Whistleblower lawsuit leads to 32 more hospitals settling Medicare fraud allegations

Washington, DC, Dec. 18, 2015 - Thirty-two hospitals in 15 states agreed to pay more than $28 million to settle a whistleblower lawsuit brought by Phillips & Cohen LLP alleging that the hospitals overcharged Medicare for a type of back surgery known as kyphoplasty.

More than 130 hospitals have now reached settlements with the Justice Department totaling $105 million as a part of an investigation spurred by a Phillips & Cohen "qui tam" (whistleblower) lawsuit. In addition, the government had previously settled similar allegations with Medtronic Spine LLC, which purchased Kyphon, the company that produced the balloon device used to perform kyphoplasty, in 2008 for $75 million. That brings the total settlement amount for the cases to approximately $180 million.

Twenty-nine of the 32 hospitals in this round of settlements were named as defendants in that lawsuit.

"This case shows the impact that two individuals can have when they choose to stand up and challenge a Medicare fraud scheme," said Matthew Smith, a whistleblower attorney for Phillips & Cohen in Washington, DC. "This case has had a wide impact on hospitals and the healthcare industry, reimbursing the taxpayers for close to $180 million in Medicare fraud in over 100 hospitals across the country."

The government first learned of the Medicare billing scheme back in 2008 as a result of a False Claims Act lawsuit filed in federal district court by Phillips & Cohen on behalf of clients Craig Patrick and Charles Bates, both former employees of Kyphon.

The lawsuit alleged hospitals submitted false claims to Medicare and other government healthcare programs by billing kyphoplasty as an inpatient, rather than an outpatient, procedure.

"Colin Huntley, Senior Trial Counsel at the Department of Justice in Washington, DC, has done phenomenal work on this case," Smith said. "In addition, Assistant United States Attorney Gretchen Wylegala, USAO investigator Peggy McFarland and Health Care Fraud Auditor Teri Tetlow of the United States Attorney's Office for the Western District of New York have pursued this matter with amazing determination."

Hospital settlement amounts:

  • The Cleveland Clinic, Cleveland, Ohio - $1.74 million
  • Citrus Memorial Health System, Inverness, Florida - $2.6 million
  • Cullman Regional Medical Center, Cullman, Alabama - $350,000
  • Martin Memorial Medical Center, Stuart, Florida - $2 million
  • MultiCare Tacoma General Hospital, Tacoma, Washington - $983,000
  • Norwalk Hospital, Norwalk, Connecticut - $920,000
  • Princeton Community Hospital Association, Princeton, West Virginia - $1,513,500
  • Sacred Heart Medical Center, Spokane, Washington - $906,000
  • Sarasota Memorial Hospital, Sarasota, Florida - $972,000
  • Spartanburg Regional Health Services District Inc., Spartanburg, South Carolina - $1.725 million
  • St. Cloud Hospital, St. Cloud, Minnesota - $500,000
  • Tampa General Hospital, Tampa, Florida - $2 million
  • Five hospitals (Crestwood Medical Center, Huntsville, Alabama; St. Joseph's Hospital, Fort Wayne, Indiana; Carolinas Hospital System, Florence, South Carolina; Mary Black Health System, Spartanburg, South Carolina and Trinity Medical Center, Birmingham, Alabama) affiliated with Community Health Systems Inc., Franklin, Tennessee - $3.5 million
  • Five hospitals (East Cooper Medical Center, Mt. Pleasant, South Carolina; North Fulton Hospital, Roswell, Georgia; Providence Memorial Hospital, El Paso, Texas; St. Francis Hospital, Memphis, Tennessee and Sierra Medical Center, El Paso, Texas) affiliated with Tenet Health Care Corp., Dallas, Texas - $2.2 million
  • Five hospitals (Biloxi Regional Medical Center, Biloxi, Mississippi; Davis Regional Medical Center, Statesville, North Carolina; Lancaster Regional Medical Center, Lancaster, Pennsylvania; Physicians Regional Medical Center, Naples, Florida and Riley Hospital in Meridian, Mississippi) formerly owned and operated by Health Management Associates Inc., Naples, Florida - $2 million
  • Three hospitals (Winter Haven Hospital, Winter Haven, Florida; St. Joseph's Hospital, Tampa, Florida and St. Anthony's Hospital, St. Petersburg, Florida) affiliated with BayCare Health System, Clearwater, Florida - $1.5 million
  • Two hospitals (Banner Boswell Medical Center, Sun City, Arizona and Banner Thunderbird Medical Center, Glendale, Arizona) affiliated with Banner Health in Phoenix, Arizona- $2.685 million.