Universal Health Services, King of Prussia, Pa., said its two-hospital South Texas Health System, based in Edinburg, was served with a criminal subpoena by federal authorities. The criminal investigation is related to a civil investigation of potential False Claims Act violations at the system; that investigation was launched in November 2005. The investigations cover the system’s physician relationships since Jan. 1, 1999, UHS said. The civil subpoena was issued by HHS’ inspector general’s office, but the company did not say what law enforcement authority issued the criminal subpoena. The U.S. attorney’s office in Houston also was involved in the civil investigation and indicated to UHS in 2005 that authorities were interested in physician employment agreements and potential solicitations of patient referrals from physicians, the company said. South Texas Health System has struggled in recent years because of competition from a physician-owned specialty hospital nearby. The system contributed 19% of the company’s pre-tax earnings in 2003, but that percentage fell to 13% in 2004 and then to 4% in 2005, Universal said in a securities filing last year. In the first quarter of 2005, UHS bought a local physician group and health clinic for $5.2 million in cash upfront and an agreement to pay as much as $9.8 million more based on certain contingencies, the filing indicates. In 2001, Universal paid $56 million to Charlotte, N.C.-based MedCath to buy McAllen (Texas) Heart Hospital and make it part of McAllen (Texas) Medical Center.
Feds investigate UHS system in Texas
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