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Scripps Tagged for $1.5M in False Claims Settlement

News  |  By John Commins  
   January 22, 2018

Allegations in a whistleblower lawsuit claimed that the San Diego-based health system improperly billed government-sponsored health plans for physical therapy services.

Scripps Health will pay $1.5 million to resolve False Claims Act allegations related to improper billing for physical therapy services, the Department of Justice announced.

The services were provided by a therapist who did not have billing privileges with TRICARE or Medicare, and who was not properly supervised by a physician, DOJ said.

"Federal healthcare programs require that services are rendered by authorized providers or under the appropriate supervision of an enrolled physician," Acting Assistant Attorney General for the Justice Department's Civil Division Chad A. Readler said in prepared remarks.

"These requirements help protect patients from unscrupulous or unqualified medical professionals," he said.

Scripps Health said in prepared remarks that it self-reported the infractions and settled with the government to avoid costly and uncertain litigation.

"Contrary to what was said in the Department of Justice news release, this was a civil investigation focused on the technical billing issues only; there were no allegations related to quality or medical necessity of care in this investigation. The technical billing issue had no financial benefit to Scripps (it did not increase reimbursement rates or reduce costs)," Scripps said. 

Medicare and TRICARE limit billing privileges to enrolled providers. Services from unenrolled providers can be billed as "incident to" the services of an enrolled physician, but only if the physician provided direct supervision, DOJ said.

The settlement resolves False Claims Act allegations in a lawsuit filed by former Scripps employee Suzanne Forrest, who will receive $225,000 under the settlement.

"Unlawfully obtained payment from taxpayer-funded programs harms the entire healthcare system," said Adam L. Braverman, U.S. Attorney for the Southern District of California. "We will hold accountable all providers who defraud these programs."

"The Department of Justice and Scripps Health have reached a settlement agreement related to a  technical error in the processing of some Medicare bills for physical therapy treatments.  Scripps provided all the services for which it billed Medicare and ensured patients received high quality care. Scripps reached a settlement to avoid continuing legal costs and uncertainty.

Scripps issued the following statement in response:

"Scripps became aware of the situation on our own and reported to the Medicare contractor, the party responsible for the handling of Medicare claims, that we had found the billing anomaly and we asked them for guidance on how to address it. The federal attorneys on the case and the relator were unaware of Scripps' self-disclosure when they reached out to Scripps, and Scripps was not aware that the relator had filed a lawsuit against Scripps when Scripps made the self-disclosure.  Therefore, Scripps diligently investigated the issue and attempted to resolve it through appropriate channels."

"It is important to note that there were and always are physicians on site during the provision of physical therapy services and available to assist with any patient needs that arose. There is no evidence of any patients requiring physician intervention. Further, all physical therapists were licensed and provided medically necessary, appropriate care."

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


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