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April 14, 2014 Healthcare Fraud

Duke University Health System to Pay $1 Million to Settle False Claims Act Allegations

The world-renowned Duke University School of Medicine operates out of three area hospitals owned by the Duke University Health System. According to a recently-unsealed False Claims Act filing in the federal District Court of the Eastern District of North Carolina, several of its billing practices allegedly violated the FCA and amounted to an “unjust enrichment” of the hospital system at the expense of taxpayers. The case was filed by whistleblower and former in-house auditor Leslie Johnson, who resigned from the organization amid allegations of retaliation and unfair treatment.

In the context of healthcare fraud, exposure to liability under the FCA is triggered when a fraudulent medical transaction involves a patient receiving Medicare, Medicaid, or Tricare benefits. For these patients, medical facilities could face penalties for invoicing for exaggerated services or services never rendered. Known as “upcoding,” this practice also often involves billing for outpatient time with a physician when, in fact, a nurse or member of the office staff actually handled the visit.

Facts of United States of America and State of North Carolina ex rel. Leslie Johnson v. Duke University Health System, Inc, et al.  

The first allegation against Duke Health System involves the mischaracterization of assistants present for coronary artery bypass surgeries. Under federal medical billing rules, organizations may not bill for services rendered by a surgical assistant during this procedure. However, the rules do allow doctors to bill for the use of a physician’s assistant. According to the complaint, Duke routinely mischaracterized assistants as physician’s assistants, thereby receiving a higher reimbursement, when the assistant was actually fulfilling the duties of a surgical assistant — a non-reimburseable role in the coronary artery bypass procedure.

Second, Duke is alleged to have unlawfully unbundled certain medical services in order to receive piecemeal payments for each individual service, which results in a larger total payment, as opposed to one lump sum reimbursement for the entire procedure. In this example, Duke was submitting unbundled invoices for anesthesia and cardiac services when procedures require these services to be billed together. This practice is also prohibited by federal Medicare and Medicaid billing rules.

Duke has since blamed these errors on a software malfunction and maintains a lack of any intentional misdeed. According to a statement by a Duke Medicine spokesperson, “Duke had no intent to submit inaccurate claims, and denies that it violated the False Claims Act….For settlement purposes only, we have agreed to pay back to the Medicare, Medicaid, and TRICARE programs payments received over a six-year period for claims that resulted from an undetected software problem and through possible misapplication of certain technical billing requirements.”

The Assistant U.S. Attorney for the Eastern District of North Carolina stated, “Allegations of health care fraud will be zealously pursued in North Carolina….We encourage our citizens to report potential health care fraud to the appropriate authorities. Duke University Health System was forthcoming with information, and was cooperative in the investigation and resolution.”

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