Hospital Chain CEO Will Pay $3.46 Million to Resolve Fraud Allegations Involving Kickbacks and Fraudulent Billings

The CEO of Health Management Associates LLC, a hospital chain, will pay $3.46 million to resolve allegations that he caused the company to unnecessarily admit patients in order to increase billings to government healthcare programs.

Hospital Chain CEO Will Pay $3.46 Million to Resolve Fraud Allegations Involving Kickbacks and Fraudulent Billings

Gary D. Newsome was CEO of the Florida-based healthcare provider between September 2008 and July 2013. After the fraud allegations surfaced, Health Management Associates was acquired by Community Health Systems Inc.

Prosecutors claim Newsome indirectly pressured doctors to increase the number of admissions into Health Management’s hospitals regardless of lack of medical necessity. According to the lawsuit, a large number of Medicare beneficiaries admitted to Health Management-controlled facilities could have been efficiently treated in outpatient settings. The inappropriate inpatient admissions resulted in substantial billings for the company.

Prosecutors also claim Newsome caused the company to pay kickbacks in exchange for lucrative admissions, which were recommended by physicians who were aware of the scheme. The participating doctors, employed by a staffing company called EmCare, allegedly received bonus payments, among other illegal incentives.

Both Health Management and EmCare have previously settled lawsuits related to this type of misconduct. In 2018, Health Management paid $61.8 million to resolve a civil lawsuit. The company also paid a $35 million penalty as part of a Non-Prosecution Agreement. On the other hand, EmCare agreed to a $29.6 million settlement.

The alleged misconduct by Health Management and its associates was first brought forward in a whistleblower lawsuit filed by Jacqueline Meyer and J. Michael Cowling, former employees of EmCare and HMA respectively. The tipsters will receive about $725,000 as a reward for their assistance in exposing the fraud. Under the False Claims Act, whistleblowers can receive up to 30 percent of any recoveries resulting from the information they provide.  

Assistant Attorney General Jody Hunt said in a press release that those who bill government healthcare programs for hospital stays that are not medically necessary “will be held accountable for wasting federal dollars.” Hunt concluded that the Department of Justice “will pursue those who cause hospitals to offer financial incentives to physicians in return for improper patient referrals that undermine the integrity of our health care system.”

The Acting U.S. Attorney for South Carolina, where the lawsuit was filed, emphasized that medical decisions “should be driven by what is in the patient’s best interest, not by what helps line a provider’s pockets.” “The U.S. Attorney’s Office will not tolerate false claims based on unnecessary hospital admissions, which drive up health care costs and can harm patients,” she concluded.

Overbilling is one of the most common types of Medicaid and Medicare fraud. According to the Office of the Inspector General’s Special Agent Derrick L. Jackson, “Taxpayer money wasted is money stolen from vital government health programs.”

If you know of a healthcare provider or company that is cheating its patients, call us. We can assist you in putting an end to the fraud and help you receive a large cash reward for your trouble. Connect with us 888.742.7248 or ONLINE.


Medicaid Fraud Hotline: 888.742.7248 or Report Online
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