A hospital chain based in Northern California agreed Thursday to pay $37 million to settle allegations that it overcharged the federal Medicare program.
The settlement resolved a 2009 qui tam lawsuit filed in San Francisco federal court against Dignity Health by a former employee who claimed the hospital chain submitted false and inflated Medicare claims from 2006 to 2010.
The former worker, Kathleen Hawkins, will receive about $6.25 million from the settlement.
Private citizens can can sue on behalf of the federal government to recover money under the False Claims Act. Successful plaintiffs share in any recovery.
Since January 2009, the Justice Department has recovered more than $23 billion through False Claims Act cases. About $15 billion of that amount was recovered in cases involving fraud against federal health care programs.
In its settlement Thursday, San Francisco-based Dignity Health also agreed to hire an independent auditor to review its Medicare claims.
Hawkins’ lawsuit claimed that more than a dozen of Dignity’s hospitals often admitted patients for procedures that could have been done less expensively for outpatients. The suit said installing pacemakers and stents were billed as in-patient procedures instead of less expensive outpatient operations.
Four of the hospitals were also accused of overcharging for minimally invasive spinal cord compression operations.
As part of Thursday’s settlement agreement, Dignity entered into a corporate integrity agreement with the U.S. Department of Health and Human Services – Office of Inspector General. The integrity agreement requires Dignity “to engage in significant compliance efforts over the next five years,” the Justice Department said.
“Under the agreement, Dignity is required to retain independent review organizations to review the accuracy of the company’s claims for services furnished to federal health care program beneficiaries,” the DOJ said.
Dignity said it settled the lawsuit to avoid the expense of litigation. It said the settlement wasn’t an admission of any improper conduct.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.