Justice Dept. says Health Management Associates ex-CEO aided 'scheme'

Former Health Management Associates CEO Gary Newsome has emerged as a defendant in a broad whistle-blower investigation alleging the Naples-based hospital system engaged in kickbacks to boost patient admissions, regardless of medical necessity.

In a news release Monday, the Department of Justice alleges Newsome directed corporate officers to exert “significant pressure” on emergency physicians and hospital administrators.

“The Department of Justice is committed to ensuring that health care providers who attempt to misuse federal health care programs for their own profit are held accountable,” said Stuart F. Delery, assistant attorney general for the Justice Department’s civil division, in a statement. “Schemes such as this one can contribute significantly to the rising cost of delivering health care and create needless patient risk.”

Newsome stepped down from his post in July to serve as as president of The Church of Jesus Christ of Latter-day Saints’ Uruguay-Montevideo Mission in South America.

HMA did not immediately respond to the government’s Monday afternoon announcement.

The company operates 71 hospitals in 15 states, including Lehigh Regional Medical Center, two Physicians Regional Medical Center hospitals in Naples and two health centers in Charlotte County.

The Justice Department has joined eight related lawsuits in recent months. It also accuses HMA of inflating billing claims to Medicare and Medicaid and paying other physician groups for referrals.

The Florida case accused the company of providing up to $800,000 worth of office space, equipment and other payments to Primary Care Associates of North Port in exchange for patient referrals to its hospitals. According to the suit, Primary Care Associates referrals accounted for one-third of revenues for both HMA hospitals in Charlotte County between 2004 and mid-2007, or more than $48 million.

HMA shareholders last week overwhelmingly voted to approve a $7.6 billion deal that would turn the company over to Tennessee-based Community Health Systems.

http://www.news-press.com/article/20140114/HEALTH/301140026?gcheck=1

Health Management backs takeover by Community Health

Nov 13 (Reuters) - Health Management Associates Inc said on Wednesday its board backed its proposed takeover by Community Health Systems Inc after a review period spurred by activist investor Glenview Capital.

Health Management said that the board had agreed to the transaction at the price of $10.50 in cash plus 0.06942 share of Community Health common stock, or about $13.44, per Health Management share, plus a contingent value right of up to $1.00 per share.

Those were the terms of the deal when it was announced back in August by a previous board of directors, although a decline in Community Health's share price now puts the deal value at $3.6 billion plus the contingent value right compared with $3.9 billion it was when first announced.

Health Management shares have also traded off since the deal and closed on Tuesday at $12.52.

Glenview Capital, which owns 14.5 percent of Health Management's stock and is its largest shareholder, said that UBS Securities and Lazard Freres & Co had conducted a fairness opinion on the deal for the board.

Shareholders replaced Health Management's board in August with a slate of directors that Glenview had put forth, raising questions about whether the deal would go through or whether the terms would change.

Naples HMA to return $31 million in questionable incentive money

Health care giant promises more diligent oversight

Health Management Associates Inc. is repaying $31 million in technology incentives it improperly collected through federal and state programs and will tighten its financial controls as it restates financial results dating back to 2010, the Naples-based hospital company reported.

HMA disclosed that 11 of its hospitals collected the $31 million through the Medicare and Medicaid Health Information Technology program, but made an error in applying the requirements of the program. The program is intended to encourage health care providers to upgrade their electronic records systems.

HMA did not name the hospitals involved and did not return calls seeking additional information on Wednesday.

In a press release, HMA said it has notified the Centers for Medicare and Medicaid Services and has repaid “the majority of the funds” and is still working to pay back some state agencies that participate in the programs.

HMA operates 71 hospitals in 15 states, including Lehigh Regional Medical Center in Lehigh Acres; two Physicians Regional Healthcare System hospitals in the Naples area; Bayfront Health Port Charlotte; and Bayfront Health Punta Gorda.

The $31 million recorded as income from the program was consistently less than 2 percent of earnings before interest, taxes, depreciation and amortization in each impacted quarter, said analyst Sheryl Skolnick, analyst with CRT Capital Group.

“As these kinds of restatements go, it is fairly minor,” Skolnick said. “The degree of overstatement is not huge, but it is not acceptable. It’s the material failure of the controls that raises the level of seriousness.”

Skolnick said HMA will likely get some leniency for reporting the problem itself, but the Securities and Exchange Commission may investigate the company’s controls further.

HMA already faces whistle-blower suits alleging Medicaid and Medicare fraud, federal investigations from the Department of Justice and the Securities and Exchange Commission and class-action suits from shareholders saying the company isn't acting in their best interest.

In August, Glenview Capital Management — HMA's largest shareholder — replaced the company's board and put its own directors in place.

On July 30, Franklin, Tenn.-based Community Health Systems Inc. announced it intended to buy HMA for cash and stock valued at about $13.78 a share, or about $7.6 billion, including $3.7 billion in debt. That deal is expected to close in the first quarter, HMA said in its statement.

http://www.news-press.com/article/20131107/BUSINESS/311070041/Naples-HMA-to-return-31-million-in-questionable-incentive-money?nclick_check=1