King of Prussia, Pennsylvania-based hospital management company United Health Services (UHS) has agreed to pay the U.S. Department of Justice $127 million to resolve the investigation into its behavioral health facilities.

Alongside the payment, which resolves the civil aspect probe from the DOJ and a number of states that UHS incorrectly billed Medicare and Medicaid programs, the government has dropped the criminal investigation against the company. The agreement is still subject to requisite regulatory approvals and has not been closed.

UHS has been dealing with the federal investigation for a number of years and executives have said the company has been paying in excess of $10 million annually in legal fees as part of the case. UHS CFO Steve Filton said on the company’s earning call that the settlement is expected to be completed by the fall.

A Buzzfeed News investigation detailed an alleged pattern of involuntary patient admissions at UHS facilities where some individuals would be held involuntarily and their condition would be upcoded to bill insurers at a higher level.

While Filton said there has been no strongly measurable impact on the business as a result of the investigation, he added that the resolution of the case “certainly can’t hurt.”

“We certainly have dedicated a significant amount of time and effort internally, on the part of some individuals, but I think we have made every effort to try not to distract our operators with the issues of this case,” Filton said. “But I think there’s no way there’s not sort of a general halo benefit.”

As part of the settlement, government will send the hospital group a corporate integrity agreement with the Office of the Inspector General of the Department of Health and Human Services.

While a draft of that agreement has not been finalized, UHS executives predicted that the policies would include strengthening and validation of the company’s compliance program.

“The criminal investigation came to absolutely nothing so you’ll have to deal with the existing management for a while,” said UHS CEO Alan Miller on the company’s earnings call.

UHS, which earned $238 million profit on $2.9 billion of revenue in the second quarter of 2019 currently owns 288 behavioral health centers and 26 acute-care hospitals.

Those numbers continue to grow. Earlier this month, UHS won approval to develop a $33 million behavioral health hospital in Wisconsin scheduled to open in 2021.

Investors have reacted positively to the news about the settlement and favorable financial metrics from UHS with the company’s stock up more than 10 percent since the announcement.

Photo: JamesBrey, Getty Images

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