In a lawsuit, a former hospital executive says Prime Healthcare Services urged doctors to admit emergency room patients to the inpatient wings if they were covered by Medicare or private insurance. Credit: Monica Lam/California Watch

The U.S. Department of Justice is backing a whistleblower who claims that hospital chain Prime Healthcare Services inappropriately urged doctors to transfer emergency room patients into hospital beds.

In a lawsuit, a former hospital executive alleges that the chain overlooked medical need and whisked emergency room patients to the inpatient wings of the hospital if they were covered by Medicare or private insurance. Nonpaying customers, the case alleges, were shown the door after a cursory stay.

By joining the False Claims Act lawsuit, the Justice Department brings additional legal firepower and evidence from an independent probe that validates aspects of the whistleblower’s case.

The Center for Investigative Reporting exposed allegations of the profit-motivated practice in a 2011 report. We analyzed public data showing that after the chain took over a hospital, the percent of seniors admitted into the hospital from the ER spiked, usually from about 40 percent to more than 60 percent.

One woman said she felt like she was in the “Twilight Zone” as physicians at a Prime hospital overruled her family’s objections to admitting her grandmother, who hoped to see her own doctor at a nearby hospital.

Months after the story ran, whistleblower Karin Berntsen filed suit. Berntsen was director of quality and risk management at Alvarado Hospital in San Diego County. Her lawsuit claims that patients who didn’t meet the threshold required for hospital admission were admitted anyway.

Magistrate Judge Patrick J. Walsh ruled today that federal civil fraud attorneys in Los Angeles can join the case and will have 30 days to file a complaint. Government prosecutors tend to review whistleblower cases alleging taxpayer fraud and choose whether to back each case. Elaine Stromgren, a partner with the Tampa, Florida-based law firm suing Prime on Berntsen’s behalf, said the move “shows the seriousness of the allegations and the strength of the evidence supporting those claims.”

Berntsen’s lawsuit describes multiple instances when chain Chief Executive Prem Reddy asked staff to improperly admit patients from the emergency room into the hospital instead of observing them on an outpatient basis. Medicare reimburses hospitals more for patients who are admitted, compared to those who are observed on an outpatient basis and released. Berntsen recounted a January 2011 meeting where Reddy allegedly told doctors that “you can always find a reason to make the (emergency room) patient an inpatient.”

Berntsen also alleges that unlicensed “clinical documentation specialists” were coached to exaggerate patient medical conditions in medical records to justify admitting them to the hospital.

The Justice Department initially declined to back Berntsen’s claims in 2013, when the case initially was made public. However, attorneys announced this week that their independent investigation into Berntsen’s claims has turned up sufficient evidence for federal civil fraud attorneys to join the suit.

The DOJ filing says that since late 2013, investigators have talked to witnesses at different Prime hospitals who said Reddy would demand the firing of ER doctors who passed up opportunities to admit patients into the hospital. Investigators also learned that Reddy told physicians to find a way to admit all seniors older than 65, since they were covered by Medicare.

Berntsen’s lawsuit also alleges that Prime engaged in what’s known as “upcoding.” This is the practice of falsifying patient medical conditions to justify higher bills to Medicare and other payers. The allegations align with CIR’s findings, showing that the hospital reported outsized rates of rare and lucrative medical conditions. The maladies include kwashiorkor, a severe form of malnutrition typically associated with sub-Saharan Africa.

Berntsen claimed that the practice hurt patients, since doctors would justify the billing by giving patients unnecessary medications and care. The Justice Department did not move to back those claims.

As in other False Claims Act cases, the whistleblower stands to gain a windfall if she wins the case.

You can reach Christina Jewett at Follow her on Twitter: @By_CJewett.

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Christina Jewett is a reporter for Reveal, covering labor and workplace issues with a focus on the workers' compensation system. With reporting partner Will Evans and CNN, she exposed widespread fraud and failed government oversight of California’s network of addiction treatment centers for the poor. The stories led to the defunding of more than 200 rehab clinics and changes in state law. The Emmy-nominated series won the 2013 broadcast award from Investigative Reporters and Editors. Jewett – as part of California Watch, a project of The Center for Investigative Reporting – won the 2011 George Polk Award for medical reporting with Lance Williams and Stephen K. Doig. The series exposed outsized rates of rare but lucrative medical conditions at a rapidly growing hospital chain and spurred a federal investigation. She was also a Livingston Award finalist in 2010. Previously, Jewett worked at ProPublica and The Sacramento Bee, where a story she broke about contracting malfeasance led to arrests and convictions. She and a colleague also chronicled jail abuse and medical mistreatment, spurring countywide policy reforms. Those stories were honored with awards from the John Jay College of Criminal Justice and the National Council on Crime and Delinquency. Jewett is based in Sacramento, California.