Sins of Admission: Whistleblower Cases See Massive Payouts


Admit RMFor one physician group, the question of whether to admit or observe certain patients turned into a fierce legal battle on a national scale. After the testimony of a few key whistleblowers, huge settlements were paid and more litigation is pending.

For one physician group, the question of whether to admit or observe certain patients turned into a fierce legal battle on a national scale. After the testimony of a few key whistleblowers, huge settlements were paid and more litigation is pending.


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A 76-year-old is brought to the ED complaining of chest pain. The patient’s description of symptoms suggests the possibility of acute cardiac ischemia. However, an EKG shows no T wave changes, and cardiac enzymes are normal. Should the patient be admitted or placed in observation status?

This hypothetical raises thorny issues at the busy intersection of patient care and hospital finance. While the clinical decision to observe or admit can sometimes be murky, the financial consequences of the decision are quite clear: If the hospital places a patient in observation status, it will be reimbursed far less than if it admits the patient immediately. While the most important determination in whether to observe or admit should be what is in the best interests of the patient, hospital admission policies may encourage physicians to do what is in the best interests of a hospital’s bottom line.


This issue was at the heart of a well-publicized lawsuit filed in Charlotte, N.C. by the Federal Government and a group of whistleblowing emergency physicians led by Thomas Mason, MD. Mason, along with Steven Folstad, MD, owned Mid-Atlantic Emergency Medical Associates (MEMA), the exclusive provider of ED physician services at several medical centers in North Carolina. The lawsuit alleged that Health Management Associates (HMA), the owner of the medical centers, and EmCare, a for-profit corporation providing management services to emergency departments, conspired to cheat the Medicare and Medicaid programs by financially incentivizing ED physicians to order expensive ED testing and then to admit patients when outpatient observation of the patients would have been more appropriate. The lawsuit further alleged that, since at least 2003, HMA imposed corporate benchmarks on EDs and used proprietary computerized programs to track each physician’s performance and to financially incentivize physicians who exceeded those benchmarks and penalize those who did not meet those standards. In their lawsuit, Mason and the other whistleblowers alleged violations of both the False Claims Act and Anti-Kickback Statutes (See interview with Thomas Mason below).

In January 2014, Tennessee-based Community Health Systems, Inc. (CHS), the nation’s largest operator of acute care hospitals, acquired 70 HMA facilities and agreed to pay $98.15 million to resolve seven whistleblower lawsuits, including the one filed by Mason. Under the settlement in the case, United States et al. ex rel., Mason, Folstad and MEMA v. Health Management Associates, Inc. et al., CHS did not admit any wrongdoing.

However, the litigation is continuing. The False Claims Act permits private parties to sue on behalf of the government and to obtain 10%-30% of the government’s recovery. The whistleblowers’ share of the settlement hasn’t been determined, so for Mason and other plaintiffs, the action is still pending, according to Mason’s attorney, Marc Raspanti.

“We continue to work with the government toward a successful resolution of this case,” Raspanti said in an email. “Due to the courage of Dr. Mason and his colleagues at MEMA, we hope that the type of allegations which are outlined in our complaint are eliminated from the landscape of all American hospitals in the future. As long as good doctors place the needs of their patients above all else, our health care system shall remain the best in the world.”


The case raised the issue of who makes the decision whether to observe or admit a patient, which clearly involves multiple clinical assessments, criteria and viewpoints. Unfortunately, this critical question – so integral to understanding the emergency physicians’ role – remains to be answered.

The Survey Says…
To get clarity on this question of an EP’s role in deciding whether to admit, EPM asked readers to take part in a short survey. Out of 27 respondents, 21 reported that emergency physicians do play a specific role in the admit/observe decision at their facility. Here are some typical responses, illustrating the wide range of admission scenarios, reported by these ED physicians:

  • We in the ED decide on admitting; for observation status, there are criteria.
  • We call and get permission to admit, then decide whether to admit or observe.
  • We have case management in the ED to help determine the proper status of patients in the ED.
  • The decision to admit is mine; it is rare for hospitalist or family medicine service to refuse to admit; the decision to place in observation or admission status is mine initially; however, an ED case manager who reviews all admissions may change the status based on published criteria.
  • I recommend, and the hospitalist concurs or not; the hospitalist has the final say.
  • I discuss with the hospitalist.
  • The criteria include InterQual and observation protocols.
  • I give my opinion to the hospitalist, and we decide together.
  • I enter an admission order; a care coordinator reviews and can ask that the status be changed

In general, the survey results indicate that multiple clinical perspectives, including those of case coordinators and hospitals, come into play in making the decision whether to observe or admit. Often there appears to be consultation and collaboration involved in the determination.

Clearly, this is an area in flux. At Mt. Sinai hospital in New York City, for example, the EP makes the decision of whether to observe or admit a patient, but hospital administration monitors the situation closely in terms of overall observation vs. admit patterns. As Nick Genes, an emergency physician at Mount Sinai points out, however, a new phenomenon is taking place, with the emergence of the “specialty consultant,” such as a neurosurgeon or orthopedist. Previously, Genes notes, these specialty consultants use to recommend that patients be admitted and followed on the ward. Now, he says, these physicians often order MRIs or similar diagnostics and recommend continuing observation.

As the survey indicates, when it comes to the question of observation or admission and the role of the EP, we’re anything but settled, and the debate will continue.

Michael Levin-Epstein, J.D., M.Ed is a Maryland-based freelance writer who contributes to EPM, Telemedicine and other health care and business-related publications.


