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Company With Hospitals In Kansas City Area Settles Medicare Fraud Claims For $65 Million

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The owner of four hospitals in the Kansas City area and its chief executive have agreed to pay the federal government $65 million to settle a whistleblower suit alleging the company defrauded Medicare.

Federal prosecutors alleged that Prime Healthcare Services falsely billed Medicare by unnecessarily admitting patients at 14 of its California hospitals when they should have been treated in an outpatient setting. Reimbursements are higher for admitted patients than for outpatients.

Prime will pay the bulk of the settlement; its CEO, Prem Reddy, will pay $3.25 million.

Prime, which is based in Ontario, California, and is the nation’s fifth largest hospital chain, owns St. Joseph Medical Center in south Kansas City, Missouri; St. Mary’s Medical Center in Blue Springs, Missouri; Providence Medical Center in Kansas City, Kansas; and Saint John Hospital in Leavenworth, Kansas.

None of the Kansas City-area hospitals was accused of wrongdoing in connection with the settlement.

In a statement, Prime emphasized that it had not admitted liability.

“There was no finding of improper conduct or wrongdoing of any kind by Prime Healthcare,” the company said. “Prime Healthcare’s exemplary record of clinical quality care was never in question. This matter dealt with the technical classification of the category under which patients were admitted and billed.”

Karin Berntsen, a former director of performance improvement at one of Prime’s California hospitals, filed the lawsuit under the False Claims Act, which allows private citizens to bring lawsuits on behalf of the government and share in any recovery. Berntsen will get $17,225,000 as her share of the settlement.

Prime also agreed to enter into a five-year corporate integrity agreement requiring it to retain an independent panel to review its Medicare claims.  

Prime recently hired the former CEO of Menorah Medical Center, Steven Wilkinson, to oversee its Kansas City area operations.

Dan Margolies is a senior reporter and editor at KCUR. You can reach him on Twitter @DanMargolies

Dan Margolies has been a reporter for the Kansas City Business Journal, The Kansas City Star, and KCUR Public Radio. He retired as a reporter in December 2022 after a 37-year journalism career.
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