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May 10, 2013 Healthcare Fraud

False Claims Act Lawsuit: Alleged Violations Could Result in Largest Whistleblower Suit

A False Claims Act lawsuit filed against a Florida-based hospital is shaping up to be the largest qui tam case of its kind, proving that one person truly can make a difference. Halifax Hospital Medical Center and Halifax Staffing Inc., located in Volusia County, are accused of grossly overbilling both Medicare and Medicaid, performing unnecessary spinal surgeries and paying illegal kickbacks to physicians for over a decade. If successful in this False Claims Act suit, the Department of Justice (DOJ) could recover over $200 million in damages.

The whistleblower, Elin Baklid-Kunz, claims that she personally witnessed years of fraudulent activity within the hospital. As a Halifax employee of over 15 years, she worked as the Staffing Director of Physician Services before being transferred to compliance and revenue services.

After consulting with a False Claims Act attorney, Baklid-Kunz filed her own whistleblower lawsuit against Halifax in July of 2009. According to the compliant, Baklid-Kunz alleged the hospital overbilled Medicare by tens of millions of dollars and had improper financial relationships with several physicians. In 2011, under the False Claims Act, the DOJ chose to intervene in the lawsuit.

Allegations of Fraud

Baklid-Kunz alleged that between the years of 2000 and 2011, she witnessed the hospital admitting thousands of patients who did not meet the medical criteria for admission. Included in the official compliant, an internal hospital audit conducted in 2008 clearly showed a pattern of fraudulent activity. According to the audit, in a period of just one month, 82 percent of the patients who were admitted to Halifax for complaints of chest pain did not meet the hospital’s admission requirements.

Over 11 years, the hospital allegedly admitted thousands of medically unnecessary patients. According to estimates, these bogus admissions resulted in over $30 million of fraudulent reimbursements by government-sponsored healthcare providers, Medicare and Medicaid.

The DOJ also alleged that Halifax Hospital Medical Center and Halifax Staffing provided illegal kickbacks to nine physicians within the organization. According to the allegations, six oncologists and three neurosurgeons staffed by Halifax were given kickbacks in the form of “incentive bonuses.” These bonuses were directly related to the physician’s performance, meaning the more procedures they performed, the more money they received. These illegal kickbacks essentially bribed and enticed physicians to perform medically unnecessary procedures.

Halifax also provided illegal kickbacks to the nine physicians through a compensation package that was above fair market value or not commercially reasonable, according to the DOJ. Two of the three neurosurgeons allegedly received annual bonuses from Halifax in excess of $1 million. In addition, one of the three neurosurgeons is accused of performing medically unnecessary spinal fusion surgeries. Dr. Fredrico Vinas allegedly put multiple patient’s lives in danger by insisting their medical conditions required spinal fusion surgery, when in fact, the patients could have been treated through less-invasive means.

The Life of a Whistleblower

Elin Baklid-Kunz publically stated that while she felt morally compelled to file the False Claims Act lawsuit, she is not enjoying her position as a whistleblower.

“I kept hoping someone else would do it but sometimes you have to be that someone,” said Baklid-Kunz.

While she was working in the compliance and revenue department of Halifax, Baklid-Kunz began to notice a disturbing pattern of overbilling. Troubled by the information, she approached her supervisor and questioned why refunds were not being issued.

”I was told, my loyalty has to be to the hospital, not the government,” Baklid-Kunz said.

After her attempt to speak with a supervisor, Baklid-Kunz was moved to a different position within the hospital. She was named Staffing Director of Physician Services for the hospital in 2008, a position which she still holds. In her new role, Baklid-Kunz was in the position to review physician contracts and payments. It was here that she discovered additional False Claims Act violations in the form of illegal kickbacks.

“I struggled morally with what to do,” Baklid-Kunz said. “I need to work, and didn’t want to lose my job. I thought they would listen to me, but they never did.”

“Improper financial arrangements between hospitals and physicians threaten patient safety because personal financial considerations, instead of what’s best for the patient, can influence the type of health care that is provided,” said Assistant Attorney General for the Civil Division of the Department of Justice Tony West. “The department is committed to preventing kickbacks that can corrupt the integrity of health care delivery.”