Fifty-five hospitals in 21 states settle Medicare fraud case for $34 million; whistleblowers’ lawyers comment

BUFFALO, NY, July 2, 2013 - The federal government announced today that 55 hospitals in 21 states are paying a total of $34 million to settle allegations they overcharged Medicare for a back procedure known as "kyphoplasty" using a fraudulent billing scheme first exposed by two whistleblowers represented by Phillips & Cohen LLP.

Today's settlements result from the government's ongoing investigation into billing for kyphoplasty procedures by hospitals nationwide. The government so far has recovered over $74 million from more than 100 hospitals - including the settlements announced today -- as a result of its investigation and information provided by the whistleblowers.

"This isn't a case of simple paperwork errors or innocent misunderstanding of Medicare rules," said Mary Louise Cohen, a Washington, DC, lawyer with Phillips & Cohen. "Hospitals across the country misrepresented the type of treatment they provided to patients so they could bill Medicare for expensive inpatient stays."

The government became aware of the Medicare billing scheme as a result of a "qui tam" (whistleblower) lawsuit filed in 2008 in federal district court in Buffalo, New York, by two former Kyphon employees, Craig Patrick and Chuck Bates.

The whistleblowers alleged Kyphon, which sold the equipment and materials used to perform the procedure, persuaded hospitals to submit false claims to Medicare and other government healthcare programs by showing how much greater their revenues would be by billing kyphoplasty as an inpatient, rather than an outpatient, procedure. Inpatient care generally isn't medically necessary for routine, scheduled kyphoplasty procedures.

Kyphon was acquired later by Medtronic Spine LLC, which paid $75 million in 2008 to settle the allegations. Today's settlement brings the total recoveries to the government from kyphoplasty-related cases to more than $149 million.

Kyphoplasty is a minimally invasive procedure used to treat certain spinal compression fractures often due to osteoporosis. A balloon device pumps up the compressed vertebra, and then bone cement is injected into the cavity after the balloon is removed. Generally patients fully recover within a few hours.

"Taxpayers are fortunate to have such a talented government legal team working on their behalf to recover Medicare funds that otherwise would have been lost," said attorney Matthew Smith of Phillips & Cohen. He singled out Trial Attorney Colin Huntley of the Department of Justice; Assistant U.S. Attorney Gretchen Wylegala, Investigator Margaret McFarland and Auditor Theresa Tetlow of the US Attorney's Office in Buffalo; and Special Agent Peggy Glynn of the Department of Health and Human Services Office of the Inspector General for their dedication and work on the case.

The False Claims Act offers rewards to whistleblowers who file qui tam lawsuits against entities that are defrauding the government, if funds are recovered. In cases the government joins, whistleblowers are awarded with 15 percent to 25 percent of the amount recovered.

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

The settling hospitals and the settlement amounts are (by state):

Alabama

• Andalusia Regional Hospital, Andalusia - included in total Lifepoint Hospitals Inc. settlement of $2.52 million

• Russellville Hospital, Russellville -- included in total Lifepoint Hospitals Inc. settlement of $2.52 million

California

• Cedars Sinai Medical Center, Los Angeles -- $1.48 million

• Los Robles Regional Medical Center, Thousand Oaks -- included in total HCA settlement of $7.14 million

Delaware

• Bayhealth Kent General Hospital, Dover - included in total Bayhealth settlement of $1.11 million

• Bayhealth Milford Memorial Hospital, Milford -- included in total Bayhealth settlement of $1.11 million

Florida

• Mount Sinai Medical Center, Miami -- $1.84 million

• Aventura Hospital & Medical Center, Aventura - included in total HCA settlement of $7.14 million

• Capital Regional Medical Center, Tallahassee - included in total HCA settlement of $7.14 million

• Doctors Hospital of Sarasota, Sarasota -- included in total HCA settlement of $7.14 million

• Fawcett Memorial Hospital, Port Charlotte -- included in total HCA settlement of $7.14 million

• Fort Walton Beach Medical Center, Fort Walton Beach -- included in total HCA settlement of $7.14 million

• JFK Medical Center, Atlantis -- included in total HCA settlement of $7.14 million

• Mease Countryside Hospital, Safety Harbor -- included in total Morton Plant Mease Baycare Health System settlement of $2.37 million

