University of Washington physician groups pay $35 million to settle whistleblower case

Doctors defrauded Medicare and Medicaid for years with false claims

April 30, 2004 – Two physician practice groups affiliated with the University of Washington will pay $35 million to the federal government and the state of Washington to settle a whistleblower lawsuit that said the physician groups routinely overbilled Medicare and Medicaid for years.

The "qui tam" (whistleblower) lawsuit, which had been under seal since 1999, also alleged that:

  • University physicians altered and destroyed internal audit reports that showed they should have reimbursed the government health programs for excessive payments they received.
  • The doctors systematically created false documentation to support the false Medicare claims, including falsifying documents to claim they were present while services such as dialysis were performed.

"The compliance program revealed the fraud, but the physician groups chose to change the internal audit program to hide the millions they stole," said Stephen Meagher, a San Francisco attorney with Phillips & Cohen LLP, which represents the whistleblower. "This case raises serious questions about the effectiveness of compliance programs."

The whistleblower case involved allegations similar to those associated with the government's Physicians at Teaching Hospitals, or PATH, initiative. The physicians groups bilked Medicare and Medicaid by billing the programs for services they claimed were performed by physicians when in actuality they were performed by doctors in training, known as "residents." Medicare reimburses teaching hospitals for resident salaries, so hospitals can't bill for services provided by residents.

Previously, the highest amount recovered under the PATH initiative was $30 million paid by the University of Pennsylvania in 1995.

Mark Erickson, a former internal auditor for the physician groups, filed the qui tam lawsuit against University of Washington Physicians and Children's University Medical Group in 1999 in federal district court in Seattle. His lawsuit triggered a criminal investigation that resulted in the conviction of two prominent doctors on felony charges.

Dr. H. Richard Winn, a neurosurgeon, pleaded guilty in 2002 to obstructing justice. Winn asked other doctors to lie for him and created an atmosphere of fear and intimidation within the neurosurgery department, which he chaired for most of his 20 years at the university. He resigned from the university and agreed to pay $500,000 to the government and perform 1,000 hours of community service. The university gave him a $950,000 severance package and agreed to pay him up to $2.75 million in lost wages over five years, which would be offset by any earnings he makes. Winn is now a researcher at Mount Sinai School of Medicine in New York.

Dr. William Couser, a kidney specialist, pleaded guilty to submitting a fraudulent bill to a private health provider and submitting $100,000 in inflated bills to Medicare and the Department of Defense's health program. He also agreed to pay $100,000 to the government and perform 1,000 hours of community service..

Today's settlement will be divided between the federal government and the state of Washington: $32.3 million will go to the federal government; $2.1 million will go to the state of Washington. The restitution already paid by Drs. Winn and Couser is included in the $35 million total.

The qui tam lawsuit was brought under the False Claims Act, which allows individuals to sue companies and others defrauding the government on the government's behalf. The law provides a reward of 15 percent to 25 percent of the recovery for whistleblowers. Erickson will be awarded $7.25 million. He spent almost two years analyzing documents and working with the government on the case.

Phillips & Cohen represents whistleblowers nationwide. For more information about Phillips & Cohen's record, see P&C's Successful Whistleblower Cases.

Case referred to above is: United States ex rel. Mark Erickson v. Association of University Physicians, University of Washington Physicians, and Children's University Medical Group, case no. C99-1261R.

For more information, please see the following news stories:

  • "Suit claims pattern of UW billing abuses," Sharon Pian Chan, Seattle Times, 4/30/04.
  • "$7 million award for blowing whistle on UW; ex-employee gets share of $35 million overbilling settlement," Jake Ellison, Seattle Post-Intelligencer, 4/30/04.
  • "University of Washington agrees to pay $35 million settlement for Medicare overbilling," Gene Johnson, 4/30/04.
  • "$35 million later, UW says it didn't cheat," Jake Ellison, Seattle Post‑Intelligencer, 5/1/04.
  • "UW failed to address overbilling, probe finds," Sharon Pian Chan, Seattle Times, 5/1/04.