$32 Million and a Second Strike: Oglethorpe's Psychiatric Hospitals and the Overpayments It Didn't Return

Oglethorpe Inc., a Tampa, Florida-based operator of psychiatric hospitals, along with its founder and principal owner Robert Cohen, CEO John Picciano, and Chief Operating Officer James O'Shea, have agreed to pay $32 million to resolve allegations that they violated the False Claims Act by knowingly failing to return Medicare overpayments tied to patient admissions at three of the company's Ohio facilities.DOCUMENTED

The settlement also includes a 10-year exclusion of Oglethorpe from Medicare, Medicaid, and all other federal health care programs, beginning in July 2026 — a penalty that follows what the government describes as a breach of an earlier compliance agreement the company had already entered into with federal regulators.DOCUMENTED

What the government alleges

The settlement resolves allegations that, from 2021 through the present, Oglethorpe and its executives knowingly failed to return to Medicare overpayments that the company's own consultants had identified.DOCUMENTED The overpayments relate to beneficiaries admitted to two psychiatric hospitals — Ridgeview Behavioral Hospital and Georgetown Behavioral Hospital — and a substance-abuse clinic, The Woods at Parkside, even though those beneficiaries did not qualify for inpatient psychiatric care under Medicare's coverage rules.DOCUMENTED

Under federal law, a health care provider that identifies an overpayment from Medicare is generally required to report and return it within a defined window; failing to do so can itself constitute a False Claims Act violation, separate from whatever underlying billing error created the overpayment in the first place.REVIEWED Here, the government's theory does not depend on proving the original admissions were fraudulent — it turns on what Oglethorpe did after its own consultants flagged the problem.REVIEWED

A second settlement, not a first offense

This is not Oglethorpe's first False Claims Act resolution. In 2021, the company and several of the same Ohio facilities — Cambridge Behavioral Hospital, Ridgeview Behavioral Hospital, and Parkside/The Woods — agreed to pay $10.25 million to resolve earlier allegations covering conduct from August 2013 through June 2019, involving medically unnecessary inpatient psychiatric hospitalizations and alleged kickbacks in the form of free long-distance transportation provided to patients.DOCUMENTED

As part of that 2021 resolution, Oglethorpe entered a five-year Corporate Integrity Agreement with the Department of Health and Human Services' Office of Inspector General, effective January 28, 2021, with an estimated completion date in January 2026.DOCUMENTED A Corporate Integrity Agreement is a legally binding compliance arrangement the government imposes on health care providers as an alternative to program exclusion, typically requiring independent claims review, employee training, and regular reporting to HHS-OIG. Investigators say the conduct underlying this second settlement occurred while that earlier agreement was still in effect.REVIEWED

Officials' statements

"Health care fraud has negative impacts for taxpayers and patients alike," said Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division. "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."DOCUMENTED

"My office is determined to protect the public fisc and our fragile public health programs," said U.S. Attorney Gregory W. Kehoe for the Middle District of Florida. "We will continue to pursue companies and individuals who defy Medicare's regulations for personal gain."DOCUMENTED

The government's case doesn't turn on whether the original admissions were improper — it turns on what happened after Oglethorpe's own consultants said they were.

The whistleblowers

The case originated from a qui tam lawsuit filed in the Middle District of Florida by four former Oglethorpe employees: a registered nurse, a former chief fiscal officer, and two other former staff members, whose complaint prompted the Justice Department to partially intervene ahead of the settlement.REVIEWED The False Claims Act's whistleblower provisions allow private individuals with inside knowledge of a company's billing practices to file suit on the government's behalf and share in any resulting recovery.REVIEWED

Why the exclusion matters more than the payment

For a company already operating under a compliance agreement when the second round of alleged misconduct occurred, the 10-year program exclusion carries more practical weight than the $32 million payment itself. Exclusion from Medicare, Medicaid, and all other federal health care programs means Oglethorpe's facilities cannot bill any federal health program for services during that period — a restriction that, for a company whose patient base includes a significant share of Medicare and Medicaid beneficiaries receiving behavioral health and substance-abuse treatment, functions as a far more severe operational constraint than the settlement amount alone would suggest.REVIEWED

The case was investigated and resolved through the Justice Department's Civil Division and the U.S. Attorney's Office for the Middle District of Florida, with the claims resolved remaining allegations only; there has been no court determination of liability.REVIEWED

Repeat conduct under an active compliance agreement

Corporate Integrity Agreements exist precisely to give health care providers a structured path to correct past billing problems without losing access to federal programs altogether — the agreements typically require independent claims auditing, staff training, and detailed reporting obligations designed to catch and correct problems before they recur.REVIEWED The government's allegation that the conduct underlying this second settlement occurred while Oglethorpe's five-year Corporate Integrity Agreement was still active is significant precisely because that agreement's entire purpose was to prevent a repeat of the earlier conduct it was designed to remedy.REVIEWED

For federal health care fraud enforcement generally, a provider's history of prior settlements and compliance agreements is one of the clearest signals investigators and prosecutors look for when deciding how aggressively to pursue a new case and what remedy to seek — a first-time billing dispute might be resolved through repayment and a corrective action plan, while conduct occurring under an existing integrity agreement more readily supports exclusion, since it demonstrates that lighter-touch compliance measures had already been tried and had not worked.REVIEWED That escalation from a $10.25 million settlement with a five-year compliance agreement in 2021 to a $32 million settlement with a 10-year program exclusion in 2026 reflects exactly that kind of graduated response.REVIEWED

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