Q&A with Thomas Mason, MD
EPM caught up with Dr. Mason, the principal whistleblower in the Federal Government’s litigation against Health Management Associates.

Screen Shot 2015-07-02 at 1.13.32 PMEPM: Why did you decide to pursue the litigation?

Mason: As our unsealed complaint indicates, I believe that HMA terminated our group because we refused to order tests and admit patients that we felt strongly were medically unnecessary. I believe this was in clear violation of the False Claims Act. I also believe that the financial “incentives” they offered us to comply with their directives were in direct violation of the federal Anti-Kickback Statutes. I always believed their demands were unethical and illegal and our considerable resistance led to our termination. Our unsealed complaint also discusses EmCare’s involvement with HMA’s practices and the termination of our contract.

EPM: Did you feel torn between your allegiance to your employer and a desire to correct a wrong or was it a relatively easy decision to pursue the litigation?

Mason: I did seriously labor over (and still do) our decision and its effects on our group. I knew that the loss of our two longstanding and substantial contracts at those hospitals would be devastating to our group. And it has been. But I was never in doubt that this was the right and ethical course. And when I brought my concerns to my group during our last couple of years when we were still working at HMA, there was never any discussion about acquiescence to their demands. And I hope that when this is finally over they can be made whole for the harm from HMA’s actions and our resistance to them.

EPM: Are you still involved in the litigation?

Mason: Oh yes. I have been working regularly on this case for a number of years. We have excellent, experienced attorneys assisting us but it has been a long, arduous journey. The Department of Justice intervened in our case in January 2014 and they continue their investigation and preparation for litigation.

EPM: Do you think your lawsuit has changed the way health care organizations decide whether to admit patients rather than to continue to observe them, especially in terms of seeking reimbursement?

Mason: I think the recent settlement of a Community Health Systems case involving emergency medicine and the recent media attention being given to medical necessity has certainly caught the attention of hospitals and hospital corporations. But the ball is in the court of the Department of Justice and its agencies. If hospital administrators see continued “slap on the wrist” fines, no criminal charges, and no admission of guilt, then they will continue to cross the line for higher profits. It is now up to the government to send a clear message to the medical community that unnecessary care or care tainted by kickbacks can be harmful to patients, wastes taxpayers’ money, and will be dealt with severely when detected. Most importantly, these behaviors destroy the core trust that patients must have for their physicians. We must always act in their best medical interest, not the financial interests of others, and when we don’t, and patients can no longer trust us to act in their best medical interests, the whole medical system suffers.

EPM: Do you think your lawsuit has changed the role of ED physicians in the observe-versus-admit decision?

Mason: I sincerely hope that our lawsuit, and the efforts we have made, gives confidence to other ED physicians. The care of the ED patient, from appropriate diagnostics to disposition of the patient, including observation status, admission, or discharge, should remain a clinician decision, not a corporate one.

EPM: What do you think is the optimal role for ED physicians in this area?

Mason: Often, the ED physician may be the only provider who has seen the patient, so we must have input. I believe this observation-versus-admission status is best handled by thoroughly peer reviewed and well-sanctioned protocols.

EPM: Are you still working with Mid-Atlantic Emergency Medical Associates (MEMA)?

Mason: Yes, MEMA is a comprehensive private group of Charlotte-area based physicians that has staffed the emergency departments at the Novant Health system in the Charlotte area for the last 38 years. I have been a partner for the past 20 years. After being the ED Medical Director at Lake Norman Regional Medical Center for 14 years and Chief of Staff just the year before, we were terminated by Health Management Associates (HMA) in 2010. Despite a significant loss of positions for our practice without cause, we dismissed none of our providers and I returned to work in the ED at the Novant hospitals. The loss of clinical shifts in our practice resulted in a major reduction in clinical shifts for our providers, requiring many of us to go “moonlighting” to cover our expenses.

EPM: What’s the takeaway from your experience?

Mason: It’s a warning to all who consider pursuing these types of cases: Be prepared for a long, stressful, and sometimes lonely fight. Your attorneys will immediately demand you not discuss the case with anyone, not even your spouse. You will then have the case placed under federal seal with all the legal ramifications if you should happen to break the seal. And these legal issues take years to conclude. But as long as you have a passion for doing the right thing for your patients and your profession, these will be labors of love and the pain will be greater if you don’t take action.


  1. stephen r.dannewitz, on

    In an earlier era, observation codes were reimbursed at higher levels than admission, causing many diagnoses/patients to be in observation status. If the “2 midnight” rule wasn’t fulfilled, this flew.
    From a Medicare beneficiary perspective, I was chastened for revealing that observation status = outpatient = the patient pays, not medicare. Sometimes the financial as well as the health consequences are important to those older than 65.

  2. stephen r.dannewitz, on

    Pitty the poor Medicare beneficiary who is paying out-of-pocket for observation/outpatient services not covered by Medicare.

  3. Adan Atriham on

    This is sad, very very sad… Putting finances over patient care, reimbursement over patient risks. Let’s not become the puppets of corporate medicine. We all signed the oath “putting our patient’s interest first”. Let’s keep our integrity and show to the “money people” that we are not for sale.
    Well done, Dr Mason.

  4. I was lied to and told I needed emergency surgery on my neck that I had a tumor and come to find out never had a tumor the dr left immediately after. I have done research and she has opened and closed practices in several states. She needs to be stopped it’s a money thing this Dr has ruined my life I’m completely disabled now from the surgery she did.

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