Hospitals Hit Hard in 2015 False Claims Act Enforcement

Hospitals Hit Hard in 2015 False Claims Act Enforcement


Last week, the Department of Justice announced yet another multi-billion dollar yearly haul from False Claims Act enforcement -- totaling over $3.5 billion for FY 2015.  Although lower than last year, this is the fourth year in the row that the Department  has recovered more than $3.5 billion.  Of that total, the majority, or $1.9 billion, came from the healthcare industry for claims related to allegedly unnecessary or inadequate care, kickbacks to providers to induce referrals, or overbilling for goods and services paid for by Medicare, Medicaid, or another federal healthcare program. 

Notably, this is the first year since FY 2009 that the department has recovered less than $2 billion related to alleged healthcare fraud, and is somewhat less than the $2.3 billion it recovered last year.  As the Department is quick to point out, however, the $1.9 billion relates to federal losses only, and doesn’t reflect the additional millions of dollars the Department had a hand in recovering for consumers and state Medicaid programs.    

While these settlements and recoveries ran the gamut of the healthcare industry, hospitals featured prominently.  The most prominent resolutions this year involved the Stark law, with major settlements against Adventist Health System ($115 million); North Broward  Hospital District ($69.5 million); and Georgia hospital system Columbus Regional Healthcare System and a Dr. Andrew Pippas ($25 million plus contingent payments up to an additional $10 million).  Although not specifically mentioned in its most recent press release, the Department also resolved the long running Tuomey case for $75 million after prevailing at the Fourth Circuit.   Cardiac care also continued to be a major focus, with the Department settling a qui tam suit naming hundreds of hospitals that were allegedly implanting cardiac devices in Medicare patients contrary to criteria established by CMS. 

Skilled nursing and rehabilitation facilities also featured prominently.  In the largest failure of care settlement yet, Extendicare Health Services and its subsidiary, Progressive Step Corporation agreed to a $32.3 million resolution of allegations that they billed for deficient nursing services and medically unnecessary therapy services.  This settlement also involved an additional $5.7 million to eight states related to Medicaid billings.  Highlighting the Department’s focus on this area, it explicitly noted that it has ongoing litigation against additional skilled nursing and rehabilitation chains based on allegations of medically unnecessary rehabilitation therapy. 

By the Department’s own admission, much of its False Claims Act enforcement is driven by whistleblower, or qui tam, lawsuits filed under the False Claims Act.  This year’s announcement drove that home with abundance; noting several major settlements that were the product of qui tam actions.  Relator’s (whistleblower’s) counsel have certainly taken note of these settlements, particularly some of the eye-popping resolutions against hospitals charged with Stark violations, as well as the focus on cardiac care and post-acute rehabilitation services. As such, additional qui tam actions in these areas are likely, as is a continued focus by the Department.   

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