Nine Hospitals to Pay $9.4M to Resolve Kyphoplasty-related Medicare False Claims

Nine hospitals in seven states will pay the federal government more than $9.4 million to settle whistleblower allegations that they overcharged Medicare for spinal kyphoplasty procedures, the Justice Department announced.

The nine hospitals and the amount being paid by each are:

• Ball Memorial Hospital, Muncie, IN ($1,995,431)
• Bethesda Memorial Hospital, Boynton Beach, FL ($356,079)
• Bloomington (IN) Hospital. ($1,443,848)
• Genesys Regional Medical Center, Grand Blanc, MI ($931,742)
• Huntsville (AL) Hospital, dba The Health Care Authority of the City of Huntsville ($1,992,756)
• Palmetto Health, dba Palmetto Health Baptist Hospital, Columbia, SC ($1,861,083.14)
• St. Elizabeth Medical Center, Utica, NY ($195,976)
• St. Mary's of Michigan Hospital, Saginaw MI ($260,065.21)
• United Hospital, St. Paul, MN ($428,656).

The Department of Justice said in a media release that the settlements resolve allegations that the hospitals overcharged Medicare between 2000 and 2008 when performing kyphoplasty, a minimally-invasive procedure used to treat certain spinal fractures that often are due to osteoporosis. The government contends that the hospitals performed the procedure on an in-patient basis in order to increase their Medicare billings.

"These hospitals put profits ahead of sound medical judgment," said Tony West, assistant attorney general for the Civil Division of the Department of Justice.

In May and September 2009, the DOJ reached settlements with nine other hospitals for alleged kyphoplasty-related Medicare fraud claims, and in May 2008 Medtronic Spine LLC, corporate successor to Kyphon Inc. Medtronic Spine paid $75 million to settle allegations that the company defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as an in-patient procedure, even though in many cases the minimally-invasive procedure should have been done on an out-patient basis.

All but two of the settling hospitals–St. Elizabeth Medical Center and United Hospital–were named as defendants in a lawsuit filed under the False Claims Act in 2008 in federal district court in Buffalo, NY, by whistleblowers Craig Patrick and Charles Bates. Patrick of Hudson, WI, is a former reimbursement manager for Kyphon, and Bates is a former regional sales manager for Kyphon in Birmingham, AL. They will split $1.5 million as their share of the settlement proceeds.