NME Settles Texas Fraud Case for $2 Million
National Medical Enterprises Inc. said Thursday that it will pay $2 million to settle government charges that one of its psychiatric hospitals in Texas made false claims to a federal insurance program for the families of military personnel.
The settlement is not expected to affect the outcome of current talks with the federal government aimed at resolving a broader criminal fraud investigation of National Medical, a spokeswoman for the Santa Monica-based company said.
“This is just one piece of the very large picture,” said Christi R. Sulzbach, associate general counsel and vice president of public affairs for the hospital company.
“We’re pleased to be able to take this step and put this situation behind us,” Sulzbach said. “At the same time, we will continue to negotiate with the Justice Department on the main investigation.”
The broader investigation was highlighted in August when federal authorities raided National Medical’s corporate headquarters and several other company offices around the nation.
In addition to the criminal investigation, National Medical is facing a barrage of civil lawsuits from insurers, shareholders and former patients of its psychiatric hospitals across the country. The company also operates acute care, physical rehabilitation and substance abuse hospitals.
Thursday’s settlement with the U.S. district attorney in San Antonio involved Colonial Hills Hospital, a National Medical institution that closed in May, 1992.
Under the agreement, the hospital will plead guilty to two instances of providing false billing information to the Civilian Health and Medical Program for the Uniformed Services.
In addition, National Medical will pay $1 million in fines and $1 million in restitution to the government.
Last month, the company said it would spend $125 million to settle two civil lawsuits by insurance companies that accused its psychiatric division of submitting $740 million in false claims.
The company has set aside another $125 million to settle a third insurance lawsuit, several shareholder suits and hundreds of malpractice lawsuits filed by former patients.
