Hospital execs charged with misuse of FHA construction loan

October 8, 2019

A Texas hospital, a Tennessee-based healthcare company, and three healthcare executives have been accused of improperly obtaining and misusing federal loans targeted for hospital construction in underserved areas, according to an article on the Health Leader Media website.

The Department of Justice said has charged violations of the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act against Lakeway (TX) Regional Medical Center, LLC; Franklin, Tennessee-based Surgical Development Partners, LLC; Surgical Development Partners' CEO G. Edward Alexander; Frank Sossi; and John Prater, federal prosecutors said. 

Lakeway Regional Medical Center defaulted on a $164 million HUD loan in August 2013. HUD sold the hospital for $50 million to BaylorScott&White Health in 2016.

The federal complaint alleges that the defendants schemed to improperly obtain a Federal Housing Administration-backed loan to build the Lakeway hospital.

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