A lawsuit alleging that Hilton Head Hospital and four hospitals in the Atlanta area paid kickbacks to increase Medicaid reimbursements will move forward, a federal judge has ruled.
The "whistle-blower" lawsuit contends the hospitals paid prenatal-care clinics to recruit pregnant, undocumented Hispanic women for care, and the clinics then referred the women to the hospitals for deliveries paid for by Medicaid.
Federal and state laws prohibit hospitals from paying for patient referrals for medical treatment through federally funded programs. Illegal immigrants ordinarily are not eligible for Medicaid coverage but are eligible if they are giving birth, which is considered an emergency.
On June 24 a federal judge in Georgia denied a motion by Tenet Healthcare Corp., which owns Hilton Head Hospital, and by Health Management Associates, the Georgia hospital company, to dismiss the allegations.
The ruling by U.S. District Judge Clay Land stated that prosecutors from the U.S Justice Department and the Georgia Attorney General's Office "clearly allege facts supporting their conclusion that the hospitals entered sham agreements with the clinics for the purpose of generating Medicaid referrals."
The lawsuit includes allegations that Elizabeth Lamkin, Hilton Head Hospital CEO from 2002 to 2009, approved an agreement with a for-profit prenatal care clinic on the island, Clinica de la Mama, to generate the referrals.
According to the lawsuit, Lamkin wanted 30 deliveries referred to the hospital each month from Clinica de la Mama, which operated on Hilton Head from 2006 to 2011. Clinica was run by a company called Hispanic Medical Management, which also operated prenatal care clinics in the Atlanta area.
Lamkin, now CEO of a Hilton Head-based health care management consulting firm, declined to comment on the case.
The lawsuit states the referral scheme was started at Hilton Head Hospital under a former vice president of business development, who subsequently took a job at one of the Georgia hospitals, where he duplicated he practice.
Attempts to reach Tenet Healthcare Corp. and Hilton Head Hospital representatives Wednesday were unsuccessful.
The hospitals have argued they had legitimate business relationships with the prenatal care clinics and merely hoped those relationships would generate referrals, according to court documents. They said the contracts between the hospitals and the clinics involved payments for translation, marketing and other services.
The hospitals have not disputed that the prenatal care clinics referred patients for Medicaid-covered deliveries or collected fees from the hospitals. They have said the transactions did not violate federal anti-kickback statutes and no evidence suggests otherwise.
On that basis, they filed the motion to dismiss the suit.
Prosecutors were tipped off by the whistle-blower, Ralph Williams, who worked for one of the Georgia hospitals. Williams was fired after he expressed concerns to hospital executives about the referrals, according to the lawsuit.
The S.C. Attorney General's Office is aware of the federal lawsuit, but unlike Georgia, is not participating in it, spokesman Mark Powell said Wednesday. Powell said that since it is a federal case, the state has decided, so far, not to become involved.
Follow reporter Laura Oberle at twitter.com/IPBG_Laura.