Historically, the False Claims Act came about in response to improper claims for reimbursement under wartime defense contracts. However, the modern FCA is most often used to recover funds disbursed pursuant to unlawful invoices for healthcare services submitted to Medicare and Medicaid. In fact, healthcare fraud recovery is the largest area of recovery under the FCA and has continued to rise steadily over the past several years. Many healthcare fraud cases involve illegal kickback schemes, off-label marketing, and upcoding. However, today’s case centers on reimbursement for unapproved physician income and reveals the expansive nature of FCA protections.
Case Against St. Mary’s Hospital Results in Seven-Figure Settlement
A Philadelphia-area hospital recently settled with the U.S. government following a rare self-disclosure of mistakes made in the context of physician recruitment procedures. According to information released by the Department of Justice, St. Mary Medical Center administered 15 physician recruitment agreements that likely violated the FCA; this resulted in an overpayment of invoices by Medicare and Medicaid from 2005 through 2010. These physicians were recruited pursuant to the terms of their approved recruitment contracts, but were subsequently overpaid for services. As a result, the overpayment was billed to Medicare and Medicaid, leading to the payment of false claims amounting to $2.34 million.
The overpayments and payment oversights were discovered internally by the hospital before a whistleblower lawsuit was ever filed. The hospital self-reported the mistakes, and agreed to settle the matter with the federal government after an investigation by the Department of Health and Human Services, the Office of Inspector General, the Office of Audit Services, and Assistant United States Attorney Susan Dein Bricklin. The hospital did not admit to any criminal liability as a result of the settlement and has been released from further civil liability with regard to this overpayment issue.
Interestingly, St. Mary’s recently settled another self-disclosed FCA issue involving upcoding of patient services. The practice of upcoding involves submitting codes for services to Medicare and Medicaid that either were not actually performed, or should have been billed at a lower, less-expensive rate. The settlement, which occurred in 2010, involved billing Medicare and Medicaid for inpatient services that should have been billed as outpatient or observations. The case settled for $3.28 million after the hospital voluntarily revealed the over-billing.
False Claims Act Addresses Many Types of Fraud
The FCA covers any type of healthcare fraud, ranging from more common kickback schemes to physician overpayment and unlawful upcoding. While the cases involving St. Mary’s were the result of self-disclosure, you have an opportunity to report potential fraud under the FCA’s qui tam provisions. These provisions provide whistleblowers with up to 30 percent of any recovery amount, and many FCA settlements are extremely sizable.
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