10 Recent Stark, False Claims and Kickback Lawsuits Involving Hospitals and Health Systems

1. In February, Innovative Resources Group — doing business as APS Healthcare Midwest of White Plains, N.Y. — agreed to pay $13 million to the federal government and the state of Georgia to settle allegations that it submitted false claims to Medicaid for specialty services not provided. The government alleged that APS submitted false claims to Medicaid through the Georgia Department of Community Health because it allegedly did not provide specialty services related to disease management and case management to members of the Georgia Medicaid Management Program from Sept. 2007-Feb. 2010.

2. San Francisco-based Catholic Healthcare West agreed in February to pay $9.1 million to settle allegations that seven CHW hospitals submitted false Medicare claims. The allegations stem back to the 1990s, with the Department of Justice becoming involved in 2001. The settlement resolves charges that three hospitals received overpayments due to Medicare processing errors but did not return the funds when errors were discovered; that three CHW hospitals allegedly submitted inflated costs for their home health agencies and were overpaid; and that one hospital was allegedly overpaid for treating a high percentage of patients with end-stage kidney disease for several years, including two years when the hospital was not eligible.

3. In April, Dartmouth-Hitchcock Medical Center in Lebanon, N.H., agreed to pay $2.2 million to settle allegations that it improperly billed various federal health programs. The case began in 2007 when a physician accused the medical center of improperly billing federal programs for services performed by resident physicians without sufficient supervision by staff physicians. The billings in question spanned from 2001-2007. Dartmouth-Hancock denied liability but agreed to settle to avoid the burden, expense and risks of litigation and a trial.

4. In March, Medline Industries, a medical supply firm based in Mundelein, Ill., agreed to pay $85 million to the federal government to settle allegations about illegal kickbacks to hospitals. Sean Mason, a former Medline employee, alleged that Medline violated the federal False Claims Act by paying kickbacks to hospitals and other healthcare providers that purchased company products paid for by federal programs.

5. Louisville, Ky.-based Norton Healthcare agreed to pay the federal government $782,842 in March to settle allegations that it overbilled Medicare for wound care, infusion and cancer radiation services by adding a separate "evaluation and management" charge that should have been included in the basic rate. The alleged overbilling, which occurred between Jan. 2005 and Feb. 2010, involved outpatient care. The settlement is twice the amount Norton allegedly overbilled. https://www.beckersasc.com/stark-act-and-fraud-abuse-issues/norton-settles-overbilling-charges.html

6. In February, Savannah, Ga.-based St. Joseph's/Candler Health System announced it will pay the state of Georgia $2.717 million in a civil settlement over alleged Medicaid overbilling for inpatient and outpatient services at its two Savannah-area hospitals. The settlement followed an 11-month investigation on SJCHS's billing for cross-over claims, or those made for patients enrolled in both Medicare and Medicaid. SJCHS also agreed to pay an additional $2,500 to defray the costs of the investigation. The system denied any wrongdoing under the terms of the agreement.

7. In April, California's insurance commissioner filed to intervene in a whistleblower lawsuit accusing Sacramento, Calif.-based Sutter Health, a 24-hospital system, of falsely billing for millions of dollars of anesthesia services. Commissioner Dave Jones alleges that Sutter used an anesthesia billing code to charge for services and supplies patients and payors had already paid for through other charges on the hospital bill or anesthesiologist's bill. Commissioner Jones, who said the amount of fraudulent charges is in the hundreds of millions, seeks monetary penalties and damages as well as broad injunctive relief to stop fraudulent billing practices.

8. In April, Dallas-based Tenet Healthcare accused Brentwood, Tenn.-based Community Health Systems of systematically overbilling Medicare and unnecessarily converting emergency department visits, or observation stays, into inpatient admissions. If treated as false claims, Tenet said CHS' conduct could result in liabilities in excess of $1 billion for 2006-2009 alone. Federal agencies are coordinating an investigation into CHS' billing practices. CHS has called the lawsuit "baseless" and filed a motion to dismiss the suit April 19.

9. The former CEO and COO of Tri-Lakes Medical Center in Batesville, Miss., was accused of involvement in kickbacks and bribery conspiracy in March. Raymond L. Shoemaker of Tupleo, Miss., was charged with conspiracy to commit and committing healthcare fraud, making false claims to the FBI in connection with a federal investigation, making false statements to the U.S. Department of Agriculture in connection with a loan, embezzlement from the medical center and receiving kickbacks for nursing services. If convicted of all counts, Mr. Shoemaker faces up to 80 years in prison and $2.5 million in fines.

10. In February, Whidbey General Hospital in Coupeville, Wash., agreed to forego approximately $1.7 million in Medicare billings due to physician violations of Stark Law. The hospital self-disclosed the violations in 2008 to the HHS Office of the Inspector General. Whidbey General CFO Joe Vessey said $4.85 million worth of Medicare billings were affected by the Stark Law and the hospital only expects to be reimbursed 35 percent of the amount billed.

Related Articles on False Claims, Kickbacks and Stark Law:
3 Core Concepts for Hospital and Healthcare False Claims Cases
11 Key Concepts From the Stark Law
9 Key Legal Developments Facing Hospitals

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