Consumer Fraud

Hospital conglomerate settles whistleblower’s False Claims Act lawsuit for $37 million

whistleblower Hospital conglomerate settles whistleblower’s False Claims Act lawsuit for $37 millionSan Francisco-based Dignity Health, one of the five largest hospital systems in the U.S., has agreed to pay $37 million to settle allegations stemming from a whistleblower complaint that more than a dozen of its hospitals intentionally submitted false claims to Medicare and other federal health care programs by routinely admitting patients who could have been treated on a more appropriate and less costly outpatient basis.

Dignity Health, formerly Catholic Healthcare West, operates 39 hospitals in California, Nevada, and Arizona.

Kathleen Hawkins, a former employee of the hospital chain, filed a lawsuit against the company in a California federal court under the qui tam provisions of the False Claims Act, which authorizes private individuals to file whistleblower lawsuits on behalf of the U.S. government. Whistleblowers whose cases lead to a recovery for the U.S. government receive between 15 to 30 percent of the total amount recovered.

The complaint alleged that from 2006 through 2010, 13 Dignity hospitals in all three states billed Medicare and TRICARE for inpatient surgeries on patients who underwent stent, pacemaker, and other elective cardiovascular procedures that should have been treated and subsequently billed as less costly outpatient procedures.

The lawsuit additionally alleged that from 2000 through 2008, four of the Dignity Health hospitals billed Medicare for elective, minimally invasive spinal compression fracture surgeries on an inpatient basis when they too should have been billed to Medicare as outpatient procedures.

The complaint also alleged that from 2006 through 2010, 13 of the hospitals admitted patients unnecessarily for certain common medical diagnoses that could have been treated more appropriately on an outpatient basis. The complaint alleged that the hospitals regularly elected to treat inpatients as outpatients to boost profits.

“Charging the government for higher cost inpatient services that patients do not need wastes the country’s vital health care dollars,” Assistant U.S. Attorney General Joyce Branda said in a statement. “This department will continue its work to stop abuses of the nation’s health care resources and to ensure patients receive the most appropriate care.”

Source: U.S. Department of Justice