Grenada Lake Medical Center (GLMC) has recently agreed to pay over $1.1 million to resolve allegations of Medicare fraud and abuse, involving alleged schemes of sending bills for medically unnecessary psychotherapy services.

The United States Justice Department recently announced that Grenada Lakes Medical Center has agreed to pay over $1 million to resolve allegations of Medicare fraud and abuse, stemming from alleged incidents of billing for services not medically reasonable or necessary.

The GLMC is a publicly owned hospital that was also operated by the University of Mississippi Medical Center and the Grenada Lake Medical Center Board of Trustees, which have also agreed to take part in the settlement for their alleged role in the Medicare fraud and abuse scandal.

The alleged incidents of Medicare fraud and abuse originated in January 2005, when the GLMC had reportedly begun submitting claims for Intensive Outpatient Psychotherapy (IOP) services for Medicare coverage.

The IOP claims were allegedly processed by Allegiance Health Management, a post acute healthcare management company, which billed Medicare directly from GLMC. These claims were allegedly for services that were either not medically necessary or were not relevant for the patient’s condition.

Overview of Medicare Fraud and Abuse

This scheme reportedly lasted until April 2013, until it was discovered by the whistleblower in the case. The whistleblower lawsuit was filed by Ryan L., who had previously worked for Allegiance as a Program Manager at the Inspirations Outpatient Counseling Center at the Wesley Medical Center and reported the alleged Medicare fraud and abuse when he discovered it.

This kind of Medicare fraud and abuse is some of the most common healthcare violations against the federal government, with companies often sending claims for unnecessary or unperformed medical services. Healthcare fraud and abuse is one of the most serious forms of fraud against the federal government, because it takes away from vital healthcare services meant for patients who need financial assistance.

This kind of healthcare fraud can also apply to state run programs, in which clinics, hospitals, medical labs, home healthcare agencies, pharmacies, or even private ambulance companies submit faulty claims for profit. Examples of healthcare fraud can include, but are not limited to:

• Deliberately upcoding medical billing for higher claim amounts
• Overcharging for drugs or healthcare services
• Illegal kickback and referral arrangements between healthcare providers
• Sending in claims for unnecessary healthcare services
• Sending in claims for healthcare services that were supposed to be provided by a physician, but were done by a less qualified individual

“Hospitals that participate in the Medicare program are responsible for ensuring that the services performed at their facilities or on their behalf reflect the medical needs of patients rather than the desire to maximize profit,” said Acting Assistant Attorney General Chad A. Readler in a press release.

Ryan will receive approximately $195,000 of the settlement for acting as whistleblower. These individuals can be people who work for the company or other people who may have witnessed fraud, can report this to the federal government.

Whistleblowers are considered a powerful tool to help defraud the government, with these individuals being eligible to receive between 15% to 30% of whatever settlement is awarded.

This Medicare Fraud and Abuse Lawsuit is Case No. 4:10-CV-170 in the U.S. District Court for the Eastern District of Arkansas.