, we always tell them to go to the closest hospital or where you have a medical history. Most of the time it tends to be Lee Memorial.”

Staff writers Christina Cepero and Frank Gluck contributed to this report.
Connect with this reporter on Twitter: @SDoaneNP

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