Texas health system beats $61.8M billing fraud case

A Texas federal judge dismissed a False Claims Act lawsuit alleging Dallas-based Baylor Scott & White Health overbilled Medicare by improperly upcoding claims, according to Law360.

The whistleblower lawsuit, filed in 2017, alleges Baylor Scott & White Health submitted more than $61.8 million in false claims to Medicare over a seven-year period. The allegations in the case focused on two secondary diagnosis codes: "complication or comorbidity" and "major complication or comorbidity."

The whistleblower alleged Baylor Scott & White's medical director for coding and utilization spearheaded the alleged scheme to overbill Medicare. He allegedly enacted a scheme to increase the number of patients whose services were coded for CCs and MCCs.

U.S. District Judge David Ezra dismissed the lawsuit because the whistleblower failed to properly state a claim for relief.

In the order dismissing the complaint, the judge cited a CMS regulation that states the agency does "not believe there is anything inappropriate, unethical or otherwise wrong with hospitals taking full advantage of coding opportunities to maximize Medicare payment that is supported by documentation in the medical record."

Based on the regulation, "the mere fact that defendants took targeted steps to increase their coding of CCs and MCCs to increase hospitals revenues is neither fraudulent, nor improper per se," Mr. Ezra wrote. "To state a claim for relief, there must be an allegation that a defendant knew that using a particular code was incorrect." The complaint did not include any such allegations.

The judge dismissed the lawsuit with prejudice, meaning the plaintiff is barred from bringing the claims again, because the plaintiff already had two opportunities to reformulate their allegations to state a claim for relief that meets federal pleading standards, according to the order.

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