Northwest Arkansas Hospitals LLC will pay the state over $1 million to settle 246 Medicaid claims, according to Attorney General Tim Griffin.
He announced the settlement on Friday after an investigation pursuant to the Arkansas Medicaid False Claims Act.
The claims were based on medical evaluations, diagnoses and supporting documentation certified by Dr. Brian Hyatt and nonphysician providers working under his control and supervision, according to a news release from Griffin's office.
Hyatt, a Rogers psychiatrist, was chairman of the Arkansas State Medical Board until he stepped down on March 2.
"The investigation of Dr. Hyatt continues unabated, and NWA Hospitals LLC is cooperating fully," Griffin said in a text message response to a reporter's question.
At the time an appeal was filed, Hyatt was a subcontractor with Northwest, according to the release from Griffin's office.
In the settlement, Northwest denied that it knowingly violated the False Claims Act but acknowledged that "many of the medical records supporting the covered claims contain templates created and used by Hyatt, and that the records may lack certain details and may be difficult or impossible to audit."
"While state and federal law give great deference to the diagnosis made by a medical doctor, all Medicaid providers must maintain complete and accurate records that justify claims filed and fully document the medical necessity of all services," according to the news release.
"Northwest will repay the state's Medicaid program $1,112,631.54," Griffin said in the release.
The settlement was a result of audit work conducted by the Arkansas Foundation for Medical Care.
"AFMC reviewed the medical records submitted by Northwest and determined that on 246 occasions the documentation provided did not justify or support the medical necessity requirement for hospitalizations," according to the attorney general's office.
Hyatt was also suspended from the Arkansas Medicaid program, according to a March 2 article in the Northwest Arkansas Democrat-Gazette.
All payments for Medicaid services to Hyatt were suspended by the Office of Medicaid Inspector General, according to a Feb. 24 letter the newspaper obtained under the Arkansas Freedom of Information Act. The office determined there was a "credible allegation of fraud" against Hyatt.
A Pulaski County circuit judge granted a search warrant for Hyatt's phone records Jan. 17.
The attorney general's office was contacted in April by a whistleblower from the behavioral health unit of Northwest Medical Center in Springdale, according to the warrant affidavit.
Hyatt had been the medical director of the unit since January 2018. His contract with the medical center was "abruptly terminated" in May, the affidavit states.
Investigators with the attorney general's office watched hundreds of hours of surveillance video from the behavioral unit and didn't see Hyatt enter a patient's room or make direct contact with a patient, the affidavit states.
According to the affidavit, "red flags" were identified during an analysis of Hyatt's Medicaid claims and use of evaluation and management coding, which is used to bill medical services.
"Subsequent hospital care" codes like 99231, 99232 and 99233 are the most commonly billed codes, each paying a progressively higher rate, according to the affidavit. More complicated cases with patients who are unstable or are developing a new problem are indicated by a 99233 code, the affidavit states.
Between January 2019 and June 30, 2022, Hyatt billed more Medicaid patients at the 99233 code than any other doctor billed for all of their Medicaid patients, the affidavit states.
During that time period, "99.5% of the continuing hospital care claims for Medicaid recipients/patients were billed to Medicaid under 99233," the affidavit states. "According to the claims submitted by Dr. Hyatt and the non-physician providers working under his supervision, no patient being treated in the behavioral health unit located at Northwest Medical Center ever got better, at least not before the day of the patient's release."
Data shows about 20% of all "subsequent hospital care" codes billed nationally -- and about 39% billed by Arkansas psychiatrists -- are the 99233 code, according to the affidavit.
"Dr. Hyatt is a clear outlier, and his claims are so high they skew the averages on certain codes for the entire Medicaid program in Arkansas," the affidavit states.
Billing patients at a higher rate than is appropriate is a kind of Medicaid fraud, the affidavit states. In Arkansas, Medicaid fraud resulting in an overpayment over $2,500 is a felony.
Criminal charges haven't been filed against Hyatt.
Hyatt was appointed to the State Medical Board in January 2019 by Gov. Asa Hutchinson. He was later elected chairman. His current term on the board was to expire Dec. 31, 2024.
Dr. Edward "Ward" Gardner was elected chairman of the Arkansas State Medical Board at its April 13 meeting.
In the news release on Friday, Griffin said his office's Medicaid Fraud Control Unit led the investigation and settlement with Northwest, assisted by the Office of the Arkansas Medicaid Inspector General, as well as by Special Agent Joseph Moore of the U.S. Department of Health and Human Services Office of Inspector General's Office of Investigation.
"I would like to say a special thanks to Deputy Attorney General Lloyd Warford and Special Agent Greg McKay for their good work on this case," said Griffin.
Several lawsuits have been filed against Hyatt over the past two months. The most recent was filed Wednesday in Washington County Circuit Court against Northwest Arkansas Hospitals, Hyatt, Community Health Systems Inc. and 25 John Does.
"This case arises from the concerted actions of the above-named Defendants to prey on, coerce, abuse, and unlawfully hold patients within the Northwest Medical Center - Springdale Inpatient Behavioral Health Unit in order to fraudulently bill their private health insurance, Medicare, Medicaid, or other applicable insurance coverage for alleged care and treatment that was not provided," Bryant E. Crooks of Fayetteville's Odom Law Firm wrote in the suit.
"In order to accomplish their purpose and unjustly enrich themselves, Dr. Brian Hyatt, staff, and other employees, agents, and/or representatives of the named Defendants would knowingly and intentionally hold patients in violation of Arkansas law for as long as their applicable insurance coverage would continue to pay the Defendants' fraudulent claims," according to the lawsuit.
"Although some of the Defendants' conduct may constitute medical malpractice, the Defendants' intentional and/or knowing fraudulent misconduct and mistreatment of patients extends beyond any medical treatment or medical judgment and constitutes false imprisonment, assault, battery, fraud, and other conduct that is so extreme and outrageous as to be intolerable in civilized society," wrote Crooks. "Rather than attempting to help or treat patients as their fraudulent billing claimed, the Defendants abused their positions of power, authority, and standing within the medical community to knowingly mistreat and unlawfully hold patients solely for their own financial benefit without any regard for the harm they were causing to the vulnerable patients held in their facility."
The plaintiff seeks compensatory and punitive damages and demands a jury trial.
Information for this article was contributed by the Northwest Arkansas Democrat-Gazette.