Medicare Claims Settlement Nets $6.3M from 7 Hospitals

Seven hospitals in six Southern states will pay the federal government a total of more than $6.3 million to settle Medicare false claims allegations stemming from the ongoing investigation of improper billing for spinal procedures, the U.S. Justice Department said Tuesday.

The settlements resolve whistleblower claims that the hospitals overcharged Medicare between 2000 and 2008 for inpatient kyphoplasties. The minimally invasive spinal procedure can often be performed as a less-costly out-patient procedure, but federal prosecutors said the hospitals unnecessarily performed the procedure on an in-patient basis to boost Medicare billings.

The settling hospitals are: Lakeland (FL) Regional Medical Center, $1.6 million; The Health Care Authority of Morgan County – Decatur General Hospital, Decatur, AL, $538,000; St. Dominic-Jackson Memorial Hospital, Jackson, MS, $556,000; Seton Medical Center, Austin, TX, $1.2 million; Greenville (SC) Memorial Hospital, $1 million; Presbyterian Orthopaedic Hospital, Charlotte, NC, $638,000; and The Health Care Authority of Lauderdale County, the City of Florence, AL, Coffee Health Group, and Eliza Coffee Memorial Hospital, $676,000.

The government reached similar settlements in 2009 and 2010 with 18 other hospitals for kyphoplasty-related Medicare claims, which were taken up after the government's 2008 whistleblower settlement with Medtronic Spine LLC, corporate successor to Kyphon Inc. Medtronic paid $75 million to resolve Medicare fraud allegations that it encouraged hospitals to perform kyphoplasties as revenue generating in-patient procedures.

All of the hospitals 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, was a reimbursement manager for Kyphon. Bates was a regional sales manager for Kyphon in Birmingham, AL. They will share about $1.1 million of the settlement.

The Justice Department said it has used the False Claims Act to recover $4.2 billion since January 2009 in cases involving fraud against federal healthcare programs.