Hospitals in NY, Florida, other states pay nearly $12 million to settle Phillips & Cohen whistleblower lawsuit alleging Medicare fraud

A whistleblower ("qui tam") lawsuit filed by Phillips & Cohen has resulted in 14 hospitals in New York, Florida and five other states paying nearly $12 million to the federal government to settle Medicare fraud billing charges.

WASHINGTON, DC, Feb. 8, 2012 -- Fourteen hospitals in New York, Florida and five other states have agreed to pay a total of nearly $12 million to the federal government to settle a whistleblower case filed by Phillips & Cohen LLP involving Medicare billing fraud charges for a back procedure known as "kyphoplasty."

The settlements announced yesterday mean that the "qui tam" (whistleblower) lawsuit and the government's ensuing investigation into hospital billing for kyphoplasty have resulted in recoveries to the U.S. Treasury totaling $114 million.

That total includes $39 million paid by more than 40 hospitals to settle the false claims charges. Medtronic Spine LLP, the corporate successor to Kyphon Inc., paid $75 million in 2008 to settle related charges by the same whistleblowers.

"Kyphon was very successful in convincing hospitals nationwide to buy its products and perform kyphoplasty by showing they would make a lot more money by improperly claiming that the procedure was done on an inpatient rather than an outpatient basis," said Mary Louise Cohen, a Washington, DC, attorney with Phillips & Cohen LL. "But it's fraud when hospitals bill Medicare for an inpatient procedure that was actually performed on an outpatient basis, as was often the case with kyphoplasty."

Kyphoplasty is used to treat certain spinal compression fractures, such as those due to osteoporosis. Patients generally recover from the procedure and are able to walk around within a few hours.

The 14 hospitals that have agreed to settle the whistleblower lawsuit are:

  • Plainview Hospital, Plainview, N.Y. ($2,307,265)
  • North Shore Syosset Hospital, Syosset, N.Y. ($192,735)
  • North Mississippi Medical Center, Tupelo, Miss. ($1,894,683)
  • Mission Hospital, Asheville, N.C. ($1.5 million)
  • Wenatchee Valley Medical Center, Wenatchee, Wash. ($1,224,710)
  • Community Hospital Anderson, Anderson, Ind. ($500,561)
  • St. John's Mercy Hospital, Creve Coeur, Mo. ($365,000)
  • Gulf Coast Hospital, Fort Myers, Fla. ($173,006)
  • Lee Memorial Hospital, Fort Myers, Fla. ($159,572)
  • Cape Coral Hospital, Cape Coral, Fla. ($73,279)
  • Four hospitals affiliated with Adventist Health System/Sunbelt Inc. in Florida (total of $3.9 million): Florida Hospital Orlando, Florida Hospital-Oceanside, Florida Hospital Fish Memorial and Florida Hospital Heartland Medical Center.

The whistleblowers, Chuck Bates and Craig Patrick, are former employees of Kyphon Inc. Phillips & Cohen filed the qui tam lawsuit on their behalf against the settling hospitals in 2008 in federal district court in Buffalo. The False Claims Act allows whistleblowers to sue entities that defraud the government and receive a reward of 15 percent to 25 percent of the amount the government recovers as a result of their case.

"The U.S. Attorney's Office in Buffalo as well as attorneys in the Dept. of Justice's Washington headquarters have done outstanding work on this case," said Matthew Smith, a Washington, DC, attorney with Phillips & Cohen. He noted in particular the work of Assistant U.S. Attorney Robert Trusiak, DOJ Trial Attorney Colin Huntley, USAO investigator Peggy McFarland, USAO Auditor Theresa Tetlow and Department of Health and Human Services Office of Inspector General Special Agent Peggy Glynn.

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