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Breaking News: DOJ Joins Whistleblower Suits against HMA

SoRelle, Ruth MPH

doi: 10.1097/01.EEM.0000444854.38629.ed

    After years of investigation, the U.S. Department of Justice has intervened in eight false claims lawsuits in six states against Health Management Associates, Inc., signing on to allegations of payments to doctors and clinics in exchange for patient referrals and to claims that the Naples, FL, for-profit chain pressured emergency physicians and hospital administrators to admit patients to meet corporate benchmarks, regardless of medical necessity. (Read the DOJ announcement at

    HMA's activities have already generated considerable interest, including a segment on the CBS news program 60 Minutes that aired in December 2012. (Watch that report at The push to increase admissions to the hospital from the emergency department is described in several of the suits, including one filed jointly by Jacqueline Meyer, a former regional client administrator for EmCare, the firm that provided emergency physician services to many HMA hospitals, and Michael Cowling, a former HMA division vice president and CEO of Lake Norman Regional Medical Center in Mooresville, NC.

    The qui tam, or whistleblower, suits were just recently unsealed, providing details of alleged wrongdoing for the first time. Many of the suits allege an illegal kickback scheme for referrals to HMA hospitals, but the Meyer-Cowling filing, among others, describes HMA practices in emergency departments, including a mandate that its hospitals increase admission rates by:

    • Setting benchmarks for hospital admissions from the emergency department: 50 percent for patients 65 and older and anywhere from 16 percent to 20 percent for the overall population.
    • Directing hospital administrators to monitor ED admission rates through daily, weekly, and monthly reports generated using a customized software program called Pro-MED. The plaintiffs said each emergency physician was tracked for the number and percentage of total patients admitted as well as the percentage of patients 65 and older admitted. Some hospitals also tracked physicians on a daily color-coded report card with green signifying that a physician had met the benchmark, yellow that he had almost met it, and red that he had missed the benchmark, according to the suit.
    • Using Pro-MED to flag each time an ED patient met criteria for admission, measures that were programmed right into the software. “Nevertheless, HMA used the criteria in conjunction with its customized Pro-MED software to coerce physicians to admit patients, regardless of the physician's clinical judgment about the patient's needs,” the Meyer-Cowling suit states. Physicians could manually override such actions, but according to the suit, physicians who had override rates of 35 percent or more received “failing grades.”
    • Holding daily “flash meetings” with emergency physicians “to interrogate them about so-called ‘missed’ admissions.” According to the suit, “During flash meetings, which were commonly referred to by the ER medical personnel as ‘daily inquisitions,’ hospital CEOs and their staff often overtly threatened the ER doctors and medical directors with termination if the physicians did not increase the number of patients they admitted.”
    • Distributing monthly Forced Rank Reports to hospital CEOs and administrator staff, emergency department directors, and EmCare management in which all HMA hospital EDs were ranked according to inpatient admission rates.
    • Directing hospital CEOs and emergency department medical directors not to place patients in observation status “even when medically warranted, but instead were to be admitted as inpatients so that HMA could recover larger fees for their care,” the suit alleges.
    • Implementing a Pro-MED software program “that identified a series of diagnostic tests to be immediately performed, according to what the triage nurse had specified as the patient's chief complaint, before the patient had been seen by a doctor.” The Meyer-Cowling suit says HMA also required emergency physicians to order “85% of the tests specified in the protocol, despite the fact that in many instances the tests were medically unnecessary.”
    • Setting benchmarks for calling patients' primary care physicians “85% of the time for patients 65 and over” and 35 percent of the time for younger patients “not to obtain a better understanding of patients' medical needs but, rather, to ‘sell admissions’ to primary care physicians.” HMA anticipated that these physicians would defer to the emergency physician's recommendation about hospitalization, the suit says.
    • Paying bonuses at some hospitals to emergency physicians and medical directors for meeting the benchmarks for ordering tests, calling primary care physicians, and keeping admission overrides low.

    The suit also charges that “EmCare actively assisted HMA in unlawfully pressuring and inducing ER medical directors and physicians to sacrifice their medical judgment and recommend the hospitalization of ER patients and the ordering of diagnostic tests, irrespective of the medical needs of the patients.”

    Ms. Meyer and Mr. Cowley claim they were fired — she from EmCare and he from HMA — because they did not go along with the push to increase admissions from emergency departments. The Justice Department is still deciding whether it will join the suit Ms. Meyer filed against EmCare.

    The Meyer-Cowling suit also named Gary Newsome, CEO of HMA, as a driver of the plan to inflate patient admissions, and the Justice Department joined that action as well. Mr. Newsome headed HMA from 2008 until mid-2013 when he retired to head a Mormon mission in Montevideo, Uruguay, the suit says.

    The suit lists several hospitals at which those admission activities took place. One is Carlisle Regional Medical Center, a 165-bed hospital in Carlisle, PA, that HMA had owned since 2001. Carlisle offers routine specialty care, but it is not a trauma center, and had no interventional cardiac catheterization services at the time the suit was filed in July 2011.

    Ms. Meyer was assigned to oversee EmCare's contract at Carlisle in 2009. Soon after, she attended a hospital meeting that included EmCare managers and the Carlisle ED medical director, assistant medical director, and emergency physicians. According to the suit, Frank Biondolillo, DO, the executive vice president of EmCare's southeast region, told attendees, “'If you want to be successful at an HMA hospital, you are going to have to admit more patients.'”

    The suit continues, “Dr. [Cliff] Cloonan [assistant medical director of the ED] angrily responded that Dr. Biondolillo was not going to make him break that law and that Cloonan was going to do what was right for the patient.” After the meeting, the suit notes, EmCare managers told Carlisle CEO John Kristel what had transpired. “In response, Kristel told the EmCare group to fire Dr. Cloonan because he ‘was not on board,’” the suit states. Ms. Meyer, however, advised against that, suggesting that HMA and EmCare consult their legal departments.

    “It was an insidious situation,” said Dr. Cloonan, who is not part of any of the lawsuits. “It was not really suddenly awful. Had it been, a lot more people would have [jumped] ship.”

    Dr. Cloonan said he was an employee of the hospital when he first came to Carlisle, and he and his fellow emergency physicians continued that way for a couple of years after HMA took over and built a new emergency department. But about the same time that the hospital introduced Pro-MED, an HMA manager said they no longer wanted to employ the physicians, suggesting that the doctors consider a provider of emergency services like EmCare or form their own group. They ended up going with EmCare.

    Dr. Cloonan said it seemed the best choice at the time. Besides, he and his colleagues were dealing with other issues. “I wasn't pleased with Pro-MED Blue,” he said. “It was clearly constructed not to adequately document what physicians did and facilitate their work but as an accounting tool to capture revenue. It also, in my view, facilitated fraud in the sense that there was a lot of automated test ordering. It took extra steps to undo what the computer was automatically doing.”

    Scott Rankin, MD, who worked part-time at Carlisle during this period, told EMN that Pro-MED “generated a nice bill, but it also pushed us to order studies that maybe we would not have ordered. If a patient showed up with chest pain, nurses were mandated to hit the chest pain box, and these studies were ordered before we saw the patients. Nurses told us, ‘We have to do this.’”

    Dr. Rankin said the EPs were increasingly being pressured to admit toward the end. They came out with specific numbers — 50 percent for all patients over 65 and an overall 20 percent admission rate, he said, but such numbers were not realistic for Carlisle. “I realized I was being encouraged to commit most of the fraud being described in the government-mandated program [that physicians are required to take]. I printed out a screenshot, and went out and posted it around the computers in the emergency department.”

    Dr. Cloonan said he remembers the meeting with Dr. Biondolillo well. He said he pushed back at that meeting, saying, “What I just heard is that if we don't commit fraud, we are going to get fired.”

    Before a monthly meeting of the ED staff, the medical director of the emergency department told Dr. Cloonan that he had been at a meeting at HMA headquarters and was told physicians would be fired — starting with him and Dr. Cloonan — if they did not go along with the program, Dr. Cloonan told EMN. He said he told the ED medical director that he would say nothing at the monthly physician meeting, but he would resign as assistant ED director immediately. He found a job in a nearby town.

    One by one, meanwhile, other long-time emergency physicians at Carlisle began to resign. Dr. Rankin said the physicians who had worked there left voluntarily. “To have to leave their community hospital was a painful decision. However, we had that option to leave. There were other places we could work,” he said. Physicians in other communities were not as lucky, he said.

    Dr. Cloonan said he was angry about what he saw happening. “There's a huge amount of ongoing fraud, waste, and abuse that is taking place within specifically government contractual elements of health care,” he said. “When HMA was talking about admitting 50 percent of patients over 65, that's Medicare. And it's not confined to HMA. We have created a system that is ripe for abuse. That's part of the problem.”

    Dr. Rankin said the physicians' concern was for their patients. “We put the patient ahead of profit,” he said. “For-profit medicine does not have that sum equation.”

    Robert McNamara, MD, a former president of the American Academy of Emergency Medicine, said one thing that gets lost in the narrative is the risk to patients admitted to the hospital unnecessarily. “I'm not surprised at any of it. The suits lay it out,” he said.

    Craig Brummer, MD, a former medical director at Barrow Regional Medical Center and then Walton Regional Medical Center in Georgia, described in his suit against HMA the same pressures described by Ms. Meyer, Mr. Cowling, and Dr. Cloonan. He described several patients who he said were admitted to HMA hospitals without an appropriate medical reason, including:

    • An elderly Medicare patient who underwent “a chest x-ray (that showed no issues), an EKG, and lab work. [The patient] was improperly admitted with a clinical impression of ‘neck pain.’ This 71-year-old patient should not have been admitted for ‘a chest pain rule out’ assessment,” the suit says.
    • An 11-month-old Medicaid patient who presented to the ED with a chief complaint of fever but who was admitted even after his fever dropped to normal. “He had a temperature of 104 degrees upon presentation and looked well,” the suit notes. “The infant was given a full workup of chest x-rays and labs and all were normal, but he was given intramuscular antibiotics and admitted to the hospital. [The patient] was admitted with a temperature of 98.7 with a clinical impression of fever.”
    • An 18-year-old Medicaid patient who sustained a right knee laceration. “X-rays were negative, but he was admitted for repair of the knee laceration. This patient was admitted to the hospital for repair even though his injuries did not involve an open fracture and should have been treated on an outpatient basis.”

    The Justice Department's inquiry was described in many quarters as painstaking. Stuart F. Delery, the Assistant Attorney General for the Justice Department's Civil Division, said in a statement that “schemes such as this one can contribute significantly to the rising cost of delivering health care and create needless patient risk.”

    The U.S. Attorney for the Middle District of Georgia Michael J. Moore agreed, noting in another statement that “HMA's submission of claims to Medicare, Medicaid and TRICARE for unnecessary inpatient stays is a serious matter that threatens the integrity of our entire health care system, and the end result is that those who need health care cannot afford it.”

    HMA shareholders approved a $7.6 billion sale of the company to Community Health System (CHS) in January, merging the two systems to create the for-profit hospital operator in the United States with the largest number of facilities. Hospital Corporation of America remains largest in annual revenue. (Naples News;

    CHS announced preliminary financial and operating results for 2013 on Jan. 6, noting that it was reserving $101.5 million to settle claims arising from the government's investigation into the company's short-stay hospital admissions and investigation at the CHS hospital in Laredo, TX. Or as the New York Times reported, “Investors seem to think that DOJ investigations, qui tam suits, and allegations of serious Medicare fraud are simply a cost of doing business,” said Sheryl Skolnick, PhD, the managing director and a head of research for CRT Capital. ( CHS is also negotiating a corporate integrity agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services. (Read CHS's 2013 operating report at

    HMA refused to comment specifically on the allegations in the suits or the Justice Department's joining in the whistleblower lawsuits. “As a matter of policy, we do not comment on pending litigation. The existence of the government's investigation into the issues raised in the unsealed qui tam cases has been disclosed for some time in HMAs' public SEC filings. While our legal team addresses these matters and continues to cooperate with the Department of Justice's ongoing investigation, HMA associates and physicians who practice at our facilities are focused on providing the highest quality patient care in all of our hospitals,” MaryAnn M. Hodge, the vice president of marketing and communications for Health Management Associates, wrote in an email to EMN.

    Jennifer Whitus, the marketing communications manager for EmCare, said in an email that the company cannot comment on pending litigation.

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    The Department of Justice intervened in eight whistleblower suits, and all are available on the EMN website at

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