A federal judge denied a motion by Prime Healthcare Services to dismiss a whistle-blower lawsuit alleging the hospital chain fraudulently billed Medicare.
U.S. Magistrate Judge Patrick Walsh ruled that the lawsuit, which the U.S. Justice Department joined in May, contains “sufficient facts” to file suit against Prime under the False Claims Act.
The suit claims that in order to drive up revenue, Prime founder and CEO Dr. Prem Reddy and 14 Prime hospitals in California pushed doctors to admit Medicare beneficiaries as inpatients when they should have been outpatients placed on “observation” status. The government contends that more than 35,000 patients were improperly admitted to Prime hospitals.
Prime requested the suit be dismissed on the grounds that its physicians admit patients based on their opinion and scientific judgment. Prime also argues the suit wrongly concludes that because some Medicare patients were released shortly after admission they were admitted unnecessarily.
Walsh disagreed, saying Prime's physicians could have been forced to admit Medicare patients based on policies at hospitals. In addition, the court denied requests by the American Hospital Association and the California Hospital Association to submit briefs.
“Prime Healthcare will continue this case to defend the right of patients to receive the quality care they deserve and is confident that the evidence will show that thousands of independent physicians provided the care they deemed necessary for their patients,” said Elizabeth Nickels, Prime's vice president of marketing.