Parkridge becomes third local hospital to reach fraud settlement

Parkridge Medical Center has become the third local hospital to settle allegations of violating federal law.

Parkridge is a subsidiary of national hospital chain HCA Inc., whose leaders have agreed to pay $16.5 million to resolve a federal and state health care fraud investigation, according to a news release from the Department of Justice.

The payment settles allegations that, in 2007, leaders with Parkridge gave a local physician group “financial benefits” for the group’s members to refer patients to HCA facilities, such as Parkridge.

Between 2007 and 2011, hospital officials also submitted claims to Medicare, TRICARE and TennCare/Medicaid that were arranged by the Diagnostic physician members who benefitted from the prohibited financial arrangements, according to the release.

This causes harm to the Medicare and Medicaid trust funds, and the settlement accounts for that, also according to the news release.

In addition to the payment, Parkridge must also work with federal department leaders for the next five years to ensure compliance with laws as part of the settlement. 

“We are pleased the matter is concluded, and we will diligently fulfill the terms of the corporate integrity agreement,” Kathy Winn, director of marketing at Parkridge Health System, said via email.

These allegations are similar to those that prompted Erlanger Health System to agree to a $40 million settlement in 2005.

Memorial Health Care System also recently reached a similar fraud settlement, agreeing to pay $1,278,579 to settle the allegations—but still denying wrongdoing, according to Nooga.com archives.

“Today's settlement is the third since 2005 involving violations by hospitals in Chattanooga of the Ethics in Patient Referrals and False Claims Acts and reflects the Justice Department's continued determination to enforce these laws to protect both patients and the Medicare and Medicaid trust funds,” U.S. Attorney Bill Killian said in a prepared statement.

The U.S. attorney also said that physicians should make decisions about referrals based on what is best for the patients, not because they are influenced by a financial agreement.

"We will not allow hospitals to provide financial incentives to induce physicians to steer patients their way," special agent Derrick L. Jackson, with the Office of the Inspector General and U.S. Department of Health and Human Services, said in a prepared statement. "These arrangements can corrupt medical decision making and may result in unnecessary diagnostic testing and hospital admissions."