Qui Tam Alleges Hospital Fraud Relating to Provider Relief Fund “High Impact” Payment

Earlier this month, a federal court unsealed a qui tam complaint against several New Jersey hospitals, management services organizations, and the hospitals’ Chief Executive Officer and Chief Financial Officer for allegedly refusing to return CARES Act Provider Relief Fund (“PRF”) money for which the hospitals knew they were not eligible, and for allegedly using PRF money for impermissible purposes.  See United States ex rel. Singh v. Hudson Hospital OPCO, LLC, No 21-cv-19788 (D.N.J. Nov. 5, 2021).  This case is noteworthy because it is one of the first unsealed qui tam complaints raising allegations about ineligibility for, and misuse of, PRF payments.

The CARES Act, and subsequent congressional appropriations, allocated over $178 billion to the Department of Health and Human Services (“HHS”) to distribute to healthcare providers through the Provider Relief Fund.  Providers received payments in various distributions, each with its own eligibility criteria.  HHS allocated over $20 billion in High Impact Area Distributions to hospitals that had a high number of confirmed COVID-19 positive patient admissions, to help mitigate the financial costs of caring for these resource-intensive patients.  Providers were permitted to use these PRF payments only to cover healthcare related expenses and/or lost revenues that are attributable to coronavirus.

The relator, the former system Chief Medical Officer and Chief Hospital Executive for one of the defendant hospitals, alleged that the defendant hospitals received over $50 million in High Impact Area Distributions to which the hospitals were not entitled.  Specifically, the relator alleged that two internal audits confirmed that when the hospitals applied for a High Impact Area Distribution, they over-stated the number of patients with appropriately confirmed diagnoses of COVID-19.  Despite the relator’s repeated insistence that the hospitals self-report the overpayment and return the money to HHS, the hospitals retained the money.

The relator further alleged that the hospitals expended their PRF distributions on impermissible uses, including “renovating the hospital lobby, renovating a medical office building, creating a weight loss center, renovating its radiology center and upgrading its catheter lab and stroke lab.”  Notably, the relator’s qui tam complaint incorrectly suggested that the hospital could only use its PRF distributions to cover “the cost of diagnosing and treating COVID-19 patients.”  The relator’s misunderstanding of at least certain nuanced aspects of the PRF program may have contributed to the government’s decision to decline to intervene.

A copy of the qui tam complaint can be found here.

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