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California: News and Insight on Business in the Golden
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Paracelsus to Pay Fine to Settle Charges

September 23, 1998|Barbara Marsh and Bloomberg News

A Houston hospital company said it agreed to pay $7.3 million to settle allegations that two of its hospitals in Southern California defrauded the Medicare program. In a confidential case that was unsealed Tuesday, the government contended that Paracelsus Healthcare Corp. made claims for unnecessary medical services and services that weren't provided through its hospitals in Buena Park and Bellflower. The federal government claimed Paracelsus improperly paid companies providing psychiatric programs through its 53-bed Orange County Community Hospital in Buena Park. Prosecutors also alleged the company's 85-bed Bellwood General Hospital in Bellflower paid kickbacks to physicians and medical groups to receive patient referrals. Paracelsus also signed an agreement with the federal government to take steps to avoid problem billings in the future, according to federal prosecutors. The company admitted no wrongdoing. The fraud allegations originated in a whistle-blower lawsuit filed three years ago. The agreement was announced after the stock market closed. Paracelsus stock closed at $2, unchanged, on the New York Stock Exchange.

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