Hospital, Medical Firm CEOs to Plead Guilty to Kickbacks

17674293_lTwo key players in what federal prosecutors have described as a massive scheme to defraud Georgia’s Medicaid program are slated to plead guilty to charges that they negotiated kickback payments to prenatal clinics that steered undocumented Hispanic women to local hospitals for deliveries of their babies.

Federal authorities on July 23 filed criminal information bills charging Gary Lang, the former CEO of what is now Clearview Regional Medical Center in Monroe, and Tracey Cota, the former CEO and CFO of now-defunct Hispanic Medical Management Inc., with conspiring to pay or receive illegal kickbacks to boost the number of deliveries paid for by Medicaid. The criminal information bills were filed after Lang and Cota waived indictment.

Based in Norcross, Hispanic Medical Management operated clinics under the name of Clinica de la Mama and Clinica del Bebe. Court pleadings in a companion civil case in federal court in Columbus alleged that the clinics collected as much as $20,000 a month per hospital to funnel pregnant women, predominantly undocumented foreign nationals, to four metro area hospitals and a fifth hospital in Hilton Head Island, S.C.

The Georgia and South Carolina Medicaid programs, as a rule, will not pay claims submitted by a hospital if the hospital paid anyone for the patient referral that led to the claim.

Both Cota and Lang are scheduled to enter pleas next week in front of U.S. District Judge Amy Totenberg. Lang’s attorney, Michael Trost, on Wednesday declined to comment. Cota’s attorney, Thomas Hawker, could not be reached.

The criminal charges are related to a whistleblower suit pending in federal court in Columbus. The suit, brought in 2009 by Clearview’s former chief financial officer, Ralph Williams, names a host of defendants: Tenet Healthcare Corp. and three Tenet hospitals—Atlanta Medical Center, North Fulton Regional Hospital in Roswell and Spalding Regional Medical Center in Griffin; Clearview Regional Medical Center; Hispanic Medical Management and two of its affiliates.

The suit alleges that the hospitals paid kickbacks to the clinics for more than a decade in order to increase the volume of their hospital deliveries. Last March, the U.S. Justice Department intervened in the case.

Formerly known as Walton Regional Medical Center, Clearview is a subsidiary of Community Health Services Inc. but at the time was part of a chain of hospitals owned by Health Management Associates Inc. Williams is represented by the Atlanta law firm Wilbanks & Bridges.

The criminal informations mirror allegations contained in the whistleblower suit, which accused Cota of arranging kickback payments with hospital executives in return for referring pregnant patients to the executives’ hospitals.

The hospitals drew up contracts and allegedly paid Clinica for services that included translation services, marketing consulting, paperwork associated with determining patients’ Medicaid eligibility and birth certificate services. But the criminal information bills claim that “the true purpose of the relationship was to pay for Medicaid patient referrals.”

Hospital executives, including Lang, “understood that Clinica was very successful at attracting pregnant, undocumented Hispanic women to its clinics for prenatal care, that Clinica could control where these women delivered their babies, and that if these women delivered at their respective hospitals, the hospitals could potentially realize a significant revenue stream from Georgia Medicaid or South Carolina Medicaid for providing labor and delivery services to these women … and providing services to their newborn babies,” the informations said.

The hospitals where Clinica patients were directed billed the Georgia and South Carolina Medicaid programs “hundreds of millions of dollars” for labor and delivery services, the informations say.

To ensure that Clinica patients would deliver their infants only at hospitals that paid kickbacks, Cota and others would allow only obstetricians who had delivery privileges at those hospitals to see Clinica patients.

The Clinica staff would also direct patients to specific hospitals when they went into labor. “The majority of the patients did not question whether they had the option of delivering at a different hospital,” one information said.

If a pregnant patient asked if she might deliver her child at a different hospital, Clinica staff were “instructed to discourage them from doing so, to emphasize the high likelihood of success getting Medicaid to pay for the cost of their labor and delivery … and to suggest they might not be successful at getting Medicaid to pay if they delivered at another hospital,” the informations state.

While undocumented foreign nationals are not eligible for regular Medicaid coverage, they are eligible for certain types of emergency medical assistance under the Medicaid program, including childbirth expenses.

It’s a very significant case,” said Marlan Wilbanks, who represents the whistleblower. “Known damages related to the kickbacks exceed $100 million” generated by the births of more than 30,000 infants to undocumented foreign nationals “on the taxpayers’ tab,” Wilbanks added.

“We have very strong evidence that Tenet and HMA [which at the time owned Clearview] entered into sham contracts for the sole purpose of disguising kickbacks that were designed to buy Medicaid referrals from some Clinica entities,” he continued.

“I think the fact that the criminal cases name key players involved in the fraud conspiracy is a very compelling fact that supports our allegations in the fraud and kickback civil case.”

Referring to Cota’s intent to plea, Wilbanks added: “It’s an extraordinary and rare situation to have one of the conspirators in a two-party conspiracy to provide intimate details to incriminate the hospitals and that’s exactly what we have now.”

The informations do not identify the hospitals by name, only by location, although they, and their corporate owners, are identified in the whistleblower suit and the Justice Department’s motion to intervene.

Tenet said in a written statement in March that agreements its metro area hospitals made with Hispanic Medical Management “provided substantial benefits to women in underserved Hispanic communities.

By ensuring that pregnant women received prenatal care and appropriate treatment during birth, these programs increased the likelihood of a safe birth and a healthy baby while reducing the overall cost to state Medicaid programs,” the statement said.

According to Wilbanks, Lang first engaged in the kickback scheme while he was vice president of sales at Hilton Head Island’s hospital, then brought the scheme to metro Atlanta when he became Clearview’s CEO in 2007.

In June, U.S. District Judge Clay Land, who is presiding over the whistleblower suit in Columbus, denied the defendants’ motion to dismiss the case.

Land concluded that factual allegations presented by Williams’ lawyers and the DOJ support their assertions “that when the hospitals submitted Medicaid claims for clinic patients who were referred … the hospitals falsely certified compliance with the [federal] anti-kickback statute.”

“It is estimated that more than 340,000 babies are born each year to undocumented alien mothers in United States hospitals. The American taxpayers, through the Medicaid program, pay these hospitals at least $1 billion per year for these deliveries,” Land noted.

“While the wisdom of the public policy related to these issues is for the legislative and executive branches (and not for this court) to consider, the financial opportunities presented by these numbers reveal why the healthcare industry may be motivated to pursue this slice of the Medicaid pie aggressively.”

The judge’s order singled out allegations that, when Lang was the Monroe County hospital’s CEO, the hospital paid kickbacks ranging from 15,000 to $20,000 a month to Clinica. Citing the whistleblower’s complaint and the DOJ’s motion to intervene in the case, Land said Lang generated a financial feasibility study projecting a 56.2 percent return on a contract with Clinica’s prenatal clinics based on the number of expected deliveries and the reimbursement rate per delivery. That contract, according to the suit, was a sham intended to disguise the kickbacks.

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