Lakeway (Texas) Regional Medical Center and its former managers agreed to pay more than $16.4 million to resolve two separate False Claims Act lawsuits, the U.S. Justice Department said Sept. 28.
The medical center will pay $13.6 million and co-defendants will pay $1.8 million to resolve allegations of fraudulently obtaining and misusing federal loans. The co-defendants, Surgical Development Partners, Surgical Development Partners of Austin Enterprises, and G. Edward Alexander, Frank Sossi and John Prater, assisted in the development and management of the hospital.
In the case involving fraudulent loans, the Justice Department alleged that when applying for a mortgage loan from the Federal Housing Administration, the defendants made false statements and omissions to overstate physician support and understate other credit risks. Due to those statements, the hospital received the loan under false pretenses, prosecutors said.