Prime Healthcare Pays $275K To Settle Federal Patient Privacy Case
In a federal settlement announced Tuesday, Prime Healthcare Services has agreed to pay $275,000 in a case stemming from allegations that it violated patient privacy, the Los Angeles Times' "Money & Co." reports (Terhune, "Money & Co.," Los Angeles Times, 6/11).
Prime has come under scrutiny for allegedly submitting fraudulent bills to Medicare and Medi-Cal, California's Medicaid program.
In 2011, the California Department of Public Health looked into claims that Prime "upcoded" patient bills and referred the matter to CMS officials. In addition, the FBI questioned former Prime staff members about the health system's billing practices.
An investigation by California Watch found that Shasta Regional Medical Center -- which is owned by Prime Healthcare Services -- billed Medicare for more than 1,000 cases of a rare form of malnutrition known as kwashiorkor over a two-year period.
In response to California Watch's investigation into aggressive billing practices, Randall Hempling -- Shasta Regional's CEO -- in 2011 sent an email to 785 workers disclosing confidential information about a 64-year-old patient with diabetes.
Earlier, Hempling disclosed the patient's medical files to the editor of the Redding Record Searchlight to dissuade the publication from reprinting the California Watch story.
State officials said that all of the disclosures were illegal because they were made without the patient's permission or knowledge.
The California Department of Public Health fined Prime $95,000 for violating patient confidentiality.
DPH also issued an additional $3,100 in fines because the hospital did not report the breach to the state and the patient in a timely manner.
Prime Healthcare officials have said they are appealing the state's findings and penalties.
In a January filing with Rhode Island's health department, Prime said that HHS' Office for Civil Rights was investigating the disclosure of the patient's medical data (California Healthline, 2/6).
Comments on Settlement
In the settlement, Prime did not admit wrongdoing. The company and Shasta Regional said that they "firmly believe that they would have prevailed in this matter based upon the merits."
Prime also said that its "practices have been consistent with all applicable laws."
The health system said that it still faces another federal investigation into its billing practices that it hopes "will be resolved in the near future."An OCR spokesperson declined to comment on the settlement until Prime makes the $275,000 payment ("Money & Co.," Los Angeles Times, 6/11). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.