Tampa psychiatric hospital operator, execs to pay $32M in Medicare fraud settlement

Oglethorpe Inc., a Tampa-based operator of psychiatric hospitals, along with three of its senior executives, will pay $32 million to resolve allegations it retained Medicare overpayments from some Ohio facilities, the U.S. Department of Justice announced Wednesday. 

The agreement also includes a 10-year exclusion from Medicare, Medicaid and other federal health care programs that begins in July, after investigators say the company breached an earlier compliance agreement. The settlement only resolves the allegations against Oglethorpe, according to the DoJ and there has been no determination of liability. 

Oglethorpe is a health care management company that operates and oversees psychiatric hospitals, addiction recovery centers and behavioral health clinics across multiple states. 

According to federal investigators, though, Oglethorpe and its executives violated the False Claims Act by knowingly failing to return Medicare overpayments linked to beneficiaries admitted to three Ohio facilities who did not qualify for inpatient psychiatric care. The settlement resolving these allegations, according to a statement, was agreed to by the company and three named executives: founder and principal owner Robert Cohen; CEO John Picciano; and COO James O’Shea. 

According to a release from the Justice Department, the overpayments, which range from 2021 to present, were linked to beneficiaries who had been admitted to two hospitals — Ridgeview Behavioral Hospital in Ohio and Georgetown Behavioral Hospital in Texas — as well as a substance abuse clinic called The Woods at Parkside in Ohio.  

“Health care fraud has negative impacts for taxpayers and patients alike,” Assistant Attorney General Brett Shumate of the Justice Department’s Civil Division says in the release. “This settlement reflects the department’s commitment to protecting taxpayer money and ensuring that Medicare payments are consistent with the coverage and payment rules for those services.”

According to the release, Oglethorpe’s own consultants identified the overpayments, however the company and its executives did not return them to Medicare, thus violating the federal False Claims Act. In 2021, the company had already entered into a Corporate Integrity Agreement with the Department of Health and Human Services Office of the Inspector General after an earlier False Claims Act settlement with the Department of Justice. 

Because the company violated that agreement, Oglethorpe agreed to enter into a voluntary exclusion agreement with the HHS-OIG under which they will be excluded from Medicare, Medicaid and all other federal health care programs for a 10-year period beginning in July 2026. 

The civil settlement also concludes a whistleblower lawsuit filed by four former Oglethorpe employees: Whitney Treloar, a registered nurse; Darren Caruso, former chief fiscal officer; Jeanette Skinner, former regional director of operations; and Joel Snook, former director of financial operations.

That lawsuit was filed under the whistleblower provisions of the False Claims Act, which allow private parties to sue on behalf of the government when they believe a defendant has submitted false claims for government funds. Those “qui tam” provisions also call for the whistleblowers to receive a share of the recovery, which has not yet been determined in this case, the DOJ says.