Government joins Medicare fraud lawsuit against Integrated Health Services

Whistleblower charges long-term acute care hospitals cheated Medicare out of millions

Dec. 12, 2000 — The Justice Department has joined a whistleblower lawsuit that charges Integrated Health Services Inc. (IHS) cheated the Medicare program out of tens of millions of dollars through a massive fraud scheme involving its long-term acute care hospitals.

Also named in the lawsuit is Dr. Sam Jahani, an internist in private practice in Dallas, Texas, who was an admitting physician and medical director of the IHS facility in Dallas.

According to the qui tam lawsuit, IHS, at its Dallas hospital and other long-term acute care hospitals:

  • admitted and kept patients who did not qualify for or need long-term acute care
  • billed Medicare for services that were not provided or were medically unnecessary
  • billed Medicare for therapies that were provided by unqualified or unlicensed staff

"The company hospitalized people who did not need long-term acute care," said Bonny Harbinger, a Washington, DC, attorney with Phillips & Cohen LLP, which represents the whistleblower. "With shopping trips to malls and dinners at restaurants, the Dallas facility for some patients was more of a hotel than a hospital."

The whistleblower, Carolyne Gray, worked under contract as a medical social worker at the IHS Hospital in Dallas and has more than 30 years experience in her field. She turned down an offer for a full-time position at the hospital and quit working there because she did not want to participate in Medicare fraud.

Other health care professionals — including physicians and skilled therapists — also quit working there because they did not want to be part of the fraud and were concerned they might lose their licenses, Gray said.

To qualify for Medicare payments, a long-term acute care hospital must admit and treat only those patients who are incapacitated in some way and meet certain medical criteria, such as having a severe condition that requires treatment every day and can be improved through that treatment.

According to the lawsuit, patients who stayed at the Dallas IHS hospital included:

  • A 57-year-old woman hospitalized for two months, who had no physical ailments but was grieving her son's death. She went to the mall once a week with other patients for "recreational therapy."
  • An 82-year-old woman who was hospitalized for at least 40 days with a diagnosis of a stroke. She actually had her stroke years earlier. Dr. Jahani admitted her, according to the lawsuit, because the woman had some leg weakness and her daughter, who took care of her, was going on vacation. She left the hospital at least once or twice a week to have dinner with a friend.
  • An elderly woman admitted for pulmonary complications, yet she never had any pulmonary tests or consultations with a doctor about her condition. She would leave the hospital for daily outings with her husband.

IHS, based in suburban Baltimore, Maryland, is in bankruptcy court. It filed last February for a Chapter 11 reorganization.

Gray's qui tam lawsuit was filed under seal — meaning it was not disclosed to the public — in April 1999 in federal district court in Dallas, Texas (northern district). The government investigated the allegations, then joined the case Dec. 7. The lawsuit was unsealed last week.

Before she brought her qui tam lawsuit, Gray reported the fraud to the government's Medicare Fraud Hotline and provided detailed information to many government investigators, apparently to no avail.

"Carolyne Gray tried to do the right thing," said attorney Mary Louise Cohen of Phillips & Cohen. "It's gratifying that the government is finally taking action."

The lawsuit is filed under the False Claims Act, which permits individuals with knowledge of fraud against the government to file lawsuits against companies on its behalf. If found liable, companies can be required to pay as much as three times damages and $5,000 to $10,000 for each false claim. The "relator," as the whistleblower is known, is entitled to a share of whatever money the government recovers as a result of the lawsuit.

Case referred to above is:  U.S. ex rel.Carolyne Gray v. IHS Hospital at Dallas, Integrated Health Services Inc. and Sam Jahani, D.O., case no. 3-99CV0807-P.