The Children’s Hospital Agrees to Pay Nearly $13 Million to Settle False Claims Act Allegations

Proving that healthcare fraud truly knows no bounds, the Children’s National Medical Center – through its Children’s Hospital Medical Graduate Program – is accused of engaging in costly and wasteful healthcare fraud involving various pediatric patients enrolled in the Medicaid program. Consequently, the hospital has agreed to pay a staggering $12.9 million in lieu of defending the claims, but has not admitted to any wrongdoing in the matter.

The case was brought to light several years ago by a former Children’s National Medical Center employee, who reported the information to the appropriate investigative authorities.[1. “Children’s Hospital to pay $12.9 M to settle false claim allegations.” June 15, 2015. http://www.wusa9.com/story/news/local/dc/2015/06/15/childrens-hospital-pay-millions-settle-false-claim-allegations/71252788/] As a result of his willingness to come forward, the whistleblower will receive $1,890,649.48 under the qui tam provisions of the False Claims Act.

Details of the allegations against Children’s Hospital

Precluding the allegations of fraud, the children’s hospital was mandated to submit cost reports to auditors responsible for ensuring capable and cost-effective use of public Medicaid funds.[2. Cost Reports Information Page. https://www.cms.gov/Research-Statistics-Data-and-Systems/Downloadable-Public-Use-Files/Cost-Reports/?redirect=/CostReports/] These cost reports generally detail the totality of expenses needed to treat patients enrolled in the program, including medical services, equipment, and prescription medications. Medicaid-eligible practitioners are required to be completely honest and forthcoming in these reports in order to ensure taxpayer resources are not wasted.

Allegedly, CHMC opted to falsify the contents of several of its costs reports submitted to Medicaid – a program run with funds offered by both the federal government and the Commonwealth of Virginia.[3. Zauzmer, Julie, “Children’s National Medical Center to pay $12.9 million to settle fraud suit.” June 15, 2015. http://www.washingtonpost.com/local/childrens-national-medical-center-to-pay-129-million-to-settle-fraud-suit/2015/06/15/a81b4e08-138c-11e5-89f3-61410da94eb1_story.html] Both entities rely on the information contained within the cost reports to analyze an appropriate reimbursement rate for services in the future, and the information is expected to be an accurate reflection of the true costs to treat a patient.

Moreover, CHMN is alleged to have overstated its number of available beds, thereby causing Medicaid to allocate more money than was necessary. In addition, the hospital is accused of inflating its overhead costs, thereby inflating the total overall annual costs to run the hospital and provide patient care.

In sum, CHMN is alleged to have doctored its accounting books in order to cause taxpayer-funded Medicaid programs to overpay for services rendered. The False Claims Act was immediately triggered upon the submission of the falsified reports, and the hospital was facing up to $11,000 in fines per violation, as well as possible treble damages. Accordingly, it opted to settle.

Government’s comments on the settlement

Naturally, government officials are pleased to come to a resolution on the matter, but also concerned over the growing trend of fraud within the healthcare industry.

The U.S. Attorney for the District of Columbia said in a comment, “The integrity of federal healthcare programs depends on honest and accurate reporting from the hospitals and other health care providers that receive hundreds of billions of tax dollars every year….This settlement demonstrates our commitment to defending the integrity of the system and ensuring that taxpayer money goes to meet the most critical health care needs. We will continue to work with whistleblowers like the former employee who came forward in this case to battle waste, fraud, and abuse that fuel the skyrocketing cost of health care.”

Contact Berger Montague today

If you are concerned about possible healthcare fraud at your place of employment, please do not hesitate to contact a whistleblower attorney at Berger Montague today.