Criminal investigation of UHS facilities widens to include parent company

Justice Dept Vertical 1 - low resIn March of 2015, Universal Health Services revealed that it is under investigation as “a corporate entity” by the U.S. Department of Justice Criminal Fraud Section. Modern Healthcare reported that it is a “criminal investigation into whether the company fraudulently billed Medicare and Medicaid for behavioral health treatments.”[1]

Three of UHS’s behavioral facilities had already been under criminal investigation. One of those facilities — River Point Behavioral Health in Jacksonville, Fla. — has had its payments suspended by Medicare and Medicaid since April 2014.[2]

UHS and 25 of its behavioral health facilities are also the subject of a coordinated civil investigation by federal authorities.[3] In February of 2015, UHS disclosed that the civil aspect of the coordinated probe is a False Claims Act investigation focused on billings submitted to the government.[4]

The 25 UHS facilities under investigation are:[5]

The Office of the Inspector General (OIG) in the Department of Health and Human Services issued subpoenas to UHS and 10 of its facilities in February 2013, and the OIG and the Justice Department have steadily expanded the probe since then. In nine of the last 12 quarters of operations, UHS has disclosed some expansion of the federal investigation, including additional subpoenas, payment suspensions and criminal fraud investigations.[6]

Two of the 25 facilities — Friends Hospital and Riveredge Hospital — received subpoenas from the Justice Department before UHS purchased them in 2010.[7] However, Friends Hospital received an additional request for documents after UHS acquired it, and the investigations at both Friends and Riveredge appear to be ongoing.[8]

Federal officials have not publicly disclosed details of the investigation into UHS. But UHS has acknowledged the probe in filings with the Securities and Exchange Commission, and UHS Chief Financial Officer Steve Filton has also spoken about the investigation.

In a March 2013 call with investors, Filton was asked about the federal probe and acknowledged that the “trend in behavioral care has been to have these investigations focus on clinical practices. And I would say that the content of the subpoenas would suggest that’s largely the focus here.”[9]

Filton said then he “couldn’t predict” where the investigation would lead, but noted that “the government often pursues a technique in which they try and tie together what they perceive to be clinical issues and quality deficiencies then with an argument that a false claim has been filed because there is not adequate care.”[10] Roughly two years after that March 2013 call federal officials notified UHS that the civil aspect of the coordinated probe is a False Claims Act investigation.[11]

Additional Federal Investigations [12]

UHS received notice in December, 2015 that the DOJ opened an investigation involving the El Paso Behavioral Health System in El Paso, Texas. The DOJ investigated potential Stark law violations relating to arrangements between the facility and physician(s) at the facility. In February 2017,  El Paso Behavioral Health System reached a $860,000 settlement with the DOJ to resolve these allegations.

UHS received notice in January, 2016, that the DOJ opened an investigation of the South Texas Health System of a potential False Claims Act case regarding compensation paid to cardiologists pursuant to employment agreements. In February 2017, UHS disclosed that the DOJ declined to intervene in the qui tam case against South Texas Health System in connection with this investigation.

South Texas Health System is the same UHS health system that settled False Claims allegations in 2009 related to “paying illegal compensation to doctors in order to induce them to refer patients to hospitals within the group” by paying $27.5 million and signing a Corporate Integrity Agreement.[13]

Other Legal Actions Against UHS

In addition to the federal investigations described above, UHS has also been the subject of many lawsuits filed by families of patients and former staff. Those cases often involve claims that UHS failed to offer adequate care or falsely billed for services it didn’t provide.

Federal and state officials have intervened in a number of those cases and reached substantial settlements with UHS:

  • In March 2012, UHS reached a $6.85 million settlement with the Department of Justice to settle charges by whistleblowers at the Keystone Marion Youth Center in Virginia that the facility provided substandard care and submitted false claims to Medicaid.[14]
  • In August 2012, UHS reached a $4.25 million settlement with the California Attorney General to settle a lawsuit filed by parents of a student and staff at several UHS day schools. They alleged UHS “warehouse[d]” the students and falsely billed local districts for offering instruction.[13]

Below is a list of cases in which former employees or patients’ families have accused UHS and its facilities of committing fraud. Also included in the list are lawsuits by former UHS employees who say they were fired for blowing the whistle on the company. Although a number of the cases below involve the facilities under investigation by federal officials, there is not necessarily a link between those cases and the federal probe.