15 Biggest Hospital False Claims and Anti-Kickback Stories of 2011

Here is a list of 15 of the biggest False Claims Act and anti-kickback stories involving hospital and health systems in 2011. The entries are listed in chronological order.

1. In January, seven hospitals agreed to pay the United States more than $6.3 million to settle allegations that they submitted false claims to Medicare related to kyphoplasty procedures, a minimally invasive procedure used to treat certain spinal fractures in an inpatient setting, to increase Medicare billings, instead of using less-costly outpatient facilities that are just as safe in many cases.  The procedures were allegedly performed from 2000 to 2008. Lakeland (Fla.) Regional Medical Center agreed to pay the most at $1.66 million. The other six hospitals that have agreed to settle the allegations include the Health Care Authority of Morgan County in Decatur, Ala. ($537,892); St. Dominic-Jackson (Miss.) Memorial Hospital ($555,949); Seton Medical Center in Austin, Texas ($1,232,955); Greenville (S.C.) Memorial Hospital ($1,026,764); Presbyterian Orthopaedic Hospital in Charlotte, N.C. ($637,872); and the Health Care Authority of Lauderdale County and the City of Florence, Ala. ($676,038).

2. Detroit Medical Center announced in January it would pay $30 million to the federal government to settle findings from an internal investigation that uncovered potentially improper relationships between the health system and more than 250 physicians. DMC voluntarily disclosed the findings from its investigation, which included leases that were not at fair market value, free advertising and tickets to events and seminars from 2004-2010. The investigation was conducted before DMC's sale to Vanguard Health Systems last year. 

3. Savannah, Ga.-based St. Joseph's/Candler Health System agreed in February to pay the state of Georgia $2.717 million in a civil settlement over Medicaid billing for inpatient and outpatient services at its two Savannah-area hospitals. The settlement follows an 11-month investigation that found SJCHS filed claims that were short of the full amount of Medicare prior payments, allowing the system to receive excessive reimbursement. SJCHS also agreed to pay an additional $2,500 to defray the costs of the investigation. The system implemented corrective actions to ensure that similar billing problems do not reoccur.

4. Catholic Healthcare West agreed in February to pay $9.1 million to settle allegations that seven CHW hospitals submitted false Medicare claims. The settlement resolves allegations that three hospitals that received overpayments did not return the funds when Medicare processing errors were discovered; three CHW hospitals submitted inflated costs for their home health agencies and were overpaid; and one hospital was overpaid for treating a high percentage of patients with end-stage kidney disease for several years, including two years when the hospital was not eligible. CHW acknowledged the errors and "is pleased to have resolved this matter."

5. Rex Hospital in Raleigh, N.C., agreed in April to pay the federal government $1.9 million to settle Medicare fraud charges resulting from a whistleblower lawsuit. The whistleblower alleged the hospital unnecessarily kept Medicare patients overnight following kyphoplasty procedures to boost Medicare revenues when the procedure can be performed on an outpatient basis.

6. In April, Louisville, Ky.-based Norton Healthcare paid the federal government $782,842 to settle claims that it overbilled Medicare for certain services. Norton faced allegations that it overbilled Medicare for wound care, infusion and cancer radiation services by adding a separate "evaluation and management" charge that should have been included in the basic rate. The settlement is twice the amount Norton allegedly overbilled.

7. Dartmouth-Hitchcock Medical Center in Lebanon, N.H., agreed in April to pay $2.2 million to settle allegations that it improperly billed various federal health programs. Federal prosecutors say the case began in 2007 when a physician accused the medical center of improperly billing federal programs for services performed by resident physicians without sufficient supervision by staff physicians. The billings in question spanned from 2001 to 2007. In paying its settlement, Dartmouth-Hitchcock denied any wrongdoing.

