Oklahoma hospital pays $12.2 million to settle Medicare organ acquisition overcharges Whistleblower alleged hospital cheated Medicare

Nov. 28, 2006 -- Integris Baptist Medical Center has agreed to pay $12.2 million to the federal government to settle a whistleblower lawsuit that alleged the Oklahoma City hospital substantially overbilled Medicare for the cost of acquiring organs that it transplanted into Medicare patients.

Baptist greatly overstated in its annual “cost reports” to Medicare various costs associated with heart, liver and kidney transplants for Medicare patients from 1993 to 2003, according to the “qui tam” (whistleblower) lawsuit and the government.

The lawsuit, which the government joined, said Baptist cheated Medicare in two ways. When the hospital filed its annual Medicare reports for cost-based reimbursement of expenses it paid to acquire organs for Medicare patients, the hospital claimed reimbursement for virtually all operating costs incurred by its transplant centers rather than separating out the small subset of those costs that actually related to organ acquisition activities. Medicare reimburses healthcare providers for other costs associated with organ transplants through direct patient billings, so Integris’ cost report claims resulted in double reimbursement to the hospital.

Baptist also claimed a bigger share of its costs related to organ acquisitions were due to treatment of Medicare patients than was actually the case. This also falsely increased the hospital’s Medicare payments, the lawsuit said.

“If the qui tam lawsuit hadn’t been filed, the government probably never would have discovered that it had been overcharged,” said Peter W. Chatfield, a Washington, D.C., attorney with Phillips & Cohen LLP, which represents the whistleblower.

Historically federal auditors have rarely performed detailed reviews of specific hospital depart­ments because of limited resources, Chatfield said.

The qui tam lawsuit was filed in federal district court in Oklahoma City in 2003. U.S. Department of Health and Human Services auditors and agents in Oklahoma City, working under the direction of the U.S. Attorney’s office in Dallas, Texas, and the Department of Justice in Washington, D.C., investigated the matter.

Under the False Claims Act, whistleblowers (known as “relators”) who bring qui tam law­suits that result in a recovery to the U.S. are entitled to 15 percent to 25 percent of the settlement, if the government joins the case. The government has awarded the whistleblower 19 percent of the settlement.

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.