Houston hospital agrees to pay over $1.5 million to settle 'whistleblower' case alleging overpayment

Note: Phillips & Cohen LLP represented the whistleblower in the qui tam case brought against St. Joseph's Hospital for Medicare fraud. The following is a press release issued by the U.S. Attorney's Office in Los Angeles about the settlement.

February 27, 2002 - St. Joseph's Hospital in Houston, one of the CHRISTUS chain of hospitals, has agreed to pay $1,569,000 to resolve allegations that it knowingly failed to disclose an overpayment made by the federal Medicare program.

The settlement was announced today after the United States Attorney's Office learned late Monday that United States District Judge Gary L. Taylor had authorized disclosure of the settlement terms.

The settlement resolves the hospital's liability for failing to disclose a known overpayment of $798,000 from Medicare. The allegations that the hospital failed to disclose overpayments were made by Mark Razin of Long Beach, California.

Mr. Razin made the allegations in a "whistleblower" lawsuit filed pursuant to the qui tam provisions of the False Claims Act, which permits a private individual to sue on behalf of the United States for fraud against the government. Mr. Razin was formerly an employee of Healthcare Financial Advisors (HFA) of Newport Beach, a company now owned by Certus Corporation. HFA, which was a financial consultant to hospitals across the county, was the subject of a February 1999 search warrant executed by the Office of the Inspector General of the Department of Health and Human Services. HHS has primary responsibility for enforcing fraud against the Medicare program.

St. Joseph agreed to resolve the allegations against it without acknowledging any wrongdoing. The theory presented in Mr. Razin's lawsuit is that health care providers must disclose known overpayments from the Medicare program arising out of past reimbursement errors.

For more information, please see the following news stories:

  • "First hospital settles in broad cost-reporting probe," Mark Taylor, Modern Healthcare, 3/11/02.
  • "Houston hospital agrees to pay $1.5 million to resolve FCA Medicare fraud allegations," BNA's Health Care Fraud Report, 3/6/02.