July 11, 2018

Fifty-five Nationwide Hospitals Settle False Claims Allegations for $34 Million

Editor’s note: Here’s an interesting blog post from our archives that we thought was worth sharing again. The False Claims Act has enabled whistleblowers to expose fraudulent healthcare fiscal violations, while getting financial rewards for their efforts. We feel this is justice being served indeed.

Fifty-five hospitals located in over twenty-one states entered into a settlement agreement with the United States to pay $34 million to settle allegations under the the False Claims Act for the submission of false claims to Medicare.  The DOJ announced the settlement on July 2, 2013 stating that the claims related to Medicare reimbursement for kyphoplasty procedures.

Kyphoplasty procedure is a minimally invasive procedure to treat certain spinal fractures often caused by osteoporosis.  In many cases the procedure is performed as an outpatient procedure.  Outpatient procedures are reimbursed by Medicare at a far lower rate than inpatient procedures.  These allegations, raised through a qui tam suit brought by Craig Patrick and Charles Bates, stated that the named hospital defendants often admitted patients needing the kyphoplasty procedures on an inpatient status which resulted in more costly remibursements from Medicare.  These hospitals knowingly submitted the claims for inpatient basis when the procedure should have been billed on an outpatient basis.

The July 2, 2013 settlement also resolved allegations against Medtronic Spine LLC, the corporate successor to Kyphon, Inc. that developed the medical devices to be used during the procedure and is the former employer of the two whistleblowers.  The Department of Justice alleged that the company defrauded Medicare by counseling hospital providers to preform the procedures as an inpatient rather than an outpatient status.  The company will pay the government $75 million to resolve these allegations.

The two whistleblowers will share approximately $5.5 million from the two July 2, 2013 settlements. As of July 2, 2013 the government has reached settlements with one hundred hospitals on these allegations totally $75 million.

Interested in learning more about whistleblower rights, benefits, financial rewards and repercussions? View and read our FAQ section on Qui Tam law cases and whistleblower rights here.