Ontario California based Prime Healthcare Services and its nonprofit arm, Prime Healthcare Foundation, have faced multiple lawsuits along with angry employee unions in communities where it works or is taking over hospitals.
Federal prosecutors have intervened in a whistleblower lawsuit against Prime Healthcare Services Inc. and the system’s CEO that alleges emergency department physicians were pressured to admit patients who did not need inpatient care, according to the Justice Department.
The lawsuit targets 14 hospitals owned by Prime in California. The whistleblower lawsuit was brought by Karen Berntsen, the former director of quality and risk management at Alvarado Hospital in San Diego, who estimated that improper short-stay admissions accounted for more than $50 million in false claims.
Most of these hospitals are in Southern California, including Centinela Hospital Medical Center in Inglewood, Encino Hospital Medical Center, Sherman Oaks Hospital and Huntington Beach Hospital.
The suit accuses Prime of engaging in a “systematic practice” of pushing physicians to increase the number of inpatient admissions for Medicare beneficiaries who go to the emergency departments at Prime hospitals, regardless of whether it is medically necessary.
The FBI began investigating Prime Healthcare in 2011, shortly after the whistleblower lawsuit against the organization was filed.
In January 2017, the federal court denied Prime’s motion to dismiss, holding that the government had alleged sufficient facts to support its false claims case against Prime. The trial is now set for February 2018.
Prime owns and operate 43 acute-care hospitals across the country. Since its founding in 2001, Prime has steadily scooped up troubled hospitals, turning them around by negotiating better rates from insurers, adding profitable service lines and implementing aggressive billing tactics, among other strategies.
But in 2015 Prime pulled out of a deal to buy six financially struggling hospitals in California, with those hospitals facing bankruptcy.
Prime told the LA Times that California’s attorney general put “impossible” conditions on the sale, which caused them to back out. The target hospitals were St. Vincent Medical Center and St. Francis Medical Center in L.A. County and four in Northern California: O’Connor Hospital in San Jose, Saint Louise Regional Hospital in Gilroy, Seton Medical Center in Daly City and Seton Coastside in Moss Beach, near Half Moon Bay..
Prime has also been tangled in labor disputes for years with the Service Employees International Union-United Healthcare Workers West, which has publicized a variety of allegations against the company.