Landmark Medical Center buyer admits to federal probe

WOONSOCKET, R.I. (WPRI) – The California-based hospital attempting to purchase Landmark Medical Center is the target of a U.S. Department of Justice investigation into its billing practices, according to a WPRI.com review of the for-profit company’s application filed with the state Department of Health.

In the documents filed with the state last month, Prime Healthcare Services acknowledged that on June 15, 2012, the company was subpoenaed by the DOJ and asked to turn over information related to the “diagnosis and coding of septicemia, malnutrition and other medical conditions” at its hospitals. The company said the probe stems from allegations made by the Service Employees International Union.

Prime Healthcare also admitted that in Jan. 2012, the Office for Civil Rights of the Department of Health and Human Services started a compliance review at one of its hospitals due to allegations that it “impermissibly disclosed protected health information about a patient after the patient had already disclosed the information in the newspaper and on the internet.”

The company asked that its disclosures remain confidential, but the request was denied by the Department of Health. The filing with the state was first reported by the investigative news website California Watch.

"Prime Healthcare believes any scrutiny will show its hospitals are committed to following all state and federal regulations,” Edward Barrera, a spokesman for Prime Healthcare Services, told WPRI.com. “The California Department of Public Health and several Medicare accreditation organizations conducted similar audits and found no significant issues. Prime Healthcare expects similar results and looks forward to helping Landmark Medical Center become one of the best hospitals in the state and country."

Both the Department of Health and the attorney general’s office said they do not comment on pending applications.

In October, a judge approved the sale of the 214-bed Woonsocket hospital, but the attorney general’s office deemed Prime’s application incomplete earlier this month. The company has until Mar. 15 to finalize its application.

Landmark has been in receivership since 2008 and was originally slated to be sold to Boston-based Steward Health Care System, but the company withdrew its offer in 2012.

Prime Healthcare operates 21 hospitals in California, Texas, Pennsylvania and Nevada and is also attempting to purchase a New Jersey hospital. In its Rhode Island application, the company pledged to invest at least $30 million to improve Landmark’s facilities.

Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Twitter: @danmcgowan