Eisenhower Medical Center pays $8 million to settle Medicare fraud case brought by whistleblower

Eisenhower Medical Center has agreed to pay $8 million to the federal government to settle a whistleblower lawsuit that said the hospital had filed false claims for reimbursement for treatment of patients covered by Medicare and other federal health insurance programs.

Working with Healthcare Financial Advisors Inc. (HFA), a Medicare reimbursement consultant, Eisenhower mischaracterized and overstated its expenses in “cost reports” and revised cost reports, known as “cost reports reopenings” filed with Medicare, Medicaid and TriCare from 1988 to 1998, according to the “qui tam” (whistleblower) lawsuit.

The government joined the lawsuit, which was filed in 1998, after investigating the allegations. The U.S. Attorney’s office in Los Angeles led the government’s effort in the case.

Eisenhower, located in Rancho Mirage, Calif., is comprised of Eisenhower Memorial Hospital, the Betty Ford Center, the Barbara Sinatra Child Care Center and the Anneberg Center for Health Sciences.

Healthcare providers should be careful when hiring companies that promise to increase their reimbursement from Medicare,” said San Francisco attorney Michael P. Brown of Phillips & Cohen LLP, which represents the whistleblower. “The responsibility for filing accurate reimbursement claims rests with the healthcare provider that files them."

HFA, now owned by Certus Corp., offered Eisenhower and its other hospital clients a contingency arrangement whereby HFA received a large percentage of whatever recoveries it generated for its clients through their cost reports.

One way Eisenhower fraudulently increased its reimbursement was to shift certain reported costs involving the cafeteria, maintenance and other services to its home health agency. At that time, home health agencies were reimbursed for all costs up to a certain limit; hospital costs are only partially reimbursed.

Mark Razin, of Laguna Beach, Calif., filed the whistleblower lawsuit in 1998 in federal district court in Los Angeles against Eisenhower and other hospitals that had hired HFA. He was a former employee of Healthcare Financial Advisors Inc. (HFA).

This is the fourth settlement stemming from Razin’s lawsuit that involves an HFA client. In 2002, St. Joseph’s Hospital in Houston, Texas, paid the government $1.5 million and Lovelace Health System, a wholly owned subsidiary of Cigna Corp. based in Albuquerque, New Mexico paid $24.5 million to settle the qui tam case alleging cost-report fraud. HealthSouth Bakersfield Rehabiliatation Hospital in Bakersfield, Calif., also settled.

The False Claims Act permits private individuals to file qui tam lawsuits against companies that defraud the government. Liable companies pay as much as three times the government’s losses plus penalties for each false claim. When the government joins the case, whistleblowers are entitled to 15 percent to 25 percent of the government’s recovery.

Phillips & Cohen’s practice is devoted exclusively to representing whistleblowers in qui tam lawsuits. For more information about Phillips & Cohen's record, see P&C's Successful Whistleblower Cases.

The case referred to above is: United States and the State of California, ex rel. Mark S. Razin v. Healthcare Financial Advisors, Inc., et al., SACV 98-389-DSF (AHx).