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Hospitals to Pay $250 Million After Whistleblowers File Medicare Billing Lawsuit

By: Allan M. Siegel

The U.S. Department of Justice recently announced it reached agreements with 457 hospitals, who will pay more than $250 million to settle Medicare billing fraud charges related to a whistleblower lawsuit. The hospitals were charged in a whistleblower lawsuit with fraudulently billing Medicare for implanting cardiac devices.

The False Claims Act empowers individuals with detailed knowledge of Medicare fraud to work with a private attorney and file a whistleblower lawsuit. If the case is successful, the whistleblower is eligible to share in as much as 30% of an eventual verdict or settlement related to the lawsuit.

DC Whistleblower Lawyer

In this $250 million settlement, a federal Medicare fraud investigation was launched after two whistleblowers filed a False Claims Act complaint alleging that hospitals were billing Medicare for implantable cardioverter defibrillators (ICDs) placed in patients who did not meet the requisite medical conditions for the device. ICD devices, which are implanted near and connected to a patient’s heart, detects and treats dangerous heart rhythms by delivering a shock to the heart.

Only patients who meet strict medical characteristics may qualify for an ICD covered by Medicare. The device costs about $25,000. Before implanting an ICD, the Medicare rules require waiting 40 days after a patient has a heart attack and 90 days after heart bypass surgery or angioplasty. The rules explicitly prohibit implanting ICDs during these waiting periods. According to the whistleblower lawsuit (also known as a qui tam suit), the hospitals in this case implanted ICDs in patients before the waiting period was over. Rather than adhere to Medicare guidelines, these hospitals decided to violate the rules and have taxpayers foot the Medicare bill.

Several local hospitals did not escape the DOJ’s watchful eyes. Peninsula Regional Medical Center in Salisbury, Maryland will pay $2.9 million to settle the False Claims Act case. MedStar Health of Columbia, Maryland, and eight other unaffiliated hospitals will pay $5 million to settle charges it bilked Medicare with fraudulent billing practices. The eight other hospitals footing this bill are:

  • Franklin Square Hospital Center, Inc.
  • The Good Samaritan Hospital of Maryland, Inc.
  • Harbor Hospital, Inc.
  • MedStar-Georgetown Medical Center, Inc.
  • MedStar Southern Maryland Hospital Center, Inc.
  • Montgomery General Hospital, Inc.
  • The Union Memorial Hospital
  • Washington Hospital Center Corporation

Hospitals in Washington, D.C. will also pay for violating federal healthcare laws. The George Washington University Hospital, and 19 other unaffiliated hospitals, are party to a $4.9 million whistleblower settlement. In addition, Providence Hospital in Washington, D.C. and 32 other unaffiliated hospitals will pay $14.9 million for False Claims Act violations.

The False Claims Act rewards citizens who report Medicare billing fraud and bring whistleblower lawsuits. The whistleblowers in this case – cardiac nurse Leatrice Ford Richards and health care consultant Thomas Schuhmann – received more than $38 million from the False Claims Act settlements.

Chaikin, Sherman, Cammarata, and Siegel P.C. represents whistleblowers but is not involved in these implantable cardioverter defibrillators settlements with hospitals.