Health Management Associates, Inc. (HMA) (2012 net revenue: $5.9 billion), the nation’s third-largest for-profit hospital chain, defrauded the government for at least four years by pressuring emergency room doctors to needlessly admit patients to the hospital, according to a qui tam False Claims Act lawsuit endorsed by the Department of Justice last week. Qui tam cases, first created by Congress during the Civil War to fight profiteering, allow whistleblowers (called relators) to sue a company for fraud on behalf of the government and keep a share of the damages if the case succeeds.

The HMA case was brought by Michael Cowling, a former HMA division vice-president and CEO at three HMA hospitals, and Jacqueline Meyer, an ex-administrator at EmCare, which provides ER physician services under contract with HMA. In addition to HMA, the suit names EmCare as a “willing and equally corrupt partner” and former HMA CEO Gary D. Newsome.

The lawsuit alleges that HMA set and enforced unrealistically high ER-to-hospital admission goals, paying bonuses to doctors with high admission rates and terminating physicians, as well as hospital CEOs and ER medical directors, who did not meet their targets. It further states that Newsome was personally involved in running the scheme.

The Cowling/Meyer case marks the eighth time in 30 days that the Justice Department has intervened favorably in a qui tam fraud suit against HMA, but it is the only case of the eight that names Newsome personally as a defendant.

Newsome, who became HMA CEO in 2008, earned nearly $22 million in total compensation from 2010 through 2012. In May 2013, shortly after news of the various fraud suits against HMA began to surface, HMA suddenly announced Newsome’s departure, to become president of the Uruguay-Montevideo Mormon mission in South American.

Attorney Janet Goldstein, who represents Meyer and Cowling, praised the Justice Department’s decision to join the case against HMA and Newsome. “To deter corporate fraud, we must do more than seek damages from corporate defendants,” said Goldstein. “We must put names and faces to the alleged perpetrators and seek to hold these individuals accountable in a court of law.”

-Matt Bewig

To Learn More:

Justice Department Joins False Claims Lawsuit Against Hospital Chain (by Corporate Crime Reporter)

United States ex rel. Jacqueline Meyer and Michael Cowling v. Health Management Associates, Inc., Gary D. Newsome, et al. (Complaint) (pdf)

Naples-based HMA’s CEO Gary Newsome to retire, head Mormon mission (Naples Daily News)

Pay Package for HMA CEO Gary Newsome Climbs 17% to $8.3M (by Bob Herman, Becker's Hospital Review)