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Major Hospital Chain Will Pay $65M to Settle False Claims Act Allegations

August 28th, 2018

Prime Healthcare Services Inc. (along with Prime Healthcare Management Inc. and Prime Healthcare Foundation Inc.) will pay the federal government $65 million to resolve False Claims Act allegations that 14 of its California hospitals admitted patients who could have been treated as outpatients. It also was alleged that Prime billed for fraudulent diagnoses. Under the settlement, Prime’s founder and CEO will pay more than $3 million, and Prime will pay more than $61 million.

It was alleged that between 2006 and 2013, Prime, one of the largest hospital chains in the United States, sought to increase admission of Medicare inpatients. In this case, that involved admitting patients who presented to the emergency room with complaints that did not require inpatient care. Outpatient care of these patients would have been less costly, and the admissions were deemed to be medically unnecessary. It was alleged that Prime falsified data regarding patient diagnoses to increase Medicare reimbursement.

According to the U.S. Justice Department, Prime has “entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General requiring the company to engage in significant compliance efforts over the next five years. Under the agreement, Prime is required to retain an independent review organization to review the accuracy of the company’s claims for services furnished to Medicare beneficiaries.”

The settlement is not an admission of guilt on the part of Prime Healthcare Services. At press time, there was no mention of the settlement on the company’s website.


Robert B. Vogel, MD, JD
Retinal Ophthalmologist at Piedmont Eye Center, Lynchburg VA;
Attorney, Overbey Hawkins & Wright, PLLS, Lynchburg, VA;
Adjunct Professor, Humanities and Bioethics, Liberty University School of Medicine, Lynchburg, VA.