• Mease Dunedin Hospital, Dunedin -- included in total Morton Plant Mease Baycare Health System settlement of $2.37 million

• Morton Plant Hospital, Clearwater - included in total Morton Plant Mease Baycare Health System settlement of $2.37 million

• Morton Plant North Bay Hospital, New Port Richey -- included in total Morton Plant Mease Baycare Health System settlement of $2.37 million

• North Florida Regional Medical Center, Gainesville, FL -- included in total HCA settlement of $7.14 million

• Southwest Florida Regional Medical Center, Fort Myers -- included in total HCA settlement of $7.14 million

• St. Lucie Medical Center, Port Saint Lucie -- included in total HCA settlement of $7.14 million

Georgia

• Coliseum Medical Center, Macon -- included in total HCA settlement of $7.14 million

• Coliseum Northside Hospital, Macon -- included in total HCA settlement of $7.14 million

• Northlake Medical Center, Tucker -- included in total HCA settlement of $7.14 million

• Palmyra Medical Center, Albany -- included in total HCA settlement of $7.14 million

• Redmond Regional Medical Center, Rome -- included in total HCA settlement of $7.14 million

Hawaii

•· The Queen's Medical Center, Honolulu -- $1.05 million

Iowa

• Mercy Medical Center, Dubuque - included in total Trinity Health settlement of $3.9 million

• Mercy Medical Center, Sioux City -- included in total Trinity Health settlement of $3.9 million

Kansas

• Western Plains Medical Complex, Dodge City -- included in total Lifepoint Hospitals Inc. settlement of $2.52 million

• Wesley Medical Center, Wichita -- included in total HCA settlement of $7.14 million

Kentucky

• Jackson Purchase Medical Center, Mayfield -- included in total Lifepoint Hospitals Inc. settlement of $2.52 million

• Lake Cumberland Regional Hospital, Somerset -- included in total Lifepoint Hospitals Inc. settlement of $2.52 million

• Trover Health System, Madisonville -- $1.16 million

Louisiana

• Minden Medical Center, Minden -- included in total Lifepoint Hospitals Inc. settlement of $2.52 million

Massachusetts

• New England Baptist Hospital, Boston -- $374,814

• St. Anne's Hospital, Fall River -- $552,745

Michigan

• St. Joseph Mercy Hospital, Pontiac -- included in total Trinity Health settlement of $3.9 million

• Mercy health Partners, Muskegon -- included in total Trinity Health settlement of $3.9 million

Mississippi

• Baptist Memorial Hospital-Golden Triangle, North Columbus - included in total Baptist Memorial Health Care Corp. settlement of $691,168

• Garden Park Medical Center, Gulf Port -- included in total HCA settlement of $7.14 million

Missouri

• Des Peres Hospital, St. Louis. -- $900,000

Nevada

• Sunrise Hospital & Medical Center, Las Vegas -- included in total HCA settlement of $7.14 million

North Carolina

• Wayne Memorial Hospital, Goldsboro -- $1.25 million

North Dakota

• Altru Health System, Grand Forks -- $1.49 million

Ohio

• Atrium Medical Center, Middletown, Ohio -- $4.23 million

• Mount Carmel New Albany Surgical Hospital, New Albany -- included in total Trinity Health settlement of $3.9 million

Oklahoma

• Edmond Regional Medical Center, Edmond -- included in total HCA settlement of $7.14 million

• Oklahoma University Medical Center, Oklahoma City -- included in total HCA settlement of $7.14 million

Tennessee

• Baptist Memorial Hospital-Collierville, Collierville -- included in total Baptist Memorial Health Care Corp. settlement of $691,168

• Baptist Memorial Hospital-Memphis, Memphis -- included in total Baptist Memorial Health Care Corp. settlement of $691,168

• Methodist Medical Center, Oak Ridge -- included in total Covenant Health settlement of $1.84 million

• Parkwest Medical Center, Knoxville -- included in total Covenant Health settlement of $1.84 million

• Summit Medical Center, Hermitage -- included in total HCA settlement of $7.14 million

Texas

• Conroe Regional Medical Center, Conroe -- included in total HCA settlement of $7.14 million

• Denton Regional Medical Center, Denton -- included in total HCA settlement of $7.14 million