Nine Hospitals Pay $9.4M to Settle Medicare Fraud Case

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By: OSD Staff

Published: 5/19/2010

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Federal suit accused facilities of keeping patients overnight for an outpatient spine procedure.


Nine hospitals in 7 states have agreed to pay the United States a total of about $9.4 million to settle allegations that they had performed kyphoplasty procedures, a minimally invasive spinal surgery, on an inpatient rather than outpatient basis in order to increase their Medicare billings.

"It is critical that providers make patient admission decisions based on medical necessity and the level of care needed rather than on the Medicare payment they will receive," said HHS Inspector General Daniel R. Levinson in a press release announcing the settlement.

The agreement follows a similar $8.3 million settlement reached with 6 hospitals in Indiana and Alabama last year over the same Medicare fraud allegations related to kyphoplasty procedures. The 9 new hospitals settling in the case include:

  • Ball Memorial Hospital of Muncie, Ind.: $1,995,431;

  • Bethesda Memorial Hospital of Boynton Beach, Fla.: $356,079;

  • Bloomington Hospital of Bloomington, Ind.: $1,443,848;

  • Genesys Regional Medical Center of Grand Blanc, Mich.: $931,742;

  • Huntsville Hospital of Huntsville, Ala.: $1,992,756;

  • Palmetto Health Baptist Hospital of Columbia, S.C.: $1,861,083.14;

  • St. Elizabeth Medical Center of Utica, N.Y.: $195,976;

  • St. Mary's of Michigan Hospital of Saginaw, Mich.: $260,065.21; and

  • United Hospital of St. Paul, Minn.: $428,656.

    Seven out of the 9 hospitals were named in a whistleblower lawsuit brought by Craig Patrick and Charles Bates, former reimbursement manager and regional sales manager, respectively, for Birmingham, Ala.-based manufacturing firm Kyphon. The company, which makes kyphoplasty balloons, settled its part of the case with the federal government for $75 million in 2007. The two former employees had accused Kyphon of encouraging hospitals to keep patients overnight even though kyphoplasty can be safely and routinely performed in an outpatient setting.

    Mr. Patrick and Mr. Bates will receive a total of $1.5 million from the most recent settlements, according to the Justice Department.

    Irene Tsikitas

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