Prime Healthcare

Published on: August 6th, 2018



Prime Healthcare settles False Claims Act case

U.S. ex rel. Berntsen vs. Prime Healthcare, et. al.

U.S. ex rel. Berntsen vs. Prime Healthcare, et. al. was filed in 2011 in the United States District Court for the Central District of California.  On August 3, 2018 a $65 million FCA settlement was announced.  The Wilbanks & Gouinlock client in this case was Karin Berntsen.  She was an employee of a Prime Healthcare of Alvarado Hospital in California.  At the time she filed her complaint, Prime owned 14 hospitals in California and each of these hospitals was named as a defendant in the case.  Karin’s allegations were based upon her personal knowledge of two different schemes.  One scheme involved bypassing medical necessity requirements in order to bill Medicare for inpatient admissions when a lower level of care was appropriate.  The second allegation dealt with multiple instances of “upcoding”.  These were scenarios where the Government was billed for a different service or a higher level of service than was actually delivered by Prime.

The United States government intervened in the medical necessity claim and whistleblower Karin Berntsen and her team handled the upcoding claims.  $45 million was recovered for the improper inpatient admissions and $20 million was recovered for the upcoding claims.  Ms. Berntsen was recognized for her efforts in this case by the Taxpayer’s Against Fraud Education Fund when she was named the national “Whistleblower of the Year” in 2018.

Of particular significance is the fact that as a part of the $65 million settlement by Prime, $3.25 million of that amount was required to be paid personally by Prime CEO Dr. Prem Reddy.  The Government’s Complaint in Intervention listed four or five different types of conduct where they specifically plead that Dr. Reddy was involved in the offensive conduct based upon their investigation.

It also noteworthy that the conduct was of sufficient magnitude to call for the imposition of a corporate integrity agreement (CIA).  This CIA was crafted by the Government to create additional reporting mechanisms and safeguards to ensure that Prime’s conduct in the future is more compliant than it has been in the past.

This $65 million recovery is one of the latest in a long line of FCA recoveries by a W&G client involving systemic and fraudulent conduct by large hospital chains.