Texas Tech health center pays $2.3 million to settle Medicare fraud allegations

Feb. 12, 2001 — The Texas Tech University Health Services Center (TTUHSC) has agreed to pay the federal government $2.3 million to settle Medicare fraud allegations that were first made by a whistleblower who filed a "qui tam" lawsuit.

The settlement resolved charges that Texas Tech billed Medicare for services provided by faculty physicians when they were actually provided by doctors in training, known as residents. That billing practice would result in greater Medicare payments than should have been made.

Dr. Carol Foulds, a former staff doctor at TTUHSC, filed a qui tam lawsuit under the False Claims Act against the hospital. But her qui tam lawsuit was later dismissed because of a Supreme Court ruling that whistleblowers can't sue states (or state agencies) under the False Claims Act. However, the government continued the investigation into Texas Tech's Medicare billing practices based on Foulds' lawsuit.

"The irony of it is that if the hospital had been a private teaching hospital, Foulds' case never would have been dismissed," said attorney Mary Louise Cohen of Phillips & Cohen, which represented the whistleblower.

Here is the Justice Department's press release on the settlement:

(202) 514-2007


WASHINGTON, D.C. -- The Texas Tech University Health Sciences Center (TTUHSC) will pay the United States $2.3 million to settle allegations that the component of the Texas Tech University System overbilled Medicare, Medicaid and TRICARE - the military's health care program, the Department of Justice announced today.

The settlement resolves allegations that from September 30, 1994 through December 31, 1995 TTUHSC submitted claims that services were personally provided by faculty physicians when, in fact, their records do not demonstrate that these physicians were personally involved in performing the services. The government also alleged that TTUHSC submitted claims for evaluation and management services provided by faculty physicians when, in fact, the bills submitted did not accurately reflect the level of services that were provided. The Texas Tech Health Sciences Center has facilities in Amarillo, El Paso, Lubbock and Odessa, Texas.

The investigation arose as a result of a lawsuit filed in 1995 under the qui tam provisions of the False Claims Act by Carol Foulds, a dermatology resident physician then employed by TTUHSC. Those allegations were dismissed after the U.S. Supreme Court ruled in Vermont Agency of Natural Resources v. United States ex rel. Stevens that relators or whistleblowers cannot sue states under the False Claims Act.

This matter was investigated by the Lubbock, Texas office of the Federal Bureau of Investigation with assistance from the Arlington, Texas office of the Defense Criminal Investigative Service of the Department of Defense. The Civil Division and the United States Attorney's Office for the Northern District of Texas in Dallas negotiated the settlement.