The Justice Department today announced settlements with two physician groups, EmCare Inc. (EmCare) and Physician’s Alliance Ltd (PAL), for allegedly receiving illegal remuneration in exchange for patient referrals to hospitals owned by the now-defunct Health Management Associates (HMA).

Dallas-based EmCare provides physicians to hospitals to staff their Emergency Departments (EDs). Under the settlement with EmCare, the physician group will pay $29.6 million to resolve allegations that, from 2008 through 2012, EmCare received remuneration from HMA to recommend patients be admitted to HMA hospitals on an inpatient basis when the patients should have been treated on an outpatient basis. On average, Medicare pays at least three times as much for an inpatient admission as it does for outpatient care. As part of the alleged scheme, HMA made certain bonus payments to EmCare ED physicians and tied EmCare’s retention of existing contracts and receipt of new contracts to increased admissions of patients who came to the ED.

In a separate settlement, PAL, headquartered in Lancaster, Pennsylvania, and three of its executives, Lee Meyers, Michael Warren, M.D. and Wallace Longton, M.D., agreed to resolve allegations that, from 2009 until 2012, PAL accepted illegal remuneration from HMA to refer patients to two HMA hospitals, Lancaster Regional Medical Center and Heart of Lancaster Medical Center. Under the settlement, PAL and its executives will pay $4 million plus a percentage of proceeds from the sale of PAL’s interest in a joint venture with HMA.

“These settlements demonstrate our commitment to ensuring that physician judgment is not compromised by illegal inducements,” said Acting Assistant Attorney General for the Justice Department’s Civil Division, Chad A. Readler. “Patient care decisions should be based on the needs of patients rather than the financial interests of physicians.”

Envision Healthcare Corporation (Envision) has also entered into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General as part of the resolution of the EmCare matter. EmCare is a subsidiary of Envision.

“Improper physician inducements not only compromise sound medical decision-making, but also cost American taxpayers millions in unnecessary medical costs,” said U.S. Attorney for the Western District of North Carolina Andrew Murray. “Such kickback arrangements will not be tolerated.”

“These physicians prioritized their own financial interests over the needs of their patients,” said United States Attorney Louis D. Lappen for the Eastern District of Pennsylvania. “Such conduct compromises patient care and undermines the integrity of our nation’s federal health care programs. This settlement should serve as a warning to all providers who allow financial incentives to displace their medical judgment.”

“The Hippocratic oath enjoins physicians to do no harm, not maximize profits by pocketing illegal referral payments,” said Nicholas DiGiulio, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Physicians that stray from their oath should not be surprised when they come under law enforcement scrutiny.”

"This settlement is a direct result of the FBI's dedication to hold companies accountable for their role in healthcare fraud and abuse, and it would not have been possible without the teamwork between FBI Atlanta, the FBI Headquarters' Major Provider Response Team, DOJ, and our partners," said FBI Assistant Director Stephen E. Richardson. "Since 2011, the FBI and our partners have returned over $1.25 Billion to private and public healthcare programs from these "whistleblower" investigations. The FBI is committed to safeguarding the public's trust in a health care system that places patient care, not financial gain, as their primary focus."

Under the qui tam, or whistleblower, provisions of the False Claims Act, private individuals may sue on behalf of the government for false claims and share in any recovery. The EmCare settlement resolves a qui tam lawsuit filed by Drs. Thomas Mason and Stephen Folstad, whose medical practice, MEMA, previously supplied ED physicians to two HMA hospitals in North Carolina. In connection with the settlement, Drs. Mason and Folstad will receive $6,222,907.

In a separate action, George E. Miller and Michael J. Metts, former HMA hospital executives, filed suit in the Eastern District of Pennsylvania alleging the scheme between PAL and HMA. Miller’s and Metts’ share of the settlement has not yet been determined.

The settlements were the result of a coordinated effort by the Civil Division of the Department of Justice and, in the EmCare matter, the United States Attorney’s Office for the Western District of North Carolina, and in the PAL matter, the United States Attorney’s Office for the Eastern District of Pennsylvania. The investigations were conducted by the Office of Inspector General of the United States Department of Health and Human Services and the Federal Bureau of Investigation.

The cases are captioned United States ex rel. Mason et al., Case No. 1:14-cv-579 (D.D.C.), and United States ex rel. Miller & Metts v. HMA, et al, Case No. 14-00339 (D.D.C.).

The claims resolved by the settlements are allegations only, and there has been no determination of liability.