8. A California Department of Public Health investigation in May found that Prime Healthcare, a California hospital chain under investigation for allegedly overbilling Medicare, inaccurately diagnosed 22 patients with the blood infection septicemia. HHS is investigating the healthcare system to determine whether it overbilled Medicare for treating septicemia in elderly patients. The probe began in Feb. 2011 after a study of medical records by Service Employees International Union showed that Prime hospitals reported septicemia rates among Medicare beneficiaries at more than three times the national average. The department has since dismissed cases related to the diagnosis and coding of septicemia at Prime Healthcare hospitals but referred the data to fraud officials for further examination

9. A former hospital employee filed a lawsuit in May accusing St. Luke's Hospital in Jacksonville, Fla., of falsely billing Medicare and Medicaid during an 11-month span. The suit, filed by BethAnne Algie, claimed the hospital falsely billed the government from April 2008-March 2009. The suit claimed the hospital was ineligible for Medicaid and Medicare payments because its accreditation allegedly transferred when its former operator, Mayo Clinic, opened a new facility and St. Vincent HealthCare took over St. Luke's. St. Luke's allegedly continued claiming Mayo's accreditation as its own when it was under St. Vincent HealthCare's ownership. 

10. In May, federal investigation began examining physician contracts at Fort Lauderdale, Fla.-based North Broward Hospital District. Agents from the Office of the Inspector General of the Department of Health and Human Services issued the district, also known as Broward Health, a subpoena May 17 to review contracts given to more than 27 physicians for violations of Stark and anti-kickback laws. Agents said they issued the subpoena in connection with an investigation over possible false claims to Medicare and Medicaid relating to physician reimbursements.

11. Community Health Systems, based in Franklin, Tenn., received a subpoena in May from the Security and Exchange Commission regarding its admission practices. CHS said the subpoena requested documents related to various inquiries into the company's billing practices. The practices allegedly resulted in one-day admissions that should have been billed as observation status visits. The hospital operator is being investigated by the Department of Justice and HHS following a lawsuit filed just weeks before by Tenet Healthcare alleging improper billing resulting from the admission practices. CHS stockholders also filed a suit against CHS for stock losses resulting from the alleged improper billings and resulting investigations.

12. A whistleblower's complaint against Franklin, Tenn.-based IASIS Healthcare, which claimed the 19-hospital system paid kickbacks in exchange for referrals, was dismissed by a federal judge in Arizona in June. Jerre Frazier, former vice president of ethics and compliance for IASIS, filed the complaint in March 2005, claiming the system performed unnecessary medical procedures and illegally paid physicians for patient referrals to pad profits. In Jan. 2011, IASIS filed a motion to dismiss Mr. Frazier's complaint and also filed a renewed motion for sanctions concerning Mr. Frazier's "misappropriation and misuse of privileged documents." The federal judge ruled in favor of IASIS's motion.

13. HealthSouth, a Birmingham, Ala.-based operator of rehabilitation hospitals, was subpoenaed in June by HHS for possible submission of improper claims to Medicare and Medicaid. HHS is investigating data related to patient admissions, length of stay and discharge matters at HealthSouth Hospital of Houston. Last year, two former HealthSouth Hospital employees accused the operator of wrongful termination after refusing to commit Medicare fraud. HealthSouth does not know if the federal subpoena is connected to the former employees' allegations. The company refused to partake in settlement talks with the former employees.

14. UT Southwestern Medical Center in Dallas agreed in September to pay $1.4 million to settle allegations the hospital submitted false claims to Medicaid and Medicare regarding the supervision of resident physicians between 2004 and 2007. UT Southwestern did not admit any wrongdoing but settled the case in order to "to avoid ongoing litigation expenses and prevent further distraction from our mission."

15. In June, the United States partially intervened in a lawsuit against Daytona Beach, Fla.-based Halifax Health Medical Center, in which the hospital is accused of violating the Stark Law, which prohibits a hospital from billing Medicare for services referred by physicians that have an improper financial relationship with the hospital. The lawsuit, filed by a whistleblower in 2009, claims Halifax's contracts with three neurosurgeons and six medical oncologists were improper, in part, because they either paid these physicians more than fair market value, were not commercially reasonable or took into consideration the volume or value of the physicians' referrals. The system has strongly denied the allegations.

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