Blog Exclusive: Government Sues Hospital for Birthing Mama’s Babies

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The Clinica de la Mama case could well serve as an instruction manual of what not to do to stay out of the government’s crosshairs. In this case, several hospitals entered into contracts for Clinica de la Mama to provide “services” including translation, translation management, consulting, eligibility determination, marketing, birth certificate, educational, community outreach and others. On their face, the contracts looked legitimate and the services should have been permissible. Indeed, language in these agreements stated that the agreement contained the entire understanding of the parties with respect to the subject matter thereof and, in several agreements, the parties acknowledge that none of the benefits granted Clinica de la Mama are conditioned on any requirement that Clinica de la Mama or any Clinica staff make referrals to, be in a position to make or influence referrals to, or otherwise generate business for the hospitals or their affiliates. For good measure, some of the agreements also stated that “the parties certify that they shall not violate the Anti-Kickback statute.” So what went awry? While it may not have been a dark and stormy night when the contracts were entered into—the circumstances have the earmarks of a Medicare fraud thriller.

According to the complaint of the state of Georgia and the federal criminal information against a hospital CEO and Clinica de la Mama owner, when the contracts were being negotiated by Health Management Associates (HMA), the services described in the agreements were not the primary reason why the hospital entered into the agreement or paid the remuneration. The government contended that the real reason was set forth in an e-mail the hospital administrator sent to corporate which stated the purpose of the Clinica de la Mama agreement was to “grow [the] OB service line volume.” Furthermore, the financial feasibility for the contract laid out the “the explicit reason for the contract: the expectation that payments to Clinica [De La Mama] will result in a significant increase in deliveries... and, in turn, an increase in Medicaid reimbursement.... Interpreter services, a cost center if actually purchased, and eligibility determination services [were] never mentioned in the . . . feasibility analysis. . . . HMA . . . specifically projected reaping a 52.6% return on their $1,878,000 investment.” Both Clinica de la Mama and the hospital closely tracked referrals between themselves. Thus, the government claimed HMA intended to purchase referrals and induce Clinica de la Mama to refer and direct women who were about to be eligible for Emergency Medical Assistance / Medicaid benefits in connection with the births of children. The anti-kickback law has been interpreted to cover any arrangement where one purpose of the remuneration was to obtain money for the referral of services or to induce further referrals, even if there were other legitimate purposes.

Worse yet, the service contracts were largely a sham according to the government’s complaint. When a new CFO, the relator in this case, arrived at HMA’s hospital he found the Clinica de la Mama contract in his desk and learned that the contract had not been entered into the hospital’s contract management system. Despite monthly payments of $15,000 to $20,000, the CFO was unable to find anyone who knew of or used Clinica de la Mama’s interpreter services. Indeed, the hospital actually paid another service for translations when the need for an interpreter arose.

To ensure that Clinica de la Mama patients delivered only at hospitals contracted with it, Clinica de la Mama allowed only OBs with delivery privileges at the hospitals to see patients at their clinics. Each Clinica patient also was provided with an identification card at or near her first appointment that identified her assigned OB and hospital.

When the CFO tried to terminate the relationship with Clinica de la Mama, he received a final invoice from Clinica de la Mama charging the hospital for an average of more than 13 hours per day for interpreter services purportedly provided. Despite the extensive services claimed, the CFO could not confirm that Clinica de la Mama employees had even been on-site at the hospital. If a mother asked to use another hospital, Clinica de la Mama staff were instructed to discourage them by indicating that Medicaid might not pay for the services at another hospital.

Not long after, as in all thrillers, there is resolution. The former co-owner of Clinica De La Mama and HMA’s former CEO recently pled guilty to conspiracy to violate the anti-kickback law by paying and receiving illegal remuneration.

Topics:  Anti-Kickback Statute, Federal Contractors, Healthcare, Hospitals

Published In: Criminal Law Updates, Government Contracting Updates, Health Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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