Newly unsealed lawsuits in a sweeping government fraud case allege Universal Health Services’ psychiatric hospitals had a range of techniques for arriving at a shared goal: Maximize payment by admitting as many patients as possible and keeping them as long as possible.
For-profit UHS will pay $122 million to settle 19 False Claims Act cases under a pair of settlements it has been working with the Department of Justice to resolve for years. The company, which has almost 200 behavioral health hospitals nationwide, also has to abide by a five-year agreement with the government that requires it to pay for an outside monitor.
For its part, King of Prussia, Penn.-based UHS said in a statement it “unequivocally disputes” allegations it engaged in any wrongdoing and was eager to resolve the matter to avoid future distraction and the high cost of litigation. Its stockholders seem to appreciate the closure, too: UHS’ share price jumped more than 10% when the preliminary settlement was announced a year ago.
The individual complaints were made public this week after being kept under seal throughout the litigation. Each describes a methodical scheme whereby administrators pressured staff to admit patients even when it wasn’t necessary and hold them for as long as their insurance paid out. From there, the allegations detail a hodge-podge of contrasting methods and effects on patients and government programs.
“You’ve got whistleblowers who know what they know, and it creates a stew of a case as opposed to a clean, focused, ‘This company is doing this one thing and they’re doing it as a corporate policy,'” said David Callaway, a partner with the law firm Goodwin. “This case was not a single dish, it was more of a cioppino.”
In one case, for example, former administrator Mark Heatley alleged UHS offered Medicare and Medicaid patients free or discounted plane and bus tickets to encourage them to seek treatment at its inpatient and outpatient programs at Turning Point Care Center in Moultrie, Georgia. Once patients completed its inpatient program, the complaint said Turning Point would offer free or discounted furnished apartments to convince them to enroll in its outpatient program.
“Never in Mr. Heatley’s 27 years in the industry has he seen a healthcare provider systematically offer inducements to lure and incentivize individuals to receive healthcare services at its facility,” the complaint said. “The fraud is so rampant—and Turning Point so unrepentant—that Mr. Heatley decided to file this qui tam action.”
UHS will pay $5 million in that case, which was settled separately from the 18 others.
Whether or not UHS gave the plane tickets or apartments is black and white, said Callaway. It’s much easier to prove than the other cases’ allegations, which involve patients’ admissions and lengths of stay.
Turning Point posted a remarkable 42.5% operating profit margin in 2018: $18.6 million in profit on $43.8 million in revenue, according to HMP Metrics, which collects data from hospitals’ Medicare cost reports. That’s compared with a 0.9% operating profit margin nationwide for hospitals that size.
Another whistleblower alleged UHS’ Havenwyck Hospital in Auburn Hills, Mich. routinely admitted Medicare and Medicaid patients with serious medical conditions that a psychiatric hospital couldn’t treat. Staff allegedly admitted a Medicare patient with multiple sclerosis in 2017 without his medication, even though the hospital didn’t have multiple sclerosis medication. That patient went without his medication for four days before his condition deteriorated and he was discharged to another hospital. The complaint says another admitted patient had complete paralysis on the left side from a recent stroke and needed medical care beyond what a psychiatric hospital could provide.
Several lawsuits claimed administrators directed staff to exaggerate patients’ symptoms or falsify symptoms to justify their admissions, including saying they were suicidal when they weren’t, and to hold them longer than necessary. They also said the operations lacked proper supervision by doctors.
A lawsuit against UHS’ Anchor Hospital in Atlanta said all 130 Medicare and Medicaid patients admitted to the hospital between February and May 2017 were diagnosed as having psychosis. However, the “overwhelming majority” of them did not have psychosis and were not even mentally ill, the complaint said. That lawsuit alleged staff would use a cocktail of psychotropic drugs—referred to as “booty juice”—to chemically restrain patients, who were then secluded in secure rooms. An earlier lawsuit against Anchor said the hospital used electroconvulsive therapy on patients even if it wasn’t medically necessary because of the high reimbursement rate.
Some complaints said the inappropriate admissions led to overcrowding in the facilities, and patients being placed in waiting areas or on cots or couches.
UHS said it bought some of the facilities after a portion of the alleged misconduct took place.
Nearly $16 million from the settlement will go to the whistleblowers, many of whom alleged in their complaints that they were subjected to hostile work environments or fired after they tried to stop the fraud.
It’s rare for corporate integrity agreements like the one UHS agreed to in this case to require an independent monitor, said Bill Jordan, partner and co-leader of Alston & Bird’s healthcare litigation group. Outside monitors, which are given unfettered access to records, are designed to be much more intrusive than other compliance requirements, he said.
“They’re reserved for the larger settlements where the (Office of Inspector General) views the conduct as more egregious,” Jordan said.
UHS’ independent monitor will have immediate access to its facilities at any time without notice, including access to audits, complaints, patient records and reports of abuse or neglect. The monitor will visit at least six of UHS’ behavioral health facilities on a semi-annual basis and observe patient care and a variety of meetings.
The document doesn’t limit the number of facilities the monitor can inspect, so in theory, he or she could visit all of them, which would be very expensive for UHS, which will be responsible for paying the monitor, said Brian McGovern, a partner with Crowell & Moring.
UHS’ chief financial officer Steve Filton has said the company spent $10 million per year defending itself in the DOJ investigation.
“The $10 million per year sounds like a daunting figure, but if you were to do that review of each and every one of the facilities, I could see how that figure could approach or exceed $10 million per year in expense,” McGovern said.
A company’s first year of operating under a corporate integrity agreement is typically the most expensive because they have to establish new protocols and hire a monitor, Jordan said. That’s not coming at a good time for UHS, given the COVID-19 pandemic has hit behavioral health providers especially hard. UHS’ profit was down 39% in the first quarter and the second quarter is expected to be worse because it will contain the full effects of suspending elective procedures.
“UHS and other behavioral health providers have really been struggling,” Jordan said. “I would assume since they made the determination to finalize the settlement they feel the juice is worth the squeeze and they want to move on even with the additional expenses of the oversight.”