THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, April 14, 1995 TAG: 9504140425
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY MARIE JOYCE, STAFF WRITER
LENGTH: Medium: 66 lines
To patients, it must have sounded like a great deal. They needed psychiatric treatment, and Colonial Hospital in Newport News was willing to pay for plane tickets to fly them to Hampton Roads.
But the arrangement was illegal. The patients were using Medicare, and federal law prohibits a hospital from paying Medicare patients as an inducement to choose it over another facility.
On Thursday, the owner of Colonial Hospital, Florida-based Recovery Management Corp. III, pleaded guilty in U.S. District Court in Norfolk to violating this anti-kickback law.
Assistant U.S. Attorney Alan M. Salsbury said the law protects patients who might make the wrong treatment decisions because a hospital is giving them money. There's no evidence, however, that the Colonial patients whose air fare was paid received inferior care, he said.
The law also is supposed to preserve market competition for patients whose care is paid for with federal money, Salsbury said.
Recovery Management faces fines of $2 million at its sentencing in July, Salsbury said. The hospital also could be cut off from participation in Medicare, the federal health insurance program for the elderly and disabled.
According to court documents, Recovery Management paid more than $44,000 for round-trip air fare to bring 65 patients to Hampton Roads. The patients, all Medicare participants, came from 19 states in September 1992 to January 1994.
When most of them arrived at Colonial Hospital on Warwick Boulevard, they were asked to sign a note promising reimbursement to the hospital but were told they wouldn't really have to pay it.
The notes were a ruse to make it appear that the patients weren't getting free air fare, according to Salsbury. Several patients refused to sign.
All the patients were admitted and treated at the hospital, bringing in more than $1 million in Medicare money. Recovery Management may have to pay back that money in addition to court fines.
Douglas A. Miller, president of the company, said company officials didn't realize at first that paying the air fare was illegal.
But, he said, ``We had a feeling it was wrong, and we have since stopped the practice.''
Salsbury says he won't pursue charges against the patients, some of whom were prepared to testify if the case had gone to trial.
Federal investigators said that patients were solicited by marketers within the company and by outside marketing consultants. The case was investigated by the U.S. Department of Health and Human Services and the FBI.
After the hearing, Miller was vague about the details of how patients were solicited, saying that they were referred by doctors and other health care professionals. The health care workers found out about the hospital through seminars held around the country. There's no evidence that the health care workers got kickbacks, Salsbury said.
The Department of Health and Human Services can stop a facility convicted under the anti-kickback rule from participating in the Medicare program. Medicare funds are the bread and butter of many hospitals.
But Robert Lehmann, chief executive officer of Colonial Hospital, said only about 20 percent of the facility's patients are on Medicare. Colonial, a 60-bed facility, is the only hospital owned by Recovery Management, which acquired it about four years ago.
KEYWORDS: MEDICARE ILLEGAL INDUCEMENT KICKBACK by CNB