Prime Healthcare settles federal patient-privacy case for $275,000

Prime Healthcare Services Inc., led by founder and Chief Executive Prem Reddy, above, said it settled federal allegations of patient-privacy violations at its Shasta Regional Medical Center.
(Anne Cusack / Los Angeles Times)

Hospital chain Prime Healthcare Services Inc. has agreed to pay $275,000 to settle a federal investigation into alleged violations of patient privacy.

The case stemmed from allegations that Prime Healthcare and its Shasta Regional Medical Center violated patient confidentiality by sharing a woman’s medical files with journalists and sending an email about her treatment to nearly 800 hospital employees.

Last year, California regulators fined the Ontario hospital chain $95,000 for the unauthorized disclosure of medical information in this matter. The company said it’s appealing that state fine.


In the federal settlement announced Tuesday, Prime Healthcare did not admit to any wrongdoing. The company and hospital said they “firmly believe that they would have prevailed in this matter based upon the merits.”

These violations allegedly occurred when the hospital was seeking to respond to a story published by California Watch, a nonprofit news organization, that featured patient Darlene Courtois and allegations that the hospital was overbilling Medicare.

The alleged breach of confidentiality was revealed in a January 2012 column in the Los Angeles Times.

A spokeswoman for the federal Office for Civil Rights, which investigated the matter, declined to comment in detail on the settlement until the company made the $275,000 payment.

Prime Healthcare also said Tuesday that it still faces another federal investigation into its billing that it hopes “will be resolved in the near future.”

The company has said it received a subpoena from the U.S. Department of Justice last year “surrounding the coding and diagnosis of certain medical conditions at its California hospitals.” Prime said it responded to the subpoena earlier this year and believes its “practices have been consistent with all applicable laws.”


Prime Healthcare and a related nonprofit foundation own or operate 23 hospitals in California and four other states.


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