Whistleblower Suit Costs Banner Health $18.3M

Steven Porter, April 12, 2018

A clinical documentation specialist worked only three months before resigning and accusing the health system of fraudulent billing practices.

Phoenix-based nonprofit Banner Health hired Cecilia Guardiola, a registered nurse, as corporate director of clinical documentation in fall 2012.

Within three months, however, Guardiola resigned over concerns that Banner seemed to be billing Medicare improperly. When she told administrators that she found inflated numbers and falsified documents, her bosses were allegedly unwilling to change.

"It became clear to her very quickly that the interest was on enhancing revenue and not on guaranteeing compliance or integrity," Guardiola's attorney Mitch Kreindler told HealthLeaders Media.

Guardiola filed a federal whistleblower lawsuit under the False Claims Act in 2013, detailing her allegations. That lawsuit was settled this week, with Banner agreeing to pay more than $18 million, the Department of Justice (DOJ) announced Thursday afternoon.


Related: Banner False Claims Settlement is Plaintiff's Third


Twelve of Banner's hospitals in Arizona and Colorado had been accused of taking patients who could have been treated in an outpatient setting and admitting them instead for costlier inpatient care, then submitting false claims to Medicare.

"Hospitals that bill Medicare for more expensive services than are necessary will be held accountable," said Christian J. Schrank, special agent in charge for the Department of Health and Human Services (HHS) Office of Inspector General (OIG), in the DOJ's written announcement.  "Medical decisions should be made based on patients' conditions and needs, not on providers' profits."

The organization has until April 20 to pay the federal government $18.3 million, plus 2.25% interest calculated from last May, according to the settlement agreement, which was filed in federal court this week. The government will then pay Guardiola 18% of that amount, about $3.3 million.

The health system must also pay more than $144,000 in Guardiola's legal fees.

Banner spokesperson Becky Armendariz released a statement saying the organization is "fully committed" to complying with regulations and the law while providing high-quality patient care.

"Although the rules that dictate when a hospital can accommodate a physician's request to admit a Medicare patient are complex and evolving, our policy has always been to make those decisions in accordance with government guidelines," Armendariz said in an email.

Steven Porter

Steven Porter is editor at HealthLeaders Media